Julius Berger Plc
For the construction giant, Julius Berger Plc, there is no better way to ensure a harmonious relationship with the company’s shareholders than to give an account of the management’s stewardship in the last one year and set the agenda for the company’s future.
This was the scenario at Radison Blu, Lagos, venue of the 2013 Investors Forum, organised by Julius Berger for the leadership of some of the shareholders’ associations last Tuesday.
Expectedly, what aroused the interest of the shareholders the most at the event was the sustained rise in the fortune of the company, whose profit before tax rose by 17% from N9.87 billion to N11.54 billion, in the current financial period. This feat, according to the company’s financial director Wolfgang Kollerman, indicates how successful the company had been in terms of construction activities in the reporting period. He explained that management had efficiently utilised the assets, which the shareholders have entrusted in their custody to generate a reasonable level of profit.
The company also recorded a tremendous increase in profit after tax, which jumped by more than 76% from N4.41 billion in 2011, to N7.77 billion in 2012. This, according to Kollermann, is indicative of management’s ability to maximise profit by reducing costs and related overheads. This led to the increase in shareholder’s fund, which had consistently risen over the years.
Shareholders’ fund rose by more than 50% from N9.63 billion to N14.52 billion, though the proposed dividend for the period has not been deducted yet, which will invariably reduce the fund by the amount of the dividend proposed; once approved at the AGM. Retained earnings increased by 56.80% to N13.5 billion in the period. From the profit after tax dividend proposed would be paid while the balance would be retained for further expansion.
Turnover in the year was N196.95 billion, signifying an increase of approximately 18% when compared with the turnover of N167.40 billion in the prior year. The turnover achieved is a remarkable improvement and has exceeded the budgeted turnover of N175 billion in the period. The cost of sales margin has remained constant, indicating efficiency in the usage of materials to achieve the same level of turnover.
The directors proposed that a dividend of N2.50kobo (2011:N2.40) per ordinary share would be paid to the shareholders. The dividend is subject to approval at the Annual General Meeting and deduction of withholding tax at the appropriate rate. Consequently, it has not been included as a liability in these financial statements. The proposed dividend is payable to all shareholders whose name appear on the Register of Members on May 31, 2013. The total estimated dividend to be paid is N3, 000million (2011:N2, 880million).
Some of the shareholders who spoke at the interactive session included Eric Akinduro, Nona Awoh, Owolabi Peter and Boniface Okezie.
While Awoh wanted company’s auditors fees slashed, Okezie called for an aggressive pursuit of debts. The shareholders, who commended the company for high quality of construction works in the country, however, stressed the need to reduce the incidence of contract debts.
The Managing Director of the company, Mr. Wolfgang Goetsch, said Julius Berger was affected by the prevailing security situation in certain parts of the country.
Exonerating the company from blame over the poor state of Lagos-Ibadan expressway, Goetsch said Julius Berger was merely called upon to repair the road mainly for the yuletide season. He described Julius Berger as a Nigerian company given the fact that 65 percent of the company’s equity is owned by Nigerians.
The MD told the shareholders of the plan of the company to be a player in the emerging power sector, saying it’s already talking to other investors in this regard. A presentation made by the financial director also showed that the company recorded an increase in return on equity, which measures the overall efficiency of the company in managing its total investment in assets and in generating return to shareholders. The ROE recorded a significant increase from 45.82% in 2011 to 53.52% in the current period.
The earnings per share also increased by 76.2% from N3.68 to N6.48 in the period. Kollerman disclosed that other income increased by more than 43.3%. This is mainly due to interest earned from the unique investment in government bonds issued by the Federal Government to repay debts owed to construction companies.
The bonds were carried at amortised cost and classified as held to maturity. However, in 2013 financial year, GTB in an arm’s length transaction has offered to buy the bonds for a total consideration of N3.68 billion.
The financial director disclosed that a total sum of N11, 101,217 was used to increase investment in subsidiaries, adding that all transactions between the company and its subsidiaries have been completed on arm’s length basis.
He disclosed that the federal government had entered into an agreement to repay debt owed construction companies through the issuance of bond.