News Column

UPDC's Double Reward for Shareholders

June 17, 2014

Shareholders of UACN Property Development Company Plc were all smiles at the company's annual general meeting recently, following the payment of cash dividend and scrip issue, writes Goddy Egene

When shareholders buy shares of companies, they expect returns on the investments. But their expectations have not always been met due to the challenging operating environment.

However, some companies have strived to overcome the challenges and consistently delighted shareholders by giving them dividends and bonus shares.

UPDC is among the companies that have been delivering returns to their shareholders. For the 2013 financial year, for instance, UPDC declared a cash dividend of 70 kobo per share and a bonus of one new share for every four shares already held.

At the AGM held in Lagos recently, the shareholders of the company where full of commendations for the board and management of the company for the performance in 2013.

Corporate history UPDC, which is into the business of acquisition, development, sales and management of high quality commercial and residential properties in the luxury, premium and classic segments of the real estate market in selected cities in Nigeria, used to operate as the real estate/property division of UAC of Nigeria Plc until 1998.

UPDC was incorporated as a full-fledged company in 1998, commenced operations in April 1998 and got listed on the Nigerian Stock Exchange (NSE) in November 1999.

The shares of the company are owned 46 per cent by UACN; 12 per cent by First Trustees Nigeria Limited and 18 per cent by other corporate bodies. Individuals and trustees hold the remaining 24 per cent.

It board of directors is led by Mr. Larry Ettah, who is the Group Managing Director/Chief Executive Officer UACN, as chairman. UPDC has Mr. Hakeem Ogunniran as the MD/CEO of the company while other directors include: Mrs. Folasade Ogunde; Mr. Abdul Bello; Dr. Ibrahim Mohammed; Mr. Olumide Oduntan; Mr. Babs Kasali and Mrs. Halima Alao.

The company has a vision "to be the number one real estate company in our chosen markets, offering exceptional products and services to customers." Similarly, its mission is "to grow our top-line at twice the rate of Nigeria' s GDP growth and achieve an average Earnings before interest and tax (EBIT) of 23 per cent."

Financials/returns to shareholders A look at UPDC's performance over the years showed a company that is determined to rewards shareholders. Although its financial performance over, the years indicated some fluctuations, UPDC has been rewarding shareholders with dividends and bonuses.

An analysis the company's results showed that turnover, grew from N5.676 billion in 2007, to N13.328 billion in 2008 and climbed further to N13.331 billion in 2009.

However, the turnover fell to N8.194 billion in 2010 before recovering back to N10.754 billion in 2011. The turnover grew to N12.039 billion in 2012. It declined marginally to N11.2 billion in 2013.

Profit after tax (PAT) followed same trend soaring from N425 million in 2007 to N3.683 billion in 2008. But it fell to N2.828 billion in 2009, N2.278 billion in 2010 and N1.999 billion in 2011. However, PAT recovered to N2.18 billion in 2012. By the December 31, 2013, UPDC's PAT hit N3.155 billion.

In terms of returns, shareholders of UPDC have been benefitting from cash dividend and bonus issues. For instance, shareholders received bonus shares in 2004 and 2010.

They similarly received dividends of N536 million (49 kobo per share) in 2007; N825 million (75 kobo per share) in 2008; N550 million (50 kobo per share) in 2009; N756 million (55 kobo per share) in 2010, N893 million (65 kobo per share) in 2011 and N962million (70 kobo) in 2012. In 2013, they got 70 kobo dividend and bonus issue of one for four.

Chairman's Explainations Addressing the shareholders of the company recently, Ettah said the company gave cash dividend and bonus share due to the impressive performance recorded for the year ended December 31, 2013.

According to him, despite the challenging operating environment, the company posted revenue of N11.29 billion against N12.04 billion in 2012. Profit before tax, he said rose from N2.45 billion to N3.71 billion, while profit after taxation hit N3.16 billion.

He said in the in the light of the performance, the Board of Directors recommended a dividend of N962.5 million (70 kobo per share) and bonus issue of 1 for 4 shares to shareholders.

Ettah, who explained that UPDC's growth momentum has increased and reinforced its standing as a market leader, said: "We successfully completed the floatation of the UPDC Real Estate Investment Trust (REIT) in 2013 on a capital value of N26.7 billion, of which UPDC currently holds 62.2 per cent.

"The REIT was listed on the Nigerian Stock Exchange (NSE) on July 1, 2013. It is our plan to reduce our holding to 40 per cent in line with our strategy."

Reviewing the business performance of the company, Ettah said: "In the luxury residential category, we completed and delivered to buyers the prestigious 32-unit 'Cameron Green' Ikoyi. Phase 1 of Metro City, Abuja comprising of 88 units of mixed residential apartments was also completed and is being gradually handed to buyers, while construction work on Phase II has commenced.

"We also took advantage of the lack of a formal retail channel in the Festac axis of Lagos State by undertaking the on-going Festival Mall development, which is expected to open to customers by end of 2014."

He added that the hotel arm of the business, Golden Tulip Festac, also performed well in 2013, with room occupancy averaging 44 per cent, an increase of 91 per cent over 2012.

"With five international airlines currently utilising the hotel's facilities and continuing upward trend in residential conferences by blue chip corporate customers, the hotel is set for improved performance from 2014. We plan to develop the adjoining Block B of the hotel into residential apartments in 2014," he added.

N30 billion REIT capital boost One thing strategy that worked very well for UPDC in the course of 2013 was the N30 billion capital injection through Real Estate Investment Trust (REIT).

A REIT is a scheme which typically owns and manages predominantly rent-generating commercial, retail or residential real estate (or combination) for the benefit of investors in the scheme.

Ettah had explained that the REIT offer would allow the company to raise enough financial firepower to develop some of the property assets which the company already has and some of its projects already in the pipeline.

He explained that UPDC has existing projects in Abuja, Lagos and upcoming projects which include: Metro Gardens, Lekki; Granville, G.R.A, Ikeja; Cameron Green, Ikoyi' Victoria Mall Plaza, Victoria Island all in Lagos; Emerald Court, Apo, and Metro City, Apo in Abuja; and Emerald Court and Nigeria Air force Foundation (NAFF) Estate in Port Harcourt, Rivers State.

Future outlook Ettah said the for real estate development, it is expected that the revised guidelines for Primary Mortgage Banks (PMBs) and a fully operational National Mortgage Refinance Company will provide a wider scope of activities and opportunities for estate developers and ultimately result in affordable mortgages and increased home ownership for middle and lower income earners.

"With the huge housing deficit of 17.45 million units in 2013, emerging opportunities in the commercial and retail categories and partnership opportunities in the areas of housing technology and finance, the sector continues to hold exciting promise for the future.

For UPDC, there is a good reason for optimism against this backdrop and given the capability and zeal of our business to surmount challenges, sustain our pedigree and in fact, surpass achievements year-on-year," Ettah declared.

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Source: AllAfrica

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