BCC Gives Investors Bonus
March 23rd, 2007 Ogbuotobo Chuks || chuks@stockmarketnigeria.com
By Ogbuotobo Chuks
Shareholders of Benue Cement Company Plc would have to do without cash dividend but a bonus of one for eight shares as returns on investment for the company’s 2006 financial year. Management of the company has said they plan to plough the profit realised during the period back into the business to improve future performance.
Benue Cement Company Plc has announced a turnover of N6.02 billion for the year ended December 31, 2006, indicating an increase of N2.02 billion or 50.53 per cent from N4.00 billion at the end of operations for the 2005 financial year. Profit before tax improved by N1.49 billion, representing an increase of 64.50 per cent from the previous year’s N2.31 billion, while profit attributable to shareholders rose by N862 million or 38.43 per cent. The directors however proposed to plough the net profit back into the business, offering instead a bonus of one new share for every eight held by investor, rather than pay cash dividend for the period.
The directors also reported that the company had a loss carried forward amounting to N1.14 billion, as against the N4.25 billion in the 2005 full year. In essence, the company’s effective net profit stood at N1.95 billion for the 2006 financial year, a significant improvement over the previous year’s net loss of N2.00 billion.
The bonus shares being offered amount to 309.375 million shares to be added to the number of shares in the book of the company. Only those shareholders whose names are found in the register between March 23 and 30 when it is scheduled to be closed would be entitled to the scrip dividend. But like what happened to its sub-sector peer, West African Portland Company recently, the share price of BCC recorded a loss, an indication that investors would have preferred cash dividend.
Dangote Industries Limited, an arm of Dangote Group in 2004 acquired the federal government’s core interest in Benue Cement Company under the on-going privatisation programme.The core investor’s bid to turn the Gboko, Benue State-based firm around suffered a major set back as the host community prevented access to BCC for about 44 months until a truce was arrived at by both parties. Within the period, BCC also went through a period of inactivity and loss.
The one for eight bonus proposed by directors will increase shares outstanding by 12.5 per cent to 2.784 billion while price-to-earnings ratio is expected to move from the current 43 to 35 and 25 for 2007 and 2008 financial years respectively.
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