Amid investors’ complaints over poor returns by companies as a result of the harsh economic environment in the country, First Securities Discount House Limited (FSDH) has posted a positive result, declaring a dividend of N698.7million, and profit after tax of N2.75billion in 2011.
FSDH Group, which consists of four companies in the money and capital markets, said the amount declared translates into a dividend of 25kobo per share to all its investors, same as the amount paid in 2010.
Although the company’s profit after tax dropped by 9.8 per cent for the year ended December 31, 2011 when compared to the N3.05billion recorded a year earlier, the Group’s shareholders’ funds increased by 12.3 per cent from N17.1billion in 2010 to N19.2billion in 2011, while its total assets closed at N77.1billion.
“In the financial year under review, except for FSDH Securities which witnessed a drop in profitability, all the other subsidiaries posted higher figures when compared with their performance for financial year ended December 31, 2010,” Group Chairman, Ibrahim Dikko, said at the 20th Annual General Meeting of the company in Lagos.
Mr. Dikko explained that the decline in profitability of the group was a direct result of the tight monetary policy regime in 2011, the effect of which was high interest rates with corresponding pressure on fixed income securities trading.
However, the chairman said irrespective of how tough the period was, “the company had a good outing in 2011,” adding that the shareholders have been very supportive of the business.
“We have a clearly define mandate to be conservative in our business outlook and also to make sure we provide adequate returns for the investments,” he said.
In the meantime, while the company kept its success strategy confidential, the chairman explained that one of the things FSDH has always done to achieve profitability is ensuring that the company makes investment plans not just for a year, but for the next three to five years ahead.
“If you look back into history, you’ll see we started as a narrow business just playing the discount house market business. Later we then diversified into group structure where we now do many other businesses,” he said.
Mr. Dikko said the company is currently looking at how to grow and diversify its business again, adding that in that regard, it approached the Central Bank of Niger (CBN) last year with the view to converting to a merchant bank after the change in policy by the apex bank to now allow merchant banks.
The company’s application for a banking licence, he said, is in its approval-in-principle stage with the hope that the whole process would be completed soon.
Gbenga Abraham, who represented Unity Bank, which is as a shareholder, while commenting on the performance of the company, told Premium Times that FSDH’s representation of application for a merchant banking licence is a welcome development.
“It is an opportunity to transform FSDH into a bigger platform,” he said. “We know that once they start merchant banking operation, it would have the opportunity of doing more businesses relating to other banking activities, rather than just pure money market business.
Mr. Abraham said that FSDH, as one of the leading discount houses in Nigeria with proven positive records, has assured its shareholders that they could still display their professionalism if the banking operation kicks off.
“One thing that is making shareholders to be proud of this company is their level of professionalism. When it comes to the issue of professionalism they are very strong. And their financial records also testifies to this,” he noted.
He lauded the company for posting profits notwithstanding the various challenges in the economy. “We all know that the economy is affecting every sector, but this company still recorded profit,” he added.
Mr. Abraham said his expectation for the company in the coming year is positive one based on the strategy that the management of the company plans to carry out within the period.
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