RE: FINAL DECISION ON CADBURY
Its' a great pleasure for me to express my opinion on the above issue. This is a development that shook the entire economic landscape of not only Nigeria but Africa as a whole. The development is reminiscent of the popular “Enron Saga” and “WorldCom”. It’s no surprise that it has now been known as “the Cadbury Saga”.

Though misstatement of accounting records did not start in this part of the world, the incident caused a shock to us ALL especially the professionals including external auditors. Going through our legal records, investors and other users of accounting records are not known to have sued the external auditors and/or company management, although our legislation created rooms for such. We are indeed not better than how the late Afro King described us – “suffering and smiling”. Investors in this part of the world have created an impression that our corporate governance is effective.

We have recorded accounting records falsification even in the most developed economy of the world, including the United States. Corporate governance has been abused even in the United States with all its volumes of code of corporate governance. We are still at loss as to how these companies were able to over state their profits without eyebrows being raised by “financial experts” in the US.

The American Legislators were so concerned and disturbed like most of us. They evaluated the effects of this saga on investors’ confidence in the American economic and investment environment. As s result, an Act – SARBANES OXLEY was passed to impose additional responsibility on company management and external auditors. The Act further imposes additional disclosure requirement and punishment for erring managers and external auditors. The most obvious of the provision of this act is the creation of an “oversight board” to register, regulate, control and monitor the conducts of the external auditors, ensuring that they comply with every letter in the Act. The purpose of all these is to protect the innocent investors, ensuring effective corporate governance, and introducing “checks and balances” for all players.

In the light of the above, the “Cadbury Saga” imposes great challenges on our market regulators to take drastic measures to ensure that such unethical practice does not occur any more, that investors’ interest is protected, that corporate governance is strengthened, and that all players play according to the stated rules. The regulators needed to wade into the saga to “rebuild investors confidence” in the Nigerian Stock Market. Though I have maintained consistently that “window dressing”  has been adopted by some company managers to post robust result/performance to the detriment of unsuspecting investors, no one could imagine that a company with great tradition and reputation built over the years like Cadbury could be caught in the web.

Having said this, the regulators especially the SEC (Securities and Exchange Commission) swiftly moved into action by setting up an Administrative Proceedings Committee (APC) to among others, investigate the extent of misstatement, the culprit(s) in the misstatement and recommend adequate sanction where appropriate in line with the provision of the Investments and Securities Act 1999, SEC Rules and Regulations 2000, code of conduct for Capital Market Operators and their employees and the Company and Allied Matters Act 1990.

The APC made its findings and decision public on 28 March 2007. Sequel to making the statement public, reaction has been instantaneously diverse. However, it is my intention here to comment on the report as made public. Some of the questions to be answered in this piece are, whether the findings are comprehensive and thorough. Whether the APC’s report can stand the test of critical attack. Whether the proposed sanctions are adequate enough to deter future occurrence. Whether the report can bring back investors’ confidence on the Nigerian Stock Market and management ability of quoted companies’ management teams.

To answer the questions above, it’s pertinent to summarise the report, and bring out the salient points in the report. The committee reported both its findings and its decisions most probably based on the findings. Some of the findings are stated inter alia and my opinion on each of the findings are interspersed in italics and boldened:

1. The Board used stock buy backs, cost deferrals, trade loading and false suppliers certificate to manipulate financial reports

This is an unethical practice by some companies’ management to reduce cost of sales and expenses with the sole aim of reporting higher profit. Stock buy backs on the other hand, puts artificial pressure on demand for stocks at the stock market with the consequence of artificial capital appreciation. In effects the values of Cadbury shares were overstated. The APC did not state the role of the external auditors in the cost deferrals.

2. That the company’s offshore accounts were not documented and disclosed in the in the company’s records. That payment out of the accounts was not approved by the responsible committee.

A fraud is usually measured by the intention to misstate, not to disclose any financial information in order to obtain an advantage there from. The action of the executive directors in this regard cannot be viewed in any other way(s) than fraudulently motivated. It’s more worrisome when taking in the context that responsible committee did not approve the withdrawal from the accounts. Am of the candid opinion that all the directors that benefited from the accounts must be made to return whatever they have benefited individually and collectively.

3. That the company and its chairman issued a right circular which contained an untrue statement.

Though the APC did not quantify or state the extent of the untrue statement, it is however logical to conclude that anything done on nullity is a nullity because something cannot stand on nothing. Since the account is incorrect, every other thing done in respect of that account is conclusively incorrect. Therefore, SEC should invoke the provision of the ISA to punish all that certified the statements to be true when they knew that the accounting data were not true.

4. That the company failed or neglected to make fund available en-bloc to the company’s registrar for payments of dividend within the stipulated time by the statute.

5. The company’s accounts department, sales operation department and internal audit department generated incorrect data and prepared the false reports.

