shigidi:

WEMA has gained 5% for two consecutive days now!!! i smell a rat somewhere, i might just hold on till the end of next week and see what happens.and flour mills seems to be bleeding, a good entry price for anyone.

it's becoming difficult to ignore the stench coming from this rat:-)

shigidi:

WEMA has gained 5% for two consecutive days now!!! i smell a rat somewhere, i might just hold on till the end of next week and see what happens.and flour mills seems to be bleeding, a good entry price for anyone.

Bought WEMA yesterday at 8.60. Will watch and see if it will get to 15.00 so as to exit.

which stocks can #2000 - #5000 be invested in for maximum profit. i'm asking this because i have little money i don't want to waste.

wanaj0:

Bought WEMA yesterday at 8.60. Will watch and see if it will get to 15.00 so as to exit.

I have WEMA which i have been holding onto now so the question for me is to sort out how many more units i need to acquire_{i'm talking extra large here}. I feel like i'm taking the biggest gamble since 2004 so i'm a bit jittery just now

@wanaj0 and easimoni
Broses! I have 1mil that i am willing to tie down for 6 - 12 months. i hope to have started reaping something at the end of d 6 month period possibly selling some. i am talking really short term here. what do u think?

I am thinking Transcorp cos the price has gone less than half its peak and it i believe it is boumd to go up irrespective of what trouble they might be in. you cant chuck NITEL in the Bin can u?
also japuoil, fidelity and not so sure of what insurance companies.
kindly let me know what you think plus projected prices in a 6 month period.

do u have any penny-stocks in mind.
MORE BLESSING

To all my Gurus in the house

Does anybody know what is driving the current price of Intercontinental Bank, I know the bank has good prospects and all, but considering the market. Is there something we all need to be aware of? Looking at the share price from Sept, 20 to date. The share price has surged more than or around 15%, ranging from N24.81 to N28.50. Is this the best time to take position?

lawalidowu:

@wanaj0 and easimoni
Broses! I have 1mil that i am willing to tie down for 6 - 12 months. i hope to have started reaping something at the end of d 6 month period possibly selling some. i am talking really short term here. what do u think?

I am thinking Transcorp because the price has gone less than half its peak and it i believe it is boumd to go up irrespective of what trouble they might be in. you can't chuck NITEL in the Bin can u?
also japuoil, fidelity and not so sure of what insurance companies.
kindly let me know what you think plus projected prices in a 6 month period.

do u have any penny-stocks in mind.
MORE BLESSING

Doing short term is a plan for high blood pressure. Doing short term with TRANSCORP is a recipe for disaster. Please DON'T!!!!!!!!!

Never do short term with an IPO. At least not less than 6 months!!!!!!!

Like you must have noticed, a lot depend on your risk appetite. I prefer people going to the market with a long term objective even though you can take advantage of short term opportunities.

Diamond and Wema are good if they FIT into your risk profile. Note na your money and the RISK is purely on YOU.

RoughCut:

I have WEMA which i have been holding onto now so the question for me is to sort out how many more units i need to acquire_{i'm talking extra large here}. I feel like i'm taking the biggest gamble since 2004 so i'm a bit jittery just now

Bought WEMA at the beginning of the year at about 3.50. Sold 30% sometimes in July for 9.80. That enabled me to lock in profit and take opportunities somewhere else. Now bought some more at 8.60 yesterday (half of what I sold before). So, my loss will be minimal if any.

So it has to do with the prices at which you bought, your exposure and how you are hedging your risk.

Risk management is key to investing. For me, preservation of capital is the first objective.

felo 12,
Japaul site is on again just checked like 5 mins ago

wanaj0:

Doing short term is a plan for high blood pressure. Doing short term with TRANSCORP is a recipe for disaster. Please DON'T!!!!!!!!!

Never do short term with an IPO. At least not less than 6 months!!!!!!!

Like you must have noticed, a lot depend on your risk appetite. I prefer people going to the market with a long term objective even though you can take advantage of short term opportunities.

Diamond and Wema are good if they FIT into your risk profile. Note na your money and the RISK is purely on YOU.

wanaj0:

I like that one I couldnt have put it better myself.

Quote from: baba .y. on October 20, 2007, 11:44 PM
This question goes out to the gurus well versed in financial analysis,

AUDITORS REPORT OF BANK PHB'S ACCOUNTS
The bank obtained the approval of shareholders at an extraordinary general meeting held on 8 December 2005 and the sanction of the court on 22 December 2005 to reduce share premium that arose from the allotment of PlatinumBank shares to Habib Bank shareholders by creating a special reserve to be used in writing off the goodwill that arose upon the merger of Platinum Bank and Habib Bank. Accordingly, the goodwill of N5.96 billion was set off against the special reserve account; rather than being amortised over a period of not more than five (5), years in accordance with Section 21(2) of Schedule 2 of the Companies and Allied Matters Act 1990. Had the bank amortised the goodwill over the maximum period of five (5) years, the profit before tax of N10.159 billion would have been reduced by N1.192 billion and goodwill and reserves balances would each have been increased by N4.174billion.

