Headlines news for the day.

Investors Gain N317.48bn as NSEASI Inches Up by 1.58%, Erases Previous Day Loss
Equities market closed today on a positive note, as NSEASI appreciated by +1.58% to close at 39,176.62 basis points as against -0.63% depreciation recorded previously. Its Year-to-Date (YTD) returns currently stands at -2.72%.

Market breadth closed positive as AIRTELAFRI led 21 Gainers as against 16 Losers topped by JULI at the end of today’s session – an improved performance when compared with previous outlook.

Market turnover closes positive as volume moved up by +143.41% as against +16.20% uptick recorded in the previous session. BOCGAS, GUARANTY and ETI were the most active to boost market turnover. BOCGAS and GUARANTY topped market value list.

AIRTELAFRI leads the list of active stocks that recorded impressive volume spike at the end of today’s session.

Insurance offers survival option as MSMEs battle growing risks
The growing risks facing Micro, Small and Medium-scale Enterprises (MSMEs) is reigniting the need for widespread adoption of insurance as a protection measure against unforeseen losses dealing a blow to the wider economy.

NNPC reshuffles senior executives ahead of PIB implementation
The Nigerian National Petroleum Corporation (NNPC) has announced a major shakeup among senior executives in anticipation of the country’s implementation of the long-awaited Petroleum Industry Bill (PIB). According to a statement from NNPC, the reshuffling is “in alignment with the rules…
CBN increases dollar sales to banks by over 200%
The Central Bank of Nigeria (CBN) has increased dollar sales to banks by over 200 percent, in fulfillment of the promise it made on July 27, 2021. The apex bank had made this promise following its decision to discontinue foreign exchange supplies to the Bureau De Change (BDCs
PorkMoney founders flee from Interpol over multi-million dollar fraud
Gloria Igberaese and Muyiwa Folorunsho, a Nigerian couple and co-CEOs of Divergent Enterprise have reportedly fled to the Dominican Island to avoid the Interpol desk of the Nigerian police.
How MTN Nigeria Paid Over N2trn in Taxes and Levies in 20 Year
On January 8, 2020, the Attorney-General of the Federation and the Minister of Justice, Abubakar Malami, sent a letter to MTN in which he said that following careful review and due consultation with relevant statutory agencies, his office would be withdrawing a $2 billion tax demand against the telecoms company.

This was after two years of allegation from the office of the AGF that the ICT company owed taxes from 2007 to 2017.

Evidence, however, showed that MTN has consistently paid its taxes to the Nigerian government.

In the 20 years that it has been in Nigeria, the biggest telecommunications company by market share has paid over N2 trillion in taxes and levies to the federal government.

In January 2020, the figure stood at N1.7 trillion, as confirmed by Mazen Mroue, the company’s chief operations officer recently at “MTN’s Value Contribution to Nigeria’s Socio-Economic Development. In a year, the figure has risen to more than N2 trillion”.

As part of its tax remittance to the federal government, the company announced in August 2021 that it responded to the Federal Government’s call for public-private partnerships in the rehabilitation of critical road infrastructure in Nigeria. This will involve the reconstruction of the Enugu-Onitsha Express
Oil Prices Bounce Back As Demand Recovers
Oil prices rebounded from last week’s losses as the market seemed to shrug off fears of Chinese lockdowns, with demand strength across the Atlantic overshadowing COVID-related concerns. It is assumed President Biden’s $1 trillion infrastructure bill will boost oil product demand and lift US economic performance in the short-to-mid-term, providing much-needed support for prices
• July fuel demand in India rebounded to its highest since April as New Delhi cleared restrictions and lockdowns, netting a 3% month-on-month increase to a total of 16.83 million tons.
• The rebound might have been even more pronounced, were it not for fuel prices rising to all-time highs, triggered by a chaotic taxation regime.
• In India, petroleum products are not included in the goods and services tax regime, meaning every state can set its own fuel tax levies and they have been on the rise throughout 2021, up 20% year-on-year already.
• Analysts anticipate India surpassing its pre-pandemic consumption readings in Q4-2021, with fuel pricing remaining the primary factor in the extent of demand recovery.
• Crude imports in June-July dropped to average 2014-2015 levels of 3.5 mbpd, but August loadings have surged to a healthy 4.2 mbpd on the back of demand recovery.
Moody’s Places Dangote Cement’s B1 Ratings on Review for Downgrade
Moody’s Investors Service (“Moody’s”) has placed the B1 corporate family rating (CFR), the Aa2.ng national scale corporate family rating and the B1-PD probability of default rating (PDR) of Dangote Cement Plc (“DCP”) on review for downgrade. At the same time, Moody’s has affirmed the (P)B2 local currency rating and Aa3.ng national scale rating assigned to the NGN300 billion domestic medium-term note program (DMTN) and the B2 local currency and Aa3.ng NSR to the senior unsecured notes issued by DCP.