Internal auditors are expected to ensure that companies’ policies are adhered to and complied with in the processing of transaction, recording the transaction and generating reliable accounting information. It’s a widely held notion that no internal control no matter how effective can prevent fraud especially in the face of collusion by employees. The APC having found the head of audit culpable in the falsification of accounting records, suggests that internal control over accounting records were not effective and in fact non-existent

6. That the Company’s Audit committee failed and neglected to perform its statutory function.

Am so disappointed that chartered accountants in the committee could live up to their billings. Thomas A. Ayorinde is a reputable chartered accountant and a principal partner of a firm of chartered accountants. If was a member of such committee and could not act within the provision of CAMD then nothing more would be tenable than collusion between the committee, external auditors and the management.

7. That the Audit Committee and the External auditors did not act as appropriately when put on enquiry.

My response above refers.

8. That the conducts of the board members and three management staff is fraudulent and criminal. That the EFCC should further investigate.

I think that investors and shareholders can also sue in Tort. How we greatly miss the ebullient and ever indefatigable Asalu Akintunde (RIP)

9. That Akintola Williams Delloitte (AWD) is the external auditors to the company for over forty years now.

I think it’s high time we took rotation of external auditors more seriously. We were taught by ICAN that familiarity might be a risk to auditors’ objectivity. Having been involved as external auditors for 40 years, it’s natural that the auditors think they know the client “too well” and placing and undeserved reliance on their accounting system. [list]
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10. That AWD were the external auditors when the company’s profit was overstated to the tune of N13.255 billion between 2002 and September 2006 financial periods.

Here, we deserve an oversight board as we have in the US to review the audit work papers of the external auditors to ensure that they complied with all professional and legal guidelines and the firm’s internal quality control in the expression of their professional opinion on the set of accounts of their clients.

To achieve this, I hold the opinion that the legislature reviews the CAMA 1990 and puts the external auditors under the watchful eyes of an oversight body. Also, ICAN should be more up and doing in the review of members’ audit work papers to perform this oversight function. Alternatively, ICAN should mandate all professional firms register with the Public Practice Section of the Institute. On no account should a firm exempt itself from the membership of the section. The section should also be empowered with supervisory roles and reports to the Disciplinary Committee of the institute about any misconduct by a member.

11. That AWD failed to report in its Management Letter that it did not receive a confirmation of N7.7 billion naira credited in the account from any of the company’s banks.

Well, I would not subscribe to a case of negligence against AWD until one knows the account the transaction was credited. Also, it’s not the responsibility of the auditors to write the for confirmation of individual debit or credit in a bank statement. The report did not help us either as it did not disclose the nature of the fund. However, AWD may need to review its audit procedures and programs.

12. That AWD did not state in its Management letters for 2001 to 2005 accounts that it did not receive satisfactory responses on identified internal control lapses.

We may need to know the reason AWD left out this vital information in its management letters. The purpose of the management letter is to bring to the attention of the management identified internal control lapses that could mar the operation of the company for corrective action. Though the management letter is not usually exhaustive of all inherent internal control weaknesses, failure of any auditor to report SIGNIFICANT control lapses might give an erroneous impression that system is working effectively and efficiently. Therefore, I hold the view that AWD has a question to answer here.

13. That AWD was involved in unrealistic profit forecast for the 5 billion irredeemable loan stocks as reporting accountants.

14. That AWD relied solely on documentary evidence even when the internal control evaluation suggested that the documents could be wrong and unreliable.

Well. We may have to know from the APC how it came to the conclusion that AWD ought to disregard documentary evidence in the light of no additional available audit evidence.

15. That AWD did not probe further when a supplier disclaimed in writing the N700 million certificate presented to them by the management.

It is expected that denial of a stock certificate by a supplier should put the auditors on enquiry on the reliability of accounting information and the authenticity of other documentary evidence presented by clients, AWD did not probe further as expected. The implication of this is that fictitious assets are being shown in the financial statements, while profits had been over cast to the tune of this fictitious assets value.

What could AWD have done in the light of this “stock certificate”? Nothing but to state so in its management letter. The audit committee and the Board of Directors after receiving the draft report may then request that the auditor adjust the stock to eliminate those fictitious assets value.AWD could also have disqualified the report.

16. That AWD and in particular the engagement partners did not act with high level of professionalism and diligence.

17. That the Company’s registrars did not dispatch dividend warrants to shareholders, and failed to report to SEC any actual or suspected breach or infringement or non-compliance with any of SEC rules and regulations.


In the light of the above various degree of sanctions were imposed on the individuals, companies and external auditors suspected to be involved in the saga. The sanctions range from monetary to suspension for 3 years and soon. The sanctions are produced hereunder and my opinion on each sanction are interspersed in italics and boldened:

1. Cadbury Nigeria Plc to:

a. Pay a fine of one hundred thousand Naira (N100, 000.00) in the first instance and a penalty of five thousand Naira (N5, 000.00) per day from June 30, 2002 to December 14, 2006 within 21 days from the date of the decision (March 28, 2008) for filing with the Commission, financial statements that contained untrue/misleading statements; failing which trading on its shares will be suspended.

Total fine is 8,240,000 naira.

b. Pay a fine of one hundred thousand Naira (N100, 000.00) in the first instance and a penalty of five thousand Naira (N5, 000.00) per day from August 24, 2005 to the date of the decision (March 28, 2008) within 21 days, for filing a Rights Circular for the N5 billion irredeemable convertible loan stock which contained false/misleading statements, failing which trading on its shares will be suspended.