My question is this?
1. what does this mean
2. Does this have any +ve or -ve impact on the company as a whole, in the long or short term.
3 If it does have any impact how will it influence its share price in the long, medium and short term.
4. Finally, do the laws actually allow fo this? because i find it very hard to understand that simply restructuring your accounts can translate to so much profit.


I am no financial guru but I like to task what is left of my brain. I will have to proceed with layman language so bear with me,

1. It means the company used its reserves to write off the goodwill on it's books at once rather than write it off over at least 5 years with future earnings. This reserves would have been accumulated from earnings over the years.

2. If you look at it in a simple way the net effect of either using reserves or future earnings is the same on the whole for the company. If you go more complex (or u be accountant or banker), it is better on the books to write off the goodwill over time because money depreciates over time. So if they write off some of the goodwill in future, compared to today, the real value lost will be less. Remember this is all about the value of the company on the books. Nothing is paid out in cash or otherwise.

3. This is the real deal. The reason for taking this decision I believe is to protect the price of the shares and the perceived value of the company. If the bank makes deductions from profit, the bottom line will indicate they are not doing so well when they declare profits at the end of the year. Most people will not be looking to see that goodwill is eating into the profit. The more influential fundamentals of the company like basic PE ratio e.g., will be impacted negatively because there is no provision for loss due to goodwill (adjusted PE ratio should take care of this though) and this will drive down the share price. This is because unless you are an accountant it is likely the profit and loss account will always win against the balance sheet . So with the way they have decided to go by using the reserves, the share price should not be impacted because the net effect of either action is the same and this is in a way transparent to the ordinary investor. However, if the other alternative of amortizing against profit was chosen this would have had a negative impact on price because the bank will be declaring less profit and investors will be looking elsewhere.

4. Based on the Accounting standards used in Nigeria at least, I understand this is allowed. I'm thinking Access did something similar. This restructuring of accounts did not generate any profit. The bank just decided not to write off goodwill accumulated in the past from the profit it had generated legitimately today. I do feel for the banks or companies a little. The Goodwill of these banks was accumulated over previous trading years and investors at that time benefited. Why should future earnings of the companies be used to pay it off? Why not the previous earnings from previous business activity that generated this goodwill?

Bank PHB had to write off the goodwill so that it can start paying dividend early. ( Diamond bank also took this route) There is a requirement that a company that has goodwill on its books cannot pay dividend. The amount set off would have been transferred from their share premuim accounts. Writing off goodwill is one of the permitted uses of the share premuim account so most sensible companies would prefer to transfer money from the share premuim account and set goodwill off against it.
As pumping said the action is in line. Its being reported because of the significant effect that it would have had on profits if the alternative method had been taken. Any investor that feels strongly about the treatment is then free to adjust the accounts.

RoughCut:

I have WEMA which i have been holding onto now so the question for me is to sort out how many more units i need to acquire_{i'm talking extra large here}. I feel like i'm taking the biggest gamble since 2004 so i'm a bit jittery just now

A bit like my situation. I have Wema I've been holding. It has always been my gamble stock. Serious gamble when tangible news are not forthcoming but I'm going ahead if I can get more for 8.50. When a stock like Wema starts a sudden movement north I'm curious if some people know what we don't and are taking position. I don't intend to wait to find out though,

To All GURU's

Why is it that its this time of the year that majority of the banks decide to sell thier P.O
And why cant they wait for each other at least 6months interval so that we salary earner can partake in thier Offering
or is it that they are competig or something, i cant figure out anything for now.

ummmm can someone please expantiate in this goodwill thing a bit(actually a lot)more have absolutely no idea wot it means,

then someone posted something about the norm for the xmas season being a bear run and the possibility that this xmas may be diff, well i want someone to help me think this thru, how will this present round of po's affect the market since pple'll be locking the money in and some will prolly use xmas money to subscribe and might have to sell of oda secuirities to get money to spend?

p.s. no one's answered my question about whether u can open an acct at cashcraft with 100k

netotse:

p.s. no one's answered my question about whether u can open an acct at cashcraft with 100k

@netotse
Yes, Cashcraft will open an account for you for N100k. See their website for more.

http://cashcraft.com/register.asp

Ben0524:

To All GURU's

Why is it that its this time of the year that majority of the banks decide to sell their P.O
And why can't they wait for each other at least 6months interval so that we salary earner can partake in their Offering
or is it that they are competig or something, i can't figure out anything for now.

If any bank waits, it will be swallowed up quickly by the bigger ones that would have gathered momentum,

gurus pls i wanna ask for long term whuich is better FCMB or Fidelity.
and how well do u gurus see japaul doing in the long run thanks

@ wanajo.
I dont see the likelihood of Zenith acquiring or even merging with ETB. The personalities of the key figures just wont let it happen. Also their brands are so different that it would be chaos

Frankiriri, one major effect of the writting off the goodwill in a single go is that it reduces the shareholders fund!!!!! That is the key risk for the banks. For some of them, going that route invariably implies that the shareholders fund will fall below the N25bn mark. That is one problem that WEMA is having now!

