Football is a billion pound sport and the transfer market is a key ingredient to that. The transfer market can be very difficult to understand and comprehend most times, this is because it is embodied with a lot of intrigues, too many people involved and the amount of money moving around.
This article will explain in steps how the transfer market works.

1) How are footballers recruited?
Around the world, the majority of those who will go on to be professional footballers begin their career with a football club by early adolescent, some even earlier. Mario Gotze, scorer of the goal that won Germany the world cup joined Borussia Dortmund at the age of 8. Bigger clubs usually have large fully developed academies (like Barcelona’s famous La Masia), while plenty of smaller clubs operate youth teams at various age groups.
When a player attaches himself to a club, he also enters the transfer market, at least in an informal manner. The list of inter-and intra-national guidelines, regulations and laws that govern the movement of children is complicated and also nobody becomes a professional footballer until the age of 16.

2) Who finds the footballers?
In general 3 kinds of people are in the business of introducing footballers to football clubs.
a) Scouts: The scouts are generally attached to the clubs, and spend a large chunk of their time touring different countries and stadiums, standing in the rain, snow and hail, squinting at a gangling teenager attempting to predict what he might become.
b) Analysts: The analyst also tend to be employed by the clubs, but where the scout looks for information on football pitches, the analyst looks to the numbers.
c) Agents: The agents are usually (but not always) unaffiliated to any club, they represent the interest of individual footballers. The agent is also responsible for the career management of the player, transfer & contract negotiation, public relations, sponsorship & marketing opportunities, disciplinary issues & welfare advice.

3) How do Players move?
In theory, a basic transfer works like this. Club 1 has a player, club 2 wants a player, club 1 and 2 trash out an agreeable price for the player and the transfer happens. The players’ registration is transferred from club 1 to club 2, the player signs the contract and all parties are happy.
In practice, every one of those steps can take days, weeks, months, and even years to finalise and many people haggling away at one another to get the best deal.

4) How the fee is worked out?
There are 2 major ways: One is that many players have a buyout clause in their contracts, which states that any bid of a certain amount must be accepted. Such clauses are compulsory in Spain.
The other way is through the haggling of the price, a figure arrived at after careful consideration of how much money the buying club has, how much money the selling club has, how much time is left on a players contract, whether the player has an obvious replacement, and how important the player is.
There’s also more to the money than just a transfer fee (which is usually broken into a series of payments over a few years). In addition, there are plenty of clauses that can be inserted by various parties, including selling-on fees, where the selling club get a cut of any future transfer, and buy black clauses which allow the selling club on a return, often for a set fee.
Also included can be Trophy/Success bonus. In the summer of 2014, Thomas Vermaleen moved from Arsenal to Barcelona, Arsenal inserted a clause in the transfer stipulating that they will receive additional payments based on Barcelona’s success. Arsenal will receive £3million after Barcelona won the UEFA champions league as a result of that clause.

5) How the player wages is worked out?
Footballers’ wages are dictated by the market. Football, like any other industry, conforms to supply and demand. The football industry is a multimillion-pound industry worldwide, so the purveyors of that industry should reap the benefits.
The agent and the buying club do the haggling over the amount to be paid. Several factors influence the amount of wages a player asks for, such factors include the level of skill of the said player, the owner of the buying club and how rich he is, the status of the club, the city the club is located in amongst other factors.
There have long been rumors that certain players of a certain standing and a certain … let’s say self-regard have it written into their contracts that nobody at the club is allowed to earn more than them.

6) Why the transfer news does generates so much buzz?
Agents plant stories to help their clients get new contracts; clubs leak information (and misinformation) to journalists; sources. Most people profess to hate the nonsense, yet everybody consumes it.
more on....http://nairametrics.com/this-is-how-the-football-transfer-market-really-works/

Investing in unprofitable companies is generally a high-risk, high-reward proposition, but one that many investors seem willing to make. For them, the possibility of stumbling upon a small biotech with a potential blockbuster drug, or a junior miner that makes a major mineral discovery, makes the risk well worth taking.
While hundreds of publicly traded companies report losses quarter after quarter, a handful of them may go on to attain great success and become household names. The trick, of course, is identifying which of these firms will succeed in making the leap to profitability and blue-chip status.

What causes negative earnings?

