CFO FIDSON HEALTHCARE PLC, OLUDARE ADANRI
Oludare Adanri is a thoroughbred in his field. The vivacious CFO of Fidson Healthcare Plc in this exclusive chat with The CFO, shares on financial policy, challenges, accomplishments and advice for new entrants….Excerpts
What does your role entails as the CFO of a forefront healthcare/pharmaceutical company in Nigeria?
Pharma industry in Africa is different from what it is in other continents; Europe, America and even Asia. In America, with the level of attention given to pharma industry, you see some pharma companies bigger than banks; the opposite is what we have here in Nigeria. Pharma industry in Nigeria is bedeviled with the activities of fakers, huge receivables and sometimes unfavorable government policies which put a lot of companies at the risk of debt write off. Dealing with these and other operational issues are what make my job as the CFO of a leading pharmaceutical company in Nigeria challenging.
As the CFO, I work as strategic business partner of the CEO/MD and other Executive directors. My role covers developing and implementing national strategy for the organization, structuring of finance to cover the gaps that is usually created by huge receivables which lengthen cash conversion circle and providing direction in financial management activities of the company. My role as Finance Executive cuts across all department within the organization, from operations to sales and Marketing.
My normal work day usually starts with meeting and ends with meeting. Meetings don’t actually occupy the whole day; I attend to my mails and other strategic issues that require my attention.
If you were made the Minister of Finance, what financial policies would you suggest to halt the downward move of the economy?
Minister of Finance is a political appointee, so suggestions of the minister are sometimes laced up with political considerations. The result of this usually leads to slow pace in decision making and hence impact on the overall growth of the economy. Nigeria needs to go back to the basis in order to revitalize the economy; going back to the basis is having a policy direction towards growing the real sector. The challenge of the country today is not because oil price has fallen, it is because we have no product as a country to keep sustaining our earnings and meeting consumption demands.
CBN recently directed banks that 60% of dollar allocation must go to manufacturers in order to import raw materials, One would have thought that this directive should have been in place a long time ago in a country like ours that need to stimulate growth of manufacturing industries. Currently policy statements conflict with policy signals, this is why the uncertainty premium is increasing. My financial policy direction (monetary and fiscal policy) will be to stimulate growth by encouraging more borrowings which we lead to more spending.
Every country that has survived recession spent their way out of recession, austerity measures are good but when overstretched, it stiffens the economy. I will massively spend on infrastructures to provide enabling environment for the real sector. What we have today with increased borrowing rate and harsh operating environment is increase in the number of speculators who will rather prefer putting their money in treasury bills with higher yield than investing in the real sector. Manufacturing companies are shutting down, unemployment rate is increasing, this will ultimately increase crime rate. There is also a need to increase government revenue through tax. When people can see the result of what they are paying for, willingness to pay will increase.
All said, things work when the people in charge want them to work. The government, policy makers and other stakeholders must be willing to jettison person interest in favor of national interest in order to make things work.
Fidson posted a profit of N39.5million in 2016 half year result which is actually a decline when compared to N324 million. As the CFO what are the informed decisions that will result in upward movement of profit considering the floundering economy indices?
Profit decline in 2016 is largely as a result of decline in turnover, In June 2016, Turnover dipped by 35% from N4.03bn in HY1-2015 to N2.6bn HY1-2016. This significant drop is because of unavailability of products, a direct consequence of the scarcity of foreign exchange that beleaguered many in the manufacturing sector. The paucity of foreign exchange, for the importation of key products and essential raw materials for manufacturing were disruptive to manufacturers in the pharmaceutical industry including Fidson. Gross margins dropped to 52% on turnover from 55% in the same period last year, this is a reflection of the direct impact of significant increase in the exchange rate. The second half of the year will be better with improved access to forex through forwards and futures. We have also increased prices of some key products and strengthen our cost improvements strategies to ensure that we close well.
Has the new media been a major influence in making strategic decisions in the finance sector?
Yes. If you are not playing in the new media, you are nowhere. New media is not only useful to marketing professionals; it has become the easiest, cheapest and fastest way of reaching out to large audience. Research shows that 1.5billion people around the globe are using social networks daily, Many financial corporations have discovered that social media offers a brand new way of creating value and mutual benefit for both company and customer. Financial Technology (Fin Tech) has emerged as its own industry, encompassing companies that use technology to make financial systems more efficient. A report by Accenture shows that global investment in FinTech grew from around $1billion in 2008 to nearly $3billion in 2013.