Ratings Rationale
The review for downgrade was prompted by the increase in dollar debt in DCP’s capital structure which was not initially contemplated in the B1 rating. As of 30 June 2021, the amount of dollar debt has increased to around 193 billion naira equivalent (35% of total debt) from 71 billion naira equivalent in 2019. This exposes DCP to increased currency risks because the majority of its cashflows are generated in naira and other African currencies and the fact that all the dollar debt is short term with maturities of less than a year.
Moody’s will therefore need to consider the higher proportion of dollar debt in the context of Moody’s foreign currency ceiling of B2 for Nigeria, instead of Moody’s local currency ceiling of Ba3. Under Moody’s methodology approach, Nigeria’s B2 foreign-currency ceiling limits the ability of a domestic corporate that has meaningful foreign currency obligations to be rated higher, which constrains a company’s rating.
The affirmation of the B2 ratings assigned to the DMTN program and senior unsecured notes reflect Moody’s position that the previous notching considerations is no longer appropriate because of the low secured debt in the capital structure, sustainably low group leverage and high unencumbered asset base in Nigeria that provide sufficient recovery protection for senior unsecured lenders.
Factors That Could Lead to an Upgrade Or Downgrade of the Ratings
Factors will be updated following the conclusion of the review. Moody’s review will focus on DCP’s long term capital structure target, liquidity profile and its ability to generate sizable dollar revenues. Moody’s expects to conclude the review process within 3 months.

List of Affected Ratings
..Issuer: Dangote Cement Plc
On Review for Downgrade:
….Probability of Default Rating, Placed on Review for Downgrade, currently B1-PD
….LT Corporate Family Rating, Placed on Review for Downgrade, currently B1
….NSR LT Corporate Family Rating, Placed on Review for Downgrade, currently Aa2.ng
Affirmations:
….Senior Unsecured Medium-Term Note Program, Affirmed (P)B2
….NSR Senior Unsecured Medium-Term Note Program, Affirmed Aa3.ng
….Senior Unsecured Regular Bond/Debenture, Affirmed B2
….NSR Senior Unsecured Regular Bond/Debenture, Affirmed Aa3.ng
Outlook Action:
….Outlook, Changed To Ratings under Review from Negative
N512.25bn Generated as VAT in Q2 2021, Increases by 3.20% QoQ – NBS
Sectoral distribution of Value Added Tax (VAT) data for Q2 2021 reflected that the sum of N512.25bn was generated as VAT in Q2 2021 as against N496.39bn generated in Q1 2021 and N327.20bn generated in Q2 2020 representing 3.20% increase Quarter-on-Quarter and 56.56% increase Year-on-Year.
Other Manufacturing generated the highest amount of VAT with N44.89bn generated and closely followed by Professional Services generating N29.30bn, Commercial and Trading generating N21.96bn while Textile and Garment industry generated the least and closely followed by Pioneering and Pharmaceutical, Soaps and Toiletries with N77.74m, N169m and N188.71m generated respectively.
Out of the total amounted generated in Q2 2021, N187.43bn was generated as Non-Import VAT locally while N207.69bn was generated as Non-Import VAT for foreign. The balance of N117.13bn was generated as NCS-Import VAT.
AXA Mansard Delivers Strong Performance with 22% YoY Growth in Gross Written Premium
AXA Mansard Insurance plc, a member of the AXA Group, announces its financial results for the half year ended June 30, 2021
Financial Highlights and Ratios
Income Statement Highlights
• Gross Written Premium of N37.18bn, up 22% from N30.54bn in June 2020
• Net Premium Income of N17.42bn, up 11% from N15.67bn in June 2020
• Investment and Other Income of N1.24bn, down 70% from 4.10bn in June 2020
• Operating Expenses of N4.41bn, up 43% N3.89bn in June 2020
• Profit before Tax of N3.16bn, down 28% from N4.4bn recorded in June 2020
• Profit after Tax of N2.29bn, down 37% from N3.61bn in June 2020