Total Fine is 4,835,000 naira

c. Pay a penalty of five thousand Naira (N5, 000.00) per day from June 30, 2002 to December 14, 2006 within 21 days from the date of the decision for failing to provide funds en-bloc for the payment of dividends to its shareholders despite the Commission’s earlier directive.

Total Fine is 8,140,000 naira. The aggregate of fines a+b+c is 21,215,000 naira

2. Messrs Bunmi Oni and Ayo Akadiri are: Banned from operating in the Nigerian capital market, being employed in the financial services sector and holding directorship positions in any public company in Nigeria.

3. The Messrs J.S.T. Bogunjoko, Abiodun Jaji, Andrew Baker and Christopher Okeke are: Suspended from operating in the Nigerian capital market, being employed in the financial services sector and holding directorship positions in any public company in Nigeria for a period of 5 years from the date of the decision.

4. Olusegun Aina, Akinbode Gbolahan and Tunde Egbeyemi were: Suspended from operating in the Nigerian capital market, being employed in the financial services sector and holding directorship positions in any public company in Nigeria for a period of 3 years from the date of the decision.

5. Rt. Hon. Uduimo Itsueli, Messrs Olatunde Falase, Raymond Ihyembe, Gabriel Onabote, Olusegun Oyewole, Matthew Shattock, Thomas Ayorinde, Z.C. Enuwa and S.J. Balogun are suspended from operating in the Nigerian capital market, being employed in the financial services sector and holding directorship positions in any public company in Nigeria for a period of one year from the date of the decision.

6. Messrs Cadbury Nigeria Plc, Rt. Hon. Uduimo Itsueli, Bunmi Oni, Ayo Akadiri, J.S.T Bogunjoko, Abiodun Jaji, Andrew Baker, Christopher Okeke, Olatunde Falase, Raymond Ihyembe, Gabriel Onabote, Olusegun Oyewole, Matthew Shattock, Olusegun Aina, Akinbode Gbolahan and Tunde Egbeyemi have been referred to the Economic and Financial Crimes Commission (EFCC) for further investigation and prosecution.

7. Akintola Williams, Deloitte is:
a. Ordered to pay a fine of twenty (20) million Naira within 21 days of the decision for its failure to handle the accounts of the company with high level of professional diligence failing which its registration with the Commission shall be cancelled.

b. Strongly reprimanded and warned to desist from engaging in acts that may affect the investing public’s confidence in the capital market.

c. Strongly advised to be more diligent in carrying out its assignments in capital market related issues.

d. Further directed to sign an undertaking to be diligent and of good behaviour in its future dealings in the capital market.

8. Union Registrars Limited is:

a. Ordered to pay a penalty of five thousand Naira (N5, 000.00) per day from June 1, 2002 to June 31, 2006 within 21 days of the decision, failing which its registration with the Commission will be cancelled.

b. Strongly reprimanded and warned to desist from engaging in acts that may affect the investing public’s confidence in the capital market.

c. Strongly advised to be more diligent in carrying out its assignments in capital market related issues.

d. Directed to sign an undertaking to be diligent and of good behaviour in its future dealings in the capital market.

In the light of the above sanctions, how were the shareholders compensated? Will these monetary fines and momentary “ban” enough to deter the culprit and other managers? I think NO. The “living” masterminds of the Enron case are still behind bars. Yet the Americans have the now popular Sarbanes Oxley Act. What Nigerians especially shareholders and investors need is an enabling Act to check the excesses of all players in the stock market.

I thank you for your time and patience.

@ all

It's baffling the a new stock broker could be this inefficient. But i think we need to educate ourselves on our rights. The contract between an investor and a stock broker is not more different than a principal - agent relationship. An agent cannot be TOO powerful to disobey his/her principal's WISH. How could you instruct your broker to buy but it turned away only to sell? it's unprofessional, unethical and absolutely unacceptable in any part of the world.

However, any instruction to your broker should hence forth be BLACK AND WHITE, with a received copy duly signed by the broker's receptionist or other responsible officer.

Request for your statement of account periodically and bring any identified anomaly to their notice also in WRITING. Write a strong worded but courteous letter to them disapproving and additional cost that might arisen from their negligence.

Diversify your portfolio management by having more than one broker. Dont also forget that you have the right to change your broker at will without given explanation to any one.

A word is enough for the wise.

Good. I will make my opinion on the recommendation known soon.

I shouldn't be contributing to stuff like this, but maybe to enlighten the other innocent persons. Investment simply is ploughing back "un needed" financial and other resources to generate additional income for you. If you have other use for your fund, investment in shares or the stock market is not a CRIME. also, if your feasibility study shows/tells you that investing in "noodles, candles" etc are better option to the stocks, good luck. Afterall we all invest to achieve an higher RETURN, even the HIGHEST OBTAINABLE RETURNS

Statistics has shown overtime that businesses collapse mostly these days due to ineffective internal control system. Internal control and accounting control system can assist make or mar your businesses. An effective internal control system helps you to perform optimally while assisting to safeguard your assets, and helps in improving your corporate performance. In every business, we can not neglect the importance of internal control; afterall "prevention is better than cure".