New social media has helped finance sector in Customer Relationship Management (CRM), new product/service development, Marketing and cost reduction and efficiency. Finance professional in different sector during strategic plan build up place premium on the use of social media to improve revenue generation and quality of their earnings.
What is your advice for new entrants in this line of career?
My simple advice is keep updating yourself, the world is not static therefore any professional that refuse to update himself is definitely working towards oblivion. Don’t put the cart before the horse. Money should not be your driver, money will natural follow the man that add value, Let your watchword be that I want to add value.
What are your biggest accomplishments?
As a Finance professional, working on various land mark projects in Fidson Healthcare are my major accomplishments. From Private Placement to listing on the Nigeria stock exchange, various loans negotiations to finance expansion projects, the biggest of which is the newly completed Fidson WHO-GMP Pharmaceutical plant, arguably the largest pharmaceutical plant in Africa.
I was part of the team that worked on the transition of Fidson from a private company to quoted company. In November, 2007, we successfully raised N3billion through private placement and subsequently listed the company in June 2008. I worked on N2.5billion diaper manufacturing plant project completed in 2009. Around this period Fidson commenced the construction of a WHO- GMP Pharma plant sited on 10 acres land at OTA, Ogun State. This factory was completed in April, 2016. I led the finance team to structure various loans from development and deposit money banks to finance this project. Fidson successfully raised N2billion bond in 2014 to refinance some expense loans and extend repayment period of some of the loans that are putting pressure on cashflow. Today I am glad that Fidson stands tall among other pharma companies in Nigeria.
How would you describe yourself and how do you use your leisure time?
Like every other professional I work very hard in and out of official hour, I have a strong passion to serving God so I play a leading role in serving at a local church. I try to take some time in doing exercise but this is not consistent. During my spare time I like going to cinema/ theatre with my wife to see new movies or stage plays.
Safaricom post-IPO investor wealth rises to Sh1.3trn peak
The Safaricom stock hit a historic peak recently, closing at a high of Sh32.80 per share on Friday, thereby swelling investor wealth eightfold since its listing on June 9, 2008, inclusive of dividends.
Shareholder wealth as measured by market capitalisation has now touched Sh1.314 trillion, representing an increase of a whopping Sh1.114 trillion from the time the company listed 40 billion shares at Sh5 a share 11 and a half years ago.
When the company’s cumulative dividend pay-out totalling Sh301.2 billion over the 12-year period is added, Safaricom investors have enjoyed a return of 708 percent on initial investment of Sh200 billion. The dividend alone has been enough to allow investors to recoup their capital at listing and remain with an additional Sh101.2 billion balance.
The gains last week also pushed the company valuation as a share of the entire market to 50.4 percent and underlined its dominance on the stock market. Crossing the 50 percent threshold means Safaricom’s market worth is now more than the combined valuation of all the other 61 listed companies.
Analysts have attributed the rally in the last one year to sustained foreign demand, with the growth in dividends being a key factor in driving its attractiveness to investors who have few other options to make money in the market.
“The feel-good factor surrounding Safaricom has spilled over into the New Year, on bullish sentiments by foreign investors,” said Standard Investment Bank analysts in a note.
Last year, the stock led the market in net foreign inflows at Sh4.6 billion, which backed a share price gain of 42 percent to Sh31.50 between January and December 2019. During the year, foreign investors accounted for 75.4 percent of total traded volumes on the counter.
Since the beginning of this year, the stock has gained 4.1 percent. The company’s ability to continue to generate record profits — combined with a generous dividend policy that sees it pay out 80 percent of net earnings to shareholders — helped maintain demand through a bear run that gripped the NSE between 2015 and mid last year.
Safaricom has managed to make large capital investments in telecommunications infrastructure, introduce new services and pay incremental dividends with minimal debt and without seeking additional funding from shareholders.
The firm has therefore been able to build up cash reserves quickly, culminating in two special dividend pay-outs in the past four years.
In the year ended March 2019, the company declared a final dividend per share of Sh1.25 and an additional special distribution of Sh0.62 per share, bringing the total to Sh74.92 billion.
It had also paid a special dividend of Sh0.68 per share during the financial year ending March 2017, on top of an ordinary dividend of Sh0.97 a share.
Driven by growth in M-Pesa revenue, the firm’s net profit for the year ending March 2019 rose by 14.7 percent to Sh63.4 billion.