Statement of Financial Position Highlights
• Total Assets of N102.90bn, up 9% from N94.43bn as of December 2020
• Insurance Liabilities of N40.89bn, up 38% from N29.60bn as of December 2020
• Group Shareholders’ Funds of N33.62bn, down 1% from N33.94bn as of December 2020
• Insurance Shareholders’ Funds of N30.07bn, up 2% from N29.37bn as of December 2020
Key Ratios
• Operating Expense Ratio of 17% (June 2020: 17%)
• Underwriting Expense Ratio of 8% (June 2020: 9%)
• Loss / Claims Ratio of 47% (June 2020: 45%)
• Re-Insurance Cost Ratio of 23% (June 2020: 25%)
• Return on Average Equity of 18.7% (June 2020: 16%)
• Return on Average Asset of 3.2% (June 2020: 4.5%)
• Earnings per Share of 6k (June 2020: 31k)
Financial Summary

Statement of Financial Position Jun-21 Dec-20 Growth
N’000 N’000 %
Total Assets 102,895,293 94,439,720 9%
Reinsurance Assets 13,370,086 6,499,653 106%
Insurance Liabilities 40,896,730 29,597,844 38%
Investment Contracts 9,643,555 9,638,767 0%
Shareholders’ Funds 33,619,454 33,942,870 -1%

Statement of Comprehensive Income Jun-21 Dec-20 Growth
N’000 N’000 %
Gross Written Premium 37,181,327 30,543,434 22%
Net Premium Income 17,424,245 15,672,087 11%
Investment & Other Income 1,244,942 4,098,974 -70%
Net Claims 10,866,459 9,837,799 10%
Underwriting Expenses 2,154,715 2,009,400 7%
Underwriting Profit 6,567,928 4,595,265 43%
Operating Expenses 4,411,555 3,888,470 13%
Profit Before Tax 3,162,290 4,401,829 -28%
Profit After Tax 2,289,615 3,605,996 -37%

Commenting on the results, Mrs. Ngozi Ola-Israel, the Chief Financial Officer, said “Despite the tough operating environment, AXA mansard delivered strong results in the half year ended 30th June, 2021. The performance further re-enforces our resilience and capacity to produce sustainable results. We delivered N37bn in revenues, up 22% from N30.5bn recorded in the corresponding period last year. The decline in PBT was driven by fair value losses on financial assets, which is reflective of the financial market conditions in Nigeria. We, however, remain committed to delivering strong growth and profitability in the 2nd half of the year.
Commenting on AXA Mansard’s financials at the end of the first quarter of 2021, Mr. Kunle Ahmed, the Chief Executive Officer, AXA Mansard Insurance, said “The revenue growth recorded, despite the effects of the economy and COVID-19 new normal on businesses and household income, is attributable to the support of our Partners, the continued improvement in service delivery to our clients and the commitments of our people. We have maintained a strong performance especially in our P & C and Health portfolios in the first six months of the year. We will continue to work hard to accelerate growth across all our lines of businesses by launching digital solutions to improve our engagement with Partners and refine our Risk Management advisory services as value add to our various customers.

About the Author

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First Ideas Limited is an investment and financial advisory company established in 1994 to provide advisory services to high net worth individuals, trust funds, financial institutions and medium sized companies in growth sectors.

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