Available records had informed us that the cost of detecting fraud and other irregularities far out weigh the cost of preventing them. The most effective means of protecting your assets and improve your operation is installing a fraud and material error resistible control system. There are numerous advantages of effective internal control that cannot be mentioned here. However there is enough time to tell you that Microfinance and other Lenders evaluate a company's internal control system before allowing them credit facilities!.

You may have a wonderful business proposal, if your internal control system is prone to abuse, fraud, error and other irregularities, no lender or investor will do business with you.

Having said this, you may wish to entrust the responsibility to design an internal control for your company/enterprise/venture on us. we are though young but highly experienced in designing, evaluating and improving internal control and accounting system. We apply risk based approach in designing our clients control system to suit their specific line of business and industry. We conduct a periodic review of the controls to ensure their efficiency and compliance by those concerned- management and staff alike at no extra cost. where modification is required, we waste no time in doing that because our experience has shown that delay in modifying a seeming weak control can cause a material fraud and loss of financial and other assets, as a smart person can promptly capitalize on such weakness to wreck havoc on the company/business/venture.


meet us at RBO.PARTNERS@GMAIL.COM
080-5562-8489

@ Dlaw 1

in response to your post, you may read this and contact us for more info you amy require:

Yes. Investment in shares is a sure way of making your unwanted funds work for you and earn you additional income thru dividends and capital appreciation. But first you need to know what shares is all about and develop a passion for it. if you do not have passion for money, you may not have passion for shares.

One, when you buy shares you are buying into the ownership of the company. this entitiles you to share in its profit, vote during its AGM and other General meeting and most importantly make profit on its market value appreciation .

two, you can buy shares either from the primary markets- public offers or private placement or from the Secondary market thru a stock broker.

three to buy from the primary market, you may do so without a stock broker but to buy from the secondary market, you need a stockbroker. you therefore need to appoint a stockbroker. your stockbroker will assist you creat a CSCS account to show the movement in your shares portfolio. you can also shake online the position of your fortfolio any time of the day. Either way, you cannot sale your shares without a stockbroker. I therefore recommend that you register with a stockbroker. your broker will give you advice and assist you in keeping all important docs and information safe and confidential.

four, to determine the shares to buy rests on your attitude, ethics, objectives and belief. it is my opinion that you intend to invest to make profit. so you need to invest in shares that are lowly priced and have the potential to grow over time. your attitude is important because it determines whether you can invest in shares that are considered penny and unmarketable now or shares that are fairly overpriced. your investment objective is wether you are investing for short time or long time. whether you want perpetual dividends or capital appreciation. capital appreciation is upward movements in share price resulting to profit for all investors.

five, your ethics are also important though subjective. this include your religious belief. for instance, i dont invest in beer, tobacco producing companies and hotels. not because they are not rewarding, just a matter of belief and persoonal ethics.

six, you may need some knowledge of accountancy and financial analysis to determine whether or not your share acquisition is a good buy or not. I always recommend starters to make use of fund managers till they understand the reasons for investment and how to study the market on their own, i will not hesitate to give same advice to you.

Yes. Do you have question bodering on investment and finance? post them here and be rest assured that someone will attend to them.
cheers.

Hi guys am looking for this devil, he became C-n-C after a successful coup, he ordered a shoot at sight on all helpless protesting students during "Ali must Go", he organised the 1st and most controversial election in the history of nigeria and tied up the hands of Justice sowemimo, he left office Unceremoniously.

He survived the bullets of another devils incarnate through the intervention of GOD; he baceame the CnC again through a palace coup in Jos primary. for 8 eight years he as a garrison commander, supervising the death of prominent citizens, intimadated the founders of his party PPD, held a chairman at gunpoint to resign. He silenced all critics because he knew it all. he almost sent his Vice to ECCF jail and solely hand picked all gubernetorial and presidential candidates. He caused one EWU to manufacture figures to justify this sham called ELECTION.

He slept with his sons wife, promoted his boy Nubadu from ACP to DIG without due process, sold the properties of every one to his cronies called CORPTRANS, made govs to DONATE at gunpoint to a PRES LIBRARY, mismanaged our DTPF fund, wasted money on energy yet no success,

WHEN YOU FIND HIM PLEASE LET HIM KNOW THAT THE DEEPEST PIT IN HELL REMAINS HIS PLACE OF PERMANENT ABODE

I have always known that the devil lives in OBJ. how on earth could he insert his OLD RICKETY ROD into SHAMELESS Moji's CUNT? His daughter in law. worse of it, the court should determine the paternity of the children ooo, cos they could be GBENGA'S half brothers

Nigerians should wait for more story on 'THE DEVIL CALLED OBJ"

HEAVEN HELP US

man Utd Versus Arsenal? what a nassive game. this a draw either team would have prayed to avoid but the GOD of soccer. its an unpredictable match lets c what happens.

though difficult, i believe arsenal would triumph. even at the THEATRE OF DREAM.

gunners RULE

Talk to a consultant. He will give you all needed financial advice. You may contact rbo.partners@gmail.com or 08055628489.

i wouldn't like to say this or that on this match. But i will react to some of the posts below.

onavae:

guners ko, bombers ni.

sorry to say, arsenal spoilt everything for themselves when they failed to top their group even when they could easily have done so. now they have AC Milan to attend to. next year when they come back, they will know better than to waste golden opportunities. arsenal and liverpool are out of the UCL. lets see what happens to man u and chelsea.

