The Nigerian Stock Exchange (NSE) premium board was launched in August 2015 to showcase companies that adhere to the best of international practices on corporate governance and also meet all the Nigerian bourse’s highest standards.
Today, the Nigerian equity market capitalisation is valued at N14.8 trillion and members of the premium board make up 47.1 percent of this total at N6.97 trillion.
Since its inception, companies have been making applications to join the NSE’s elite group of issuers as the premium board is also called, but only 8 companies have attained this feat.
In 2015, First Bank Nigeria Holding (FBNH), Dangote cement, and Zenith bank were listed on the board, while in 2018, Access bank, SEPLAT, United Bank for Africa (UBA), and WAPCO joined the board.
MTN Nigeria obtained approval to be listed on the NSE in 2019 and in the same year joined the premium board, having met all the board’s requirements.
The premium board is therefore enriched with representatives from the financial, industrial, oil and gas, and Information and Communications Technology (ICT) sectors.
To be listed on the NSE’s premium board, the company must have at least 70 percent rating on the NSE’s Corporate Governance Rating System (CGRS), have a market valuation of at least N200 billion, and a free float of at least 20 percent of its issued share capital.
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Revenue
In the first half of 2020, the premium board made combined revenue of N2.86 trillion showing a 6.32 percent growth from the N2.69 trillion obtained for the same period in 2019.
This is coming at a time when publicly listed companies are facing multitudes of challenges amidst the COVID-19 pandemic and other pandemic-induced shocks straining the company’s earnings.
The revenue growth of the board was driven largely by MTN Nigeria from the ICT sector at N638 billion while SEPLAT from the oil and gas sector reported the lowest revenue at N80 billion for the period.
All members of the board saw average revenue growth of 7.4 percent in their respective companies except for SEPLAT which saw a 26. 5 percent decline in revenue for the first half of 2020.
Profit
Together, the NSE premium board reported a profit decline of 7.75 percent in the first half of 2020 at N465.32 billion from N504.42 billion in the first half of 2019.
The growth in profit could have been higher but SEPLAT recorded a loss of N37 billion which was a common trend for companies in the oil sector who were affected by the shocks of the pandemic and the crash in oil price.
Among the members of the premium board, Dangote cement from the industrial goods sector made the highest profit of N126 billion while WAPCO, also in the industrial goods sector recorded the lowest profit at N23.3 billion.
Despite reporting the lowest profit on the board, WAPCO’s half-year 2020 profit represented a 158.9 percent jump from N9 billion recorded for the same period in 2019.
Earnings Per Share (EPS)
Over the last six years, the EPS of members of the premium board has fluctuated along growths and declines.
Among the members belonging to the financial services sector, only Zenith bank and FBNH showed growth in the portion of its half-year profit allocated to each outstanding share of its common stock.
EPS for Zenith bank was 16.6 percent up at N3.3 in the first half of 2020 from N2.83 recorded for the same period in 2019 while FBNH reported a positive EPS of N1.35, up 60 percent from N0.84 in the first half of 2019.
For the industrial goods sector, both WAPCO and Dangote cement recorded EPS growth in first half f 2020 as WAPCO improved its EPS by 47.9 percent to N1.45 from N0.98 in the previous year while Dangote cement saw EPS growth of 6.23 percent to N7.45 from N7.01.
SEPLAT of the oil and gas sector reported a loss in the first half of 2020 and as such had a negative EPS for the period as opposed to N65.92 in the first half of 2019, while the EPS in MTN Nigeria of the ICT sector dropped to N4.66 from N4.89 for the same period in 2019.
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Asset turnover ratio
In the first half of 2020, UBA topped the financial services sector of the premium board with an asset turnover of 7.47 percent, depicting that UBA generated N7.47 in sales for every N1 in total assets.
Access bank followed closely at 5.11 percent while Zenith and FBNH came 3rd and 4th with asset turnover of 4.57 percent and 4.21 percent.
The industrial goods sector of the board performed better than the financial service sector with Dangote cement generating N26.42 in sales for every N1 in total assets and WAPCO generating N24.31 in sales for every N1 in total assets for half-year 2020.
SEPLAT generated N7.29 in sales for every N1 in total assets while MTN Nigeria succeeded in generating N36.69 in sales for every of its N1 in total assets for the first half of 2020.
In all, only WAPCO from the industrial goods sector and Access bank of the financial service sector saw growth in their asset turnover in the first quarter of 2020.
Return on equity
In measuring how effectively companies in the financial services sector of the premium board used their assets to create profit in the first half of 2020, Zenith bank topped the list with a return on equity of 10.49 percent despite a 3 percent decline from 10.89 percent for the same period in 2019.
In second place was Access bank at 9.1 percent followed closely by FBNH in third place at 7.03 percent, while UBA was in fourth place at 6.99 percent.
All the members of the board belonging to the financial services sector experienced a decline in their year-on-year return on equity in the first half of 2020 except FBNH which saw a 24.6 percent growth in its profitability from the 5.64 percent reported in the first half of 2019.
Dangote cement had the highest return on equity in the industrial goods sector of the board at 17.06 percent, while WAPCO saw a 67 percent jump in its return on equity to 6.63 percent from 3.96 percent in the half-year of 2019.
MTN Nigeria succeeded in using 68 percent of their assets to create profit in the first half of 2020, although 30.7 percent from 98.26 percent for the same period in 2019.