Negative earnings–or losses–can be caused by temporary (short-term or medium-term) factors or permanent (long-term) difficulties.
Temporary issues can affect just one company – such as a massive disruption at the main production facility – or the entire sector, such as lumber companies during the U.S. housing collapse.
Longer-term problems may have to do with fundamental shifts in demand due to changing consumer preferences (such as Blackberry’s collapse in 2013 due to the popularity of Apple and Samsung phones), or technology advances that may render a company or sector’s products obsolete (such as compact-disk makers in the early 2000s).
Investors are often willing to wait for an earnings recovery in companies with temporary problems, but may be less forgiving of longer-term issues. In the former case, valuations for such companies will depend on the extent of the temporary problems and how protracted they may be. In the latter case, the rock-bottom valuation of a company with a long-term problem may reflect investors’ perception that its very survival may be at stake.
Early-stage companies with negative earnings tend to be clustered in industries where the potential reward can far outweighs the risk – such as technology, biotechnology and mining,.

Valuation techniques

Since price/earnings ratios cannot be used to value unprofitable companies, alternative methods have to be used. These methods can be direct – such as discounted cash flow (DCF) – or relative valuation. Relative valuation uses comparable valuations (or “comps”) that are based on multiples such as enterprise value / EBITDA and price/sales. These valuation methods are discussed below:



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Discounted cash flow (DCF): DCF essentially attempts to estimate the current value of a company and its shares by projecting its future free cash flows and “discounting” them to the present with an appropriate rate such as the weighted average cost of capital (WACC). Although DCF is a popular method that is widely used to value companies with negative earnings, the problem lies in its complexity. An investor or analyst has to come up with estimates for (a) the company’s free cash flows over the forecasted period, (b) a terminal value to account for cash flows beyond the forecast period, and (c) the discount rate. A small change in these variables can significantly affect the estimated value of a company and its shares.
For example, assume a company has free cash flow (FCF) of $20 million in the present year. You forecast the FCF will grow 5% annually for the next five years, and assign a terminal value multiple of 10 to its year five FCF of $25.52 million. At a discount rate of 10%, the present value of these cash flows (including the terminal value of $255.25 million) is $245.66 million. If the company has 50 million shares outstanding, each share would be worth $245.66 million ÷ 50 million shares = $4.91 (to keep things simple, we assume the company has no debt on its balance sheet).
Now, let’s change the terminal value multiple to 8, and the discount rate to 12%. In this case, the present value of cash flows is $198.61 million, and each share is worth $3.97. Tweaking the terminal value and the discount rate resulted in a share price that was almost a dollar or 20% lower than the initial estimate.
Enterprise Value / EBITDA: In this method, an appropriate multiple is applied to a company’s EBITDA (earnings before interest, taxes, depreciation and amortization) to arrive at an estimate for its enterprise value (EV). EV is a measure of a company’s value and in its simplest form, equals equity plus debt minus cash. The advantage of using a comparable valuation method like this one is that it is much simpler (if not as elegant) than the DCF method. The drawbacks are that it is not as rigorous as the DCF, and care should be taken to include only appropriate and relevant comparables. In addition, it cannot be used for very early-stage companies that are still quite far from reporting EBITDA.
For example, a company may post EBITDA of $30 million in a given year. An analysis of comparable companies reveals that they are trading at an average EV/EBITDA multiple of 8. Applying this multiple therefore gives the company an EV of $240 million. Assume that the company has $30 million in debt, $10 million in cash, and 50 million shares outstanding. Its equity value it therefore $220 million or $4.40 per share.
Other multiples – Other multiples such as price/sales are also used in many cases, as for instance technology companies when they go public. Twitter (NYSE:TWTR), which went public in November 2013, priced its IPO shares at $26, or 12.4 times its estimated 2014 sales of $1.14 billion. In comparison, Facebook (Nasdaq:FB) was then trading at a sales multiple of 11.6 times and LinkedIn (NYSE:LNKD) was trading at a sales multiple of 12.2 times.
Industry-specific multiples: These are used to value unprofitable companies in a specific sector, and are especially useful when valuing early-stage firms. For example, in the biotechnology sector, since it takes many years and multiple trials for a product to gain FDA approval, companies are valued on the basis of where they are in the approval process (Phase I trials, Phase II trials etc.), as well as the disease for which the treatment is being developed. Thus, a company with a single product that is in Phase III clinical trials as a diabetes treatment will be compared with other similar companies to get an idea of its valuation.
more on.... http://nairametrics.com/value-loss-making-companies/

Former Minister of Power, Barth Nnajihas said his company Geometric Power will build a 1,080 megawatt power plant jointly with General Electric , with the first phase of the project generating 500 MW expected to be completed in 2019 at a cost of $800 million.