Truly we had the opportunity to go top, but we feared no foe, hence the decision to field young and inexperienced players in our last two matches of the UCL.

@ all,

I love this thread. Am grateful to the initiator of this great idea. i will be glad to be a member of the dream. investment flourish and yield the maximum returns ONLY in an effectively controlled environment. an effective control system is a basic requirement to reduce business risks and improve profitability.

I will be willing to employ my wealth of experience in assisting all entrepreneurs and investors that desire my service to install an effective and efficient internal and accounting control. this is important to safeguard your assets, improve your performance and reduce all business risks.

am available at cmfinancialassociates@gmail.com.

Well, it is important to predict the likely line ups and see one on one who has it:


                                 Arsenal                                     Chelsea                                      Winner
1.                              Almunia                                     Cech                                           Cech (Chelsea)
2.                              Sagna                                       Belletti                                        Sagna (Arsenal)
3                               Clichy                                        Cole                                            Clichy (Arsenal)
4.                              Flamini                                      Makelele                                      Flamini (Arsenal)
5.                              Gallas                                       John Terry                                    John Terry (Chelsea)
6                              Toure                                         Alex                                              Toure (Arsenal)
7.                             Eboue                                        Joe Cole                                        Joe Cole  (Chelase)
8.                             Fabregas                                   Mikel                                             Fabregas    (Arsenal)
9.                            Adebayor                                    Shevshenko                                 Adebayor    (Arsenal)
10.                         Hleb                                             Lampard                                       Hleb      (Arsenal)
11.                         Rosicky                                         Kalou                                            Rosicky   (Arsenal).

Substitutes

12.                       Lehmann                                        Cudicini                                         Cudicini    (Chelsea)
13.                       Van Persie                                       Shawn W. Phillip                           Van Persie ( Arsenal)
14.                       Lassana                                           Sidwell                                          Lassana    (Arsenal)
15.                       Senderos                                         Bridge                                           Bridge        (Chelsea)
16.                       Bendtner                                          Ferrera                                         Not match


from the foregoing, its clear even to the blind that the blues have no hidding place on sunday. Up gunners

@ Seun,
You do not need to be HIGHLY EMOTIONAL about nairaland members being associated with scams like this. i have been a nairaland member for sometime now. i even got my first professional contract from nairaland. you can verify from my recent posts. therefore i will be the last person to cast aspersion on the integrity of your laudable and enviable work- creating a web based forum (nairaland).

However, as a fraud investigator, i have all material fact to state without any fear of contradiction that the person that sent the mail is either a user or registered member of nairaland. This is not too say that genuine business people with immesurable level of integrity are lacking here on Nairaland.

Seun, you are doing a very good job, keep it up and improve on it.

compliment.

TO ALL OUR CUSTOMERS.
Complement of the season. We hereby inform you Interswitch Nigeria made a new plan for all ATM Card Holders for maximum security. Therefore, Due to complaints that we are recieving from some of our customers about their ATM cards i.e,
1. Withdrawing of money without the Card Holders authorization,
2. ATM Card theft.
3. Lost Card.
4. ATM Mobile Theft.
It is our pleasure introducing to you our new security plan "MAXI- SECURE", It is a security plan designed to permit ATM machines to process transactions and withdrawals only To cards that are registered in this plan, Therefore any card that is not registered in this plan will be denied of any transaction or payment proccession. This will be effective as from twenty first(21st) January 2008, after registration of all already issued ATM card.
Please Note:
As from 21st Jan. 2008, only registered ATM card Holders can withdraw money from any of the atm machines in the banks nationwide. This information is only for already given atm card customers but if you have just applied for one, Do not register when given as that have been done for any ATM Card issued as from 22nd of November 2007.To enable you register your atm card(cash card, debit card, etc) to this security package, Register Plan. An sms will be sent to the phone number provided for confirmation.
Check out newspapers or watch NTA nationwide network news(9.00pm) for more

i got the above information from "customercare @interswitchng.com" <securityinterswitch@live.com> . i clicked on the regsiter plan as requested then i paused for a while. the information they requested were the secret details of your ATM that could create an unhindered access to anyone to steal your money at will. How could interswitch be asking me of my names, card number, pin code, expiration number among others. on another look, the email address was live.com.does that mean interswitch does not have its own website? please my guys beware of these people.

[s]Ironically, the people that sent these scam mails are some useless nairaland members. i have reported some of them to EFCC for possible action.
Compliments.[/s]

@ postors,
i read your comments on the labour issue in guardian but was unhappy. in a contract of employment, employees dont dictate the conditions as they CANNOT MAKE offers, rather the employers. An employee can EITHER ACCEPT what is tabled before him OR resign!.

but in this country, we try to do things the other way. the mgt of the coy has been magnanimous enough to increase the salary, but the employees or staff union cannot mandate the mgt to pay beyond its break even point.

