The Nigerian Stock Exchange (NSE) has suspended trading in the shares of AsoSavings & Loans, Omatek Ventures, Nigerian German Chemicals, Roads Nigeria, Evans Medical, Union Homes & Savings and DN Tyre & Rubber among others for the companies’ failure to file their financials with the bourse between 2017 and 2019.
Other listed firms that were affected were STACO Insurance, Unic Diversified Holdings, Resort Savings & Loans, Goldlink Insurance, Standard Alliance Insurance and FTN Cocoa Processors.
The X-Compliance report obtainedfrom the Exchange stated that the companies were suspended in pursuant to the provisions of Rule 3.1, Rules for Filing of Accounts and Treatment of Default Filing, Rulebook of The Exchange (Issuers’ Rules).
The Rule provides, “If an Issuer fails to file the relevant accounts by the expiration of the Cure Period, The Exchange will send to the Issuer a “Second Filing Deficiency Notification” within two (2) business days after the end of the Cure Period; suspend trading in the Issuer’s securities; and notify the Securities and Exchange Commission (SEC) and the Market within twenty- four (24) hours of the suspension.”
Nairametrics had reported thatAso Savings and Loans, Union Homes Savings & Loans, NGC, Multi-Trex Integrated Foods, and 15 others made the bourse’s Caveat list, as they appear to be distressed.
What it means
According to the NSE’s X-Compliance Report, which was released on September 20, 2019, the companies have failed to comply with minimum listing standards of the bourse as some of them have consistently failed to file their audited financial statements since 2014.
For instance, NGC, DN Tyre, Union Homes Savings & Loans, and Aso Savings & Loans have not sent their 2014 – 2019 audited results to the exchange. While Omatek, Evans, Unic Diversified, Juli, Anino, Multi-Trex failed to file their results since 2015, Roads, Staco Insurance, Goldlink, FTN Cocoa, Capital Oil, Guinea Insurance, Resort Savings, Standard Alliance Insurance, International Energy Insurance fall in the category of firms that have not submitted their 2017 and 2018 reports, respectively.
Why they may be up for sale
The sanctions for non-compliance, according to issuers’ rules, states:
- N100,000 per day for the first ninety (90) calendar days of non-compliance.
- N200,000 per day for the next ninety (90) calendar days of non-compliance.
- N400,000 per day thereafter until the date of submission.
What it means
With the above fines, it means that the companies which have not filed their reports since 2014 are seriously indebted to the exchange. That means DN Tyre & Rubber, Nigerian German Chemicals, Union Homes Savings & Loans and Aso Savings & Loans are expected to pay about N623 million to the purse of the exchange if they want the management of bourse to lift the ‘Caveat Emptor’ (Buyers beware) embargo placed on their shares.
Breakdown of firms’ liquidity
Investigations conducted by Nairametricsshow that the last result posted by Nigerian German Chemicals Plc, not submitted to the NSE for obvious reasons, was its 2015 Half Year (H1). The pharmaceutical firm’s profit after tax (PBT) dropped by 37.9% from N79.6 million to N49.4 million.
Nairametrics found in the results that the company was indebted to its creditors to the tune of N2.71 billion. It stated that the company owes bank overdrafts, commercial papers, Term loans, Trade payables, other payables & Accruals and taxation, among others worth N637 million, N182 million, N456 million, N306.3 million, N818.5 million and N257.8 million respectively.
In the case of DN Tyre and Rubber, the company has been witnessing a lull since it shut down its tyre manufacturing business in 2008 pending the improvement of the business operating environment in Nigeria. According to its 2015 H1, which was the last result it posted, its loss after tax dropped from N346.4 million to N43.7 million.
Also, its credit portfolio stands at N845.1 million. While Trade is worth N126.1 million, the Accruals and others, Term loans, and Sundry creditors are worth N63.9 million, N100 million and N554.9 million respectively. These are different from the brought forward tax worth N52 million.
Aso Savings & Loans
Nairametrics found that the results of the company were frequently posted until 2012. Between 2013 and 2016, the financials are missing even on the site of the firm. In 2016 and 2017, Aso Savings posted summary its first-quarter interim statements.
It managed to grow its PBT from a loss of N12.4 million as at March 2016 to a profit before tax of N10.4 million by end of March 2017, as well as witness the increase of the bank’s total liabilities from N73.3 billion to N76.6 billion within the same period.
Like Aso Savings, Union Homes has not been consistent in posting its results. The last time its investors and stakeholders heard from the bank was in 2015 when it posted its Q3 15 unaudited account. It posted a loss after tax of N67 million, lower than the N1.3 billion declared in 2014. The bank’s total liabilities also stood at N36.2 billion.