According to Reuters, the firm was in discussions with some Chinese, European and U.S. investors and expected financial close by year-end. Construction would start early next year.


“We have a 1,080 megawatt project … (in partnership) with General Electric. The power goes to the national grid. What we are doing is to build up power projects in this way,”
More on... http://nairametrics.com/barth-nnajis-geometric-ge-set-to-build-1080mw-power-plant/

As someone who lives on the mainland and works on the island I have had my own fair share of coming home late from work. Sometimes it is just due to meetings and a hectic work load. But the most common reasons most men come home late from work is to avoid the crunching Lagos traffic. I also think those in managerial positions, spend more time doing productive work when others have closed. We all know how much of an issue this can be to our loved ones who stay awake for us to get home safely. We are also aware of the emotional strain it causes in marriages. But could there just be some benefits? Maybe not much but here are a few that comes to mind;



Earn more money – Working late often leads to higher pay as hardworking employees often get compensated for putting in extra work. Some people can’t pass up this extra incentive and prefer to just put in more hours of work in exchange for an allowance or even a promotion. The extra money you earn can then be saved or put in a viable investment.



Fuel, Wear & Tear – Driving home from work during the rush hour does not only cause physical strain and you are also likely to burn more fuel as a typical 30 mins journey can take about 2hours to conclude during the rush hour. Therefore by staying at work late to avoid traffic, you get to drive on a freeway devoid of the traffic congestion the rush hour causes. That can save you almost N30,000 a month by my estimate.



Generator – Most people only get to turn on their main generators when they are home, preferring to rely on substitutes such as an inverter or a smaller generator when they are not home. This also saves you some money on fueling or diesel which you would have otherwise incurred had you been home early. This can save about N20,000 a month as well.



Feeding – Most people who get home late after work resist eating very late at night. It’s all part of healthy living preferring only to eat heavy during their lunch break. This habit is helped when you stay at work late as you avoid eating whenever you get home. This saves you money spent on feeding which for families living on a budget can be very material. You can save an average of N10,000 a month on this.




Utility Bills – For those who are at work between 12-14 hours a day, it is not surprising that they incur very minimum electricity and water bills. Especially for those who are lucky to have pre-paid meters. They hardly use power supply from the utility companies and consume less water. It is very likely that if you get home early from work you will consume more power that if you got home late.



Dependents – People will always run to who they see all the time for money. But if you are they type who leaves home very early in the morning and come back late, it is likely that you will face fewer people approaching you for financial assistance. Since they hardly see you, it is a ready made excuse to avoid them.



Please note that the examples above is by no means a strong enough excuse to come home late from work. I believe the benefits of doing that is way below the benefits of coming home early. It’s just that everything has advantages and disadvantages and it is always good to point them out.
more on... http://nairametrics.com/coming-home-late-work-can-help-save-money/

Emma is an avid football fan and a supporter of Arsenal football club. Every morning, afternoon and night he gets alerts via a number of sports news outlets informing him of activities about his club and sports in general. He is so vast in sports, he hardly loses any argument. However, he is a Banker and also has a portfolio of investments which includes shares that he manages by himself. Unlike his favorite club and love for sports he doesn’t keep tabs on his investments as much as he does with the former. It was so bad he lost most of his investments including shares in the bank that he worked in which eventually went under.

As a shareholder of a company you are entitled to receive a number of information from your company periodically and at specified periods during the financial year. These information come via various medium such as reports, bulletins, earnings guidance, newsletters, public announcements etc. Let’s take a lot at the critical ones.

Annual Reports: At the end of a financial year every company by law is required to prepare its financial statements and have it audited. After it is audited and approved by the board of directors it is packaged in an annual report and distributed to shareholders at the Annual General Meeting. Copies of the annual report can also be downloaded online. An annual report contains amongst others the company’s result for year, the chairman’s statement, auditor’s opinion, dividends declare amongst others. It is one of the most important documents issued by a company

Interim Financial Reports: Interim Financial reports are released quarterly all through the financial year and contain financial statements of the company for the period under review. Unlike the annual report, interim reports do not need to be audited and do not contain as much information as annual reports. However, they do reveal the financial state of the company which you can then use to make sound investment decisions.