Nevada:

Please do you own an audit firm? We want to audit our books and what does it cost to set up the simply accounting pro? (Sage)

For your audit, you can contact Tunde owoeye. He operates a firm that will do your audit and assist in other financial and business advisory you so desire. contact him at canaan.partners@gmail.com or remmychess@yahoo.com. He is a nairalander.

cheers

A-40:

@Jackal
We know Adebayor is a Arrow you don't have to rub it in

Thank Goodness RVP will soon be back all our strikers seem to be misfiring lately

i strongly disagree with you. Adebayor has been marvellous upfront in recent weeks without RVP. He had to play LONELY upfront with Rosicky, Hleb and Walcott miles away from him. even Arsene regreted this. check out his arsenal v Man Utd post match interview on www.arsenal.com

Morseso, we lead the table at present due to our nos of goals scored

How can you compare a Cesc with Cee. Cesc is a player that the whole world wants to see. in his first year in charge of the ARSENAL MIDFIELD, i saw him dwarf the likes of ZIDANE (watch Arsenal Vs Real Madrid 2005/06 champoins league), Patrick Viera (Arsenal vs Juventus), Ronaldinho (Arsenal Vs Barcelona), Paul Scholes (Arsenal Vs Man U 2006/07 premiership), steven gerrad (arsenal vs liverpool, premiership 2006/07, carling cup 2006/07, FA cup 2006/07) ballack, lampard, makelele (arsenal vs chelsea 2006/07 premiership, carling cup final 2006/07).

in his third season in charge, GERRAD has this to say about him: "the oyster is at his feet". Arsene said of him: "he is in the mould of the GREAT PAUL SCHOLES" of old. Benitez Raf describe him as "a wonder boy, playing the best footbal of his life". ARENAL FANS WORLD WIDE found to specific name for him. hear them

Fabregas---- fabregoal
Fabregas----- Fabulous
Fabregas------ fantastic
Fabregas-------Fabregreat
Fabregas------fabreGUND
Fabgregas------FabreSkill

i can go on and on. It is ridiculous that he could be compared with a player that lives right in the pocket of GAEL CLICHY.

@ pumping
Am so delighted we have nigerians that are willing to present THE FACTS in an intellectual arguement. Am so happy that you have demonstrated such a great quality. Your POINTS gears up the FINANCIAL ANALYSIS SKILLS in me. having said this, i will like to react to our Percieved AREAS of difference.

pumping777:


@ babaife - You are yet to tell me a reason why a company with a low PE is a weak company. I don't get it. So is a company with a high PE a strong company?

Let's look at this from both the point of view of the buyer and the seller.

- Buyer- low PE is the target because the stock is undervalued. The whole discussion I believe was based on how to select a stock to buy into so this is the scenario we should be looking at.

yes i agree with you. however a company with a low PE will be a target ONLY if its management demonstrate THE ABILITY TO IMPROVE, else ITS A BAD BUY!

- Seller -High PE is perfect because the stock is overvalued and he/she now happy to sell because he/she bought the stock at low PE and can now make cool profit. So as a seller you don't want low PE if you want to sell at that point in time, but this is really a matter of price. Using PE here is confusing.

The value of every company is determined by it by its market price. the market price of every company has an in built of both QUANTITATIVE AND QUALITATIVE INFORMATION including INVESTORS ATTITUDE. the PE on the other hand shows the relationship BETWEEN PRICE AND EARNINGS. In the market, INCREASE in EARNINGS USUALLY CAUSE AN INCREASE IN PRICE AND ULTIMATELY, THE PE.

The price of a stock does not usually have anything to do with strength but more with perceived value. As an investor, if I find a sound company with low PE my antenna is stimulated. The lower the better.

Am in TOTAL DISAGREEMENT HERE. the price of stock shows how capitalized a company. it is the ONLY VERIFIABLE MEANS OF VALUING THE COMPANY. therefore, the higher your stock price, the better for the company and its members (shareholders). I quite understand your risk profile as an investor, i must nevertheless advise that you RESEARCH properly the REASON a company has A LOW PE, and determine whether there was a time the PE was high. ensure that the management are QUALIFIED, COMPETENT AND RESULT ORIENTED

You see, as a general rule of thumb we cannot base an arguement on exceptions. There will always be exceptions. For instance, it is not all companies that make profit but this is not the norm. All acquistions may not result in better value but like I said this is the result in most cases. A company that is not acquired can also go under by itself but this is an exception so I won't use it in an arguement.