In the six months to September 2019, its profits recorded a similar margin of growth — 14.4 percent to Sh35.65 billion — again on strong M-Pesa and mobile data revenue performance.
Egyptian investment firm EFG Hermes Holding said in their 2020 yearbook markets report that the rise in profitability and market capitalisation of Safaricom and large banks, while the rest of the market lags behind, will see their dominance become more entrenched at the NSE.
These are the stocks most likely to benefit from an expected return to the equities market by local institutional investors, who have in the past three years tended towards the fixed income segment. “Local institutions remained invested in fixed income for most of 2019, but the impact of the rate cap repeal on local rates and monetary easing could force more local institutional money back into equities in 2020,” said EFG Hermes in the report.
Safaricom’s influence on the market has, however, had the effect of skewing the performance trends of the main indices, depending on whether they are weighted on price or market capitalisation.
The market cap weighted NSE All Share Index is currently at a 16-month high of 171.36 points, reflecting the positive effect of the huge weight that Safaricom has on the index due to its valuation.
On the other hand, the price weighted NSE 20 share index, where blue chips with a high nominal price (such as BAT Kenya, Bamburi, EABL and Standard Chartered) carry more weight, has benefitted less from Safaricom’s gain.
It closed at 2,701 points on Friday, which is below its 2020 high of 2,707 points recorded on January 3.
Rolls-Royce announces highest annual sales of 5,152 cars in 2019
Rolls-Royce Motor Cars has achieved the highest annual sales in 2019 with a global performance unequalled in the company’s 116-year history, the luxury car company announced recently.
According to Torsten Müller-Ötvös, Chief Executive Officer, Rolls-Royce Motor Cars, a total of 5,152 cars were delivered last year to customers in over 50 countries, an increase of 25% on the previous high set in 2018.
With these historic results, Rolls-Royce continues to make a meaningful contribution to the overall performance of its shareholder, BMW Group.
Rolls-Royce sells 5,152 cars in 2019, records best-ever sales in 116-year history
“This performance is an altogether different magnitude to any previous year’s sales success. While we celebrate these remarkable results, we are conscious of our key promise to our customers, to keep our brand rare and exclusive.
“We are pleased and proud to have delivered a growth of 25% in 2019. Worldwide demand last year for our Cullinan SUV has driven this success and is expected to stabilise in 2020. It is a ringing testament to the quality and integrity of our products, the faith and passion of our customers and, above all, the skill. The dedication and determination of our exceptional team at the Home of Rolls-Royce at Goodwood and around the world is part of our success,” Müller-Ötvös said.
Meanwhile, the car company disclosed that it recorded growth in sales across all regions during the year, which was driven by strong customer demand for all Rolls Royce models.
However, North America retained top status with one-third of the car maker’s global sales followed by China and Europe.
Rolls-Royce Motor Cars, through a global network of 135 dealerships sold in more than 50 countries, and as part of its long-term commitment to sustainable growth, the company announced two new dealerships Rolls-Royce Motor Cars Brisbane and Rolls-Royce Motor Cars Shanghai Pudong.
Rolls-Royce Motor Cars is expected to launch later in the year a flagship dealership in London, which would double the size of the previous location.
Hyundai plans to invest $87 billion into producing 44 new electric vehicles
Hyundai Motor Group is set to invest $87 billion in the production of electric vehicles and autonomous driving. This was announced by the company’s Executive Vice Chairman, Chung Eui-sun.
The $87 billion investment would be put to work over the course of 5 years in future mobility technologies like the planned production of new electric models.
Speaking during the Hyundai new year ceremony held at the company’s head office in Seoul, Eui-sun announced that the company plans to expand its electric line-up to 44 models, including 23 battery EVs and 14 hybrids, and two fuel-cell EVs. He said the first new battery EV would be launched next year.
He further said, “To consolidate our leadership in vehicle electrification, we plan to operate 44 electrified models by 2025, including 11 dedicated battery EV models, by bolstering the development of EV platforms and core components.
“In particular, in our fuel-cell electric vehicle business, where we boast the world’s top technological competitiveness, we will hit our stride by providing fuel-cell systems to customers not only in the automotive industry but also in other sectors”.
Eui-sun further revealed that the company is also big on self-driving commercialisation as it aims to develop an autonomous driving platform by 2022 and to start operating self-driving vehicles in 2023 before commercial production the next year.
As part of its self-driving commercialisation plan, Hyundai invested $2 billion last year into a joint venture with Ireland-based autonomous vehicle startup Aptiv.
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