26 Oct

Daily Watch – Oando opposes imminent SEC audit, Real GDP shrank in H2 2016

  • The NBS says GDP in real terms declined in the last two quarters of 2016. In its ‘Nigerian Gross Domestic Product Report on Expenditure and Income Approach’ for the third and fourth quarter of 2016, the statistics agency said the decline followed the negative growth trend from the first half of 2016 with both household consumption and government consumption expenditures leading to the decrease. The NBS said a strong recovery in growth in net exports, particularly in the fourth quarter, helped to stem the decline with the national disposable income recording strong growth in comparison to the GDP in the second half of 2016 in real terms, partly due to increases in other net transfers from the rest of the world.
  • Oando says a forensic audit of its business by the SEC is unnecessary. In a 9-page statement released by the company and signed by Ayotola Jagun, chief compliance officer and company secretary, the oil services firm said it would make amends in areas where it has been criticised by the regulator. The SEC had accused the company of various violations including the declaration of false profits and insider trading. The bourses in Lagos and Johannesburg, where its shares are listed, have suspended trading on the advice of SEC although the NSE partially lifted its suspension on Monday. The company further said it was not given a chance to respond to allegations about breaching SEC’s rules on dividend payments. “Any investigation into whether or not there has been a breach of insider trading rules is a question of fact which would be better addressed through an inspection of trading records of the Exchange rather than through a forensic audit of the company,” the statement added.
  • Nigerian overnight lending rates were quoted around 120 percent on Tuesday after a court ordered a freeze on millions of bank accounts with incomplete identity documents and the CBN sold treasury securities to tighten liquidity, traders said. A court has ordered a temporary freeze on millions of bank accounts with incomplete identification documents and the forfeiture of funds in those accounts as the government seeks to ensure compliance with money-laundering rules. Overnight rates had closed as high as 148 percent on Monday as news of the court order filtered into the market. It later fell on Tuesday but remained above 100 percent. The debt office plans to auction ₦100 billion in bonds on Wednesday. The central bank sold ₦18 billion in open market bills on Tuesday and another ₦11.3 billion the previous day. Traders said the liquidity deficit in the banking system was widening, after hitting ₦300 billion on Tuesday.
  • Unilever Nigeria’s ₦58.85 billion ($187 million) rights issue was 120 percent subscribed, the company said on Wednesday. The company, which is 60.05 percent owned by Anglo-Dutch consumer goods group Unilever, said four shareholders applied for 50 million shares or more during the offer. Unilever had said it would take up its rights under the offer to maintain its shareholding and not convert a loan made to the subsidiary into equity. The Nigerian firm wants the proceeds of the sale to pay off around $120 million in loans and to give it some flexibility in the event of a further weakness in the naira’s exchange rate. Unilever Nigeria’s existing shares were trading unchanged at ₦44.11 on Wednesday, up about 26 percent so far this year.