I will allow this to stand

So do you mean that if  I don't want competition to acquire my company, the action I should take is to make sure I have high PE? What about the investors that hold your shares? Won't they be concerned that the stock is overpriced and dump? Why do we have good projected PEs in these companies prospectus? See how everyone is screaming after seeing the 22x PE being projected for Bagco 

[color=#990000]This is one of the causes of CREATIVE ACCOUNTING AND WINDOW DRESSING in the corporate world. Every management has the MANDATE to IMPROVE SHAREHOLDERS WEALTH!. This is improved through INCREASING share price. if you have a high PE and a company intends to acquire your company, your high PE makes your COMPANY EARNS MORE compared to a low PE. For instance, in a share for share acquistion, your shareholders will earn more shares in the new company than otherwise. Numerically speaking, lets assume Coy A with PE of 10 wants to acquire any of Coy B or Coy C with PE ratio of 5 and 7.5 respectively to form coy D.

it is calculated thus: PE of the targeted coy divided by the PE of the Acquirer coy. therefore to acquire coy B= 5/10; 1/2. this therfore means that for every 2 shares coy A has in D, coy B has 1. Further to acquire coy C, it becomes 7.5/10; 3/4. similarly, for every 4 shares coy A has in D, coy C must have 3. (this is ONE of the methods of company valuation). Here i ask, which is better to the company and its shareholders? you may use you logic.

Low PE will usually mean others are not seeing the true value of the company. This is not a bad sign on its own. Do you realize that there were many penny stocks as at last year with single digit projected PEs? Check them out now and tell me if these companies are weak. eg Costain and  Nahco. Also go and check out the current PE of Transnationwide Express and tell me if this means it is a weak company. Haba.

the penny stock or value stock as we call it in finance, MUST have shown traces of improving performance. in valuing a company, you MUST LOOK FOR BOTH THE QUALITATIVE AND QUATITATIVE INDICES. investment is about committing your fund to earn FUTURE stream of income. when buying a stock, you are indeed buying into a company's future earnings irrespective that you buy and sell the same day. Moreso, investment is a RISKY venture that may result to GAIN or LOSS depending on LUCK and DECISIVENESS

Am equally interested. I can assist you build your clientele, if your price is right, quality is good and your words are your bonds. if you meet these three criteria, contact me at remmychess@yahoo.com or 080-556-284-89.

easimoni:

I'm confused (very confused). Why wouldn't you want your PE to drop? (or do you mean price?) They only way PE drops is for earnings to go UP UP (a good thing) or for prices to drop. If you mean prices (not PE) are dropping, simply say so. If EPS goes up, and PE goes down, most investors would be deliriously happy. A PE of 2 = cloud 9 (as long as it's not price that's dropping).

Anyway, my point is: if it's price that's causing PE to drop, let's use Price, otherwise I'm assuming it's EPS going up and who wouldn't love that?

@easimoni
most times, the reduction in market price of shares cause the drop in PE. if EPS goes up, the market reaction is to INCREASE SHARE PRICE. theoretically, the increase in EPS is built in to determine the share price. therefore, an increase in EPS CANNOT AND WILL NOT RESULT IN LOSS OF SHARE VALUE IN A NORMAL CIRCUMSTANCE (all things being equal). rather the opposite.

@ Pumping
I think you have really missed the point. For an investor, the lower the projected PE of a company compared to others in the SAME sector, the better, provided the company has not cooked it's books. You are looking at the sentimental position of the Executives and Management of the company. Agreed PE cannot be used in isolation of course.

well, i believe our opinions differ because of our individual investment strategy and instinct. we saw the issue from " a buyer" and "a seller" point of view.

The arguement about possible takeover does not apply here. Takeovers in most cases will increase the value of a company. This could be a problem for the Executives and Management of the company who do not want to give up ownership but definitely not for the shareholders because they will end up being offered the fair value of their stocks. It could be an issue whereby the new owners decide to delist the company but that is a different story. The net result of a takeover for investors is the realization of the future benefit of a company before it is due.

I must say without ant fear of contradiction that NOT ALL ACQUISITION INCREASE THE SHAREHOLDERS WEALTH. In reality, the essence of due diligence is to ensure that a party to the acquisition is not a liability to the other. also both the targeted company and the acquirer must contact or appoint FINANCIAL CONSULTANTS to study the offer and ensure that the SHAREHOLDERS WEALTH will be increased else the deal is put off. we were all living witnesses how GULF BANK could not merge with the intercontinental group.

If Afribank is acquired by Access bank how is this a loss to the investors? The investors will have to be offered a fair value for their shares. This is in fact a very desirable position for any investor to be. Look at Standard bank and IBTC saga. Have investors lost out? Low PE or not, many companies are still being acquired. Even with a high PE a company is easy to acquire if the total value (capitalization) is low. In other words, being a small company, buying it is affordable for those that think they can do better with it (Ability to generate an even lower PE based on current prices).

it is also known practically that company's with lower PE than it competitors are good for any wealthy and healthy competitor to acquire. the assumption is that the management is NOT EFFICIENT ENOUGH to ginger the share price of such companies, hence under a new and efficient management team, the share price may go up and ultimately increases the PE. a company with a low PE is referred to as VALUE STOCK. all other things being equal, such company should have the ability to operate for the unforseeable future. @ pumping is an individual with an instinct to "acquire" companies with low PE. This is acceptable ONLY IF SUCH COMPANIES HAVE THE POTENTIAL TO GROW, ELSE THE INVESTMENT IS LOST

And what do you mean by saying the PE of a company is nose-diving? Nose diving is a negative term for something undesirable and should not be used for PE. PE could be falling because the price of the stock is crashing due to maybe some negative news that could impact the returns of the company in future. However, in this case, the projected income will be adjusted to reflect a more realistic PE.