Secondly, writing it off from reserves means you are 'overstating' profit. If you've done it over 5 years, you would have used the profit made every year to amortise. Now, you are amortising from reserves.

So for me, the major risk is the reduction in shareholders fund! That's what the banks use to brag as per their size!

Almost all the banks that merged went this route. IBTC, Diamond, Access etc.

Note that the rule applies to banks alone. OandO has goodwill on its books and it is allowed to pay dividend. It is BOFIA that does not allow banks to pay dividends while carrying goodwill.

netotse:

ummmm can someone please expantiate in this goodwill thing a bit(actually a lot)more have absolutely no idea wot it means,

Goodwill is the difference between what you paid and the fair value of an asset. So when a company acquire another company, they normally pay more than the 'value' of the company. That difference is what is carried and termed goodwill. It is basically an intangible asset. For example, if the value of an asset is N5 but you paid N9 for it. In the books, that asset will be N5 and the balance N4 will be the goodwill. That N4 is an 'intangibble' asset because in reality it does not exist. But you do not want top write off everything in a single year from your profit so you amortised. However, CBN has allowed the banks to use their reserves (share premium) to net off the goodwill.

Wanajo and others,

Pls can you advise me on this ARM new Fund sold at N20 per unit now. l seem to be interested, is there any contrary view? And how much can one possible make per year? The minimum investment is N50,000.00. thx

Hi everyone,
Does any one have an idea how the lawsuit between Federal Government/Kano State government again Neimeth/Phizer is going to affect the company. I just bought some of their shares and I'm wondering if I should dispose them before the price drops further.Thanks

MyPeace:


Wanajo and others,

Please can you advise me on this ARM new Fund sold at N20 per unit now. l seem to be interested, is there any contrary view? And how much can one possible make per year? The minimum investment is N50,000.00. thx

ARM fund (discovery fund) is one of the least performing. Reason is because they are heavily invested into real estate that takes time to bring returns. Check their investment structure and see whether it aligns with your plans.

Personally, I am not investing in any fund. I can invest individually and do better than them

@WANAJO, so you wont advise me to put my money into mutual funds being done by cashcraft.

Thanks Wanajo, but they said the will use the new fund for shares and bonds. lts a new fund different from the old existing one.

netotse:

ummmm can someone please expantiate in this goodwill thing a bit(actually a lot)more have absolutely no idea wot it means,

then someone posted something about the norm for the xmas season being a bear run and the possibility that this xmas may be diff, well i want someone to help me think this through, how will this present round of po's affect the market since people'll be locking the money in and some will prolly use xmas money to subscribe and might have to sell of oda secuirities to get money to spend?

p.s. no one's answered my question about whether u can open an acct at cashcraft with 100k

You can also look at goodwill as the value of attributes of the company that you cannot quantify. For instance, the brand of the company, the existing customer base and prospects and also the human capital managing the business.

This in a way is what is paid for in a franchise. So for instance if you take an example of a franchise like Mr. Biggs, people know there is already a brand and a customer base exists which will increase the value of the company. Someone buying Mr. Biggs today may be expected to factor this in beyond the value of the assets and liabilities on the books.

NASCON again, am bleeding!!!! . any info guys. their results were good so what is the problem.
I personally believe the insurance sector is going to be the toast of the NSE come 2008. Deeply into MBenefits and am sure we will kick a** in Q2 08.

Exchange-traded Funds are coming to the NSE.

http://proshareng.com/myproshare/portal_news.php?id=3057

They are also likely to cut transaction costs.

@timoni
i have never been on this page of nairaland,but i have seen some of your post.
i work in hedge fund.
reply and we can talk

To All GURU's

Pls can one buy into insurance sector now knowing that they are going to do another consolidation very soon by NAICON
and their share is droppng to bearest minimum e.g M.E.M insurance and lasaco does any one has any info about them?


PLS reply A.S.A.P

To ALL

@kilasos

abi na easimoni u dey baptise to timoni abeg i don laugh tire

pumping777:

You can also look at goodwill as the value of attributes of the company that you cannot quantify. For instance, the brand of the company, the existing customer base and prospects and also the human capital managing the business.

This in a way is what is paid for in a franchise. So for instance if you take an example of a franchise like Mr. Biggs, people know there is already a brand and a customer base exists which will increase the value of the company. Someone buying Mr. Biggs today may be expected to factor this in beyond the value of the assets and liabilities on the books.

You are right.

Pumping777, you quantify that intangible attributes that's why you pay above the fair value of the asset. Like the franchise you talked about, you pay above the value of the asset to cover the good name that you are also acquiring. It is the quantity of INTANGIBLE asset that is classified as goodwill.