Nose diving is a term is the most appropriate words when you hold a share whose PE continues to reduce in value. for instance, you bought a share when the PE is 20, any the last 3 quarterly results shows a PE of 15, 10, and 5. i ask what should an investor do? hold the shares till the PE becomes 2? you have to sell. the reduction in PE may be due to accurate information being made available in the market. How i wish i could explain better on CREATIVE ACCOUNTING and its EFFECTS on SHARE PRICE. A topic for another day

It is like saying the expenses or debts of a company is nose-diving. Is this not desired?

when expenses and debts nose dive, it is HIGHLY DESIRABLE because the effect is that earnings increase, share price increase, confidence in the management increases and ULTIMATELY, PE INCREASES

Having a low PE ratio does not imply that a company is WEAK. It simply means that it is likely to be undervalued and it could also be a target for investors which will eventually increase the price due to bargain hunters. If the projected PE of Zenith banks drops to 10, tell me wether the price will not rise or someone will not try to acquire it. Either of these will benefit the current owners of the stock.
A Weak or Low PE is a value stock. it is one of the criteria to adjudge the efficiency of the management team. investors WANT TO BUY SHARES WITH LOW PE THAT HAVE THE ABILITY TO GROW OVER TIME, BUT DO NOT WANT TO SEE THEIR SHARES PE DROP. or what is the point in buying a share whose PE is likely to drop?[quote][/quote]

while i agree that investors should INVEST CAUTIOUSLY, i dont subscribe to allegation without proof. The results being posted by the various banks may not be realistic due to CREATIVE ACCOUNTING AND WINDOW DRESSING. cases are abound- Access bank, Diamond Bank, IBTC chartered Bank, among other banks had their audited accounts QUALIFIED by their various AUDITORS. reason was that 'THEY FAILED TO WRITE OFF THEIR GOODWILL TO THE PROFIT AND LOSS'. Had they done this, their profit would have reduced to the value of the amortised goodwill and net assets reduced by the same amount.

It is also on record that the banking sectors accounts for nothing less than 60% of transaction at the capital markets. it therefore means that, should there be any "HIT" on that sector, the capital market may crash (GOD forbid). I have always posited that the Nigerian Stock Market is INEFFICIENT and CREATIVE ACCOUNTANCY is rampant. this being the reason for certain share prices nose driving while the operation of the companies are nothing to write home about.

on the issue of the MD being questioned for fraud, am aware that the former MD of Omega bank is being questioned in that regards, but i dont think it has anything to do with "STOCK FRAUD". Another that i know of is the board of Spring bank that was sacked some months back.

In conclusion, every investment has it associated risks. we must evaluate our risks before investing our fund. If you require the service of a financial analyst, please contact tunde at canaan.partners@gmail.com

Insurance companies share prices are low. are they value stock? that is are they undervalued or the market is being unfair to the sector? though their consolidation plan appears to be hitting the rock coutesy various litigation among the players, i do not expect their stocks to be so undervalued.

concering the insurance stuff, it is often said that the cost of ignorance is higher compared to the value of knowledge. how do i mean, you will not understand insurance until you come face to face with unforseen disaster (God Forbids). In recent times, people have doubted the sincerity of insurance companies to pay "claims" in the occurence of unforseen risk. Like the Hurricane case in the US.

the failure of insurance companies to pay claims may be due to the insurance policy undertaken by individual insured. i know in Nigeria, should hurricane occurs (Heaven Forbids), some corporate invididuals will not loose much cos most of them are insured against "natural disaster". also, in an attempt to beat cost, many nigerians prefer to deal with "unlicensed" agents and brokers that will never remit their premium to the insurers. by implication, the over wise but unsuspecting insured IS NEVER INSURED. s/he will not know this until the accident occurs.

my point is, insurance is a decision one must make like every other investment decision. if you dont take insurance, you save some cost. should accident or risk occurs, you loose your investment or assets. the choice is yours.

regards.

Their is a debate currently going whether the governemnt and the people of nigeria owe taiwo Akinkumi. The pros argue that the man is suffering in abject poverty, his children unemployed while the govt and the people of nigeria carry his intellectual property around the world. they argue that we should compensate the poor man.

the antis say he was given 100 pounds in 1960. they said any idiot could paint a piece green white green. they think the man is blackmailing the nation and her nationals.

where do you belong? and what do you think we can do for the poor, dying, helpless man?

i visited the website of arm to obtain some information, but was disappointed. the financial was not posted, their rate of returns not posted. even efforts to obtain the competence and qualification of the management team was not successful as nothing about their qualification was on their web.

their vice president that head the real estate has about 3 years experience from capital alliance. i found these information insufficient to make an investment decision. please if you have other details other than the ones on thier site, send to remmychess@yahoo.com or canaan.partners@gmail.com

regards