Corporate Announcements: During the year companies also take a lot of non-financial decisions which can have impact on their future. For example, they can announce a change of directors, chairmen or CEO. It could also be that they have relocated office or change the memorandum and articles of association of the company. It also includes dividend announcements, financial forecast, public offers etc. Corporate announcement are a very crucial part of a company’s financial cycle and should be taken seriously by every investor.

Corporate Deals: Deals such as mergers and acquisitions, takeovers, spin offs, debt offerings etc. are an important event in any company’s financial year. Before they are concluded they are often announced in the media or through appropriate channels for shareholders and other stakeholders to digest and offer opinions. It is so important to follow these events as every move the company makes can affect the financial state of the company either positively or negatively which off course affects your investments. Deals are typically announced in the pages of newspapers, business news websites, on TV, social media etc.
more on... http://nairametrics.com/tracking-these-reports-can-help-you-stay-ahead-of-the-stockmarket/

It’s that time of the month again and Remy looks visibly worried. He is increasingly running out of options and was tired of hiding from some people. Ironically he is about to add more people at to that dreaded list of lenders.

This time, his Children’s school fees was about N2million per term and he had just N50, 000 left from his prior month’s salary. Now that he had run out of options on who to run to for more cash, he was now contemplating getting a bank loan to finance his children’s school fees.

Pulling them out of that school and telling the kids he cant afford it was also not an option. He had to keep up that lifestyle as he thought his status in society was very important in addition to his genuine quest to have his kids obtain the best education they possibly can get. If borrowing is what it takes then borrowing he must embark on.

Should this be the right approach? Must we continue to live from hand to mouth despite the harsh economic environment we find ourselves in? Before you decide to live like Remy, why not consider these options.

Budget

I have always reiterated the importance of having a family budget prepared on a Monthly basis. Budgets if nothing, gives you an insight into your household income and the likely expenses that will match it. Every single naira that you earn must have a mission. Without budgets it is easy to think that you have the money only to find out later that you have to borrow to augment.

Cut your coat to your cloth

If your Children school fees per term is more than 50% of your monthly take home pay, then you have basically set the stage for hardship and borrowing. For example, a family that earns a combined N500, 000 per month will need to save N75, 000 every month to pay for a N225,000 per term school fees per term. Anything above this is a recipe for incessant borrowing.

Not for everyone

Nearly every average working class family will like to have their children attend the best schools in the world. Harvard or Princeton for example, cost over $30,000 per annum for tuition taking it out of the reach of most families. This is why there are other options for students who cannot afford to pay for an Ivy League school. Luckily there is no written rule that says students who end up not going to an Ivy League school cannot perform better in their careers. This is so with some of the local schools we have in Nigeria. Rather than whine about not being able to afford a better looking school for your kids efforts should be made at putting them in the next best school that you can afford

Work even harder

Big dreams hardly die so if you still want your ward to go to that big school then you have to work really hard for it. Put in more efforts at your job making sure that it never goes unnoticed. Soon enough, you will be promoted and paid a higher salary. If that doesn’t happen, then seek employment elsewhere that can pay you better.

Seek alternative income


Why not explore other means of augmenting your salary? If you are good at trading then you can have a buy and sell business by the side, which can help fund the school of your dreams for your children. Besides, alternative income helps increase the amount you can throw on school fees when you earn more.
more on.... http://nairametrics.com/how-to-avoid-borrowing-to-pay-school-fees/

Investors have often pondered why most finance journalist and analysts weren’t able to forewarn the public on the impending financial crisis of 2009 which culminated in the lost of significant investments.

One analyst gave a candid answer.

He said the relationship that subsists between the financial journalist and clients often deterred them from giving the true picture of a company.

Oando’s huge debt puts shareholders returns at risk

The huge debt in the books of Oando Plc, an indigenous Nigerian energy company puts shareholders in a precarious situation as return on equity could flounder.

The company’s continued delay in releasing its Full year 2014 results is making it difficult for analysts and investors to make informed decisions as other firms in the sector are bracing to release half year 2015 results.

There is a concern about Oando’s ability to survive a slump in oil prices and currency risk that could crimp the company’s expected cash flow from assets.

The spiraling interest expense in the books of Oando exposes it to financial risks if the company’s cash flows prove inadequate to meet financial obligations.

Shareholders will demand much a higher rate of returns for investing in a high risk company like Oando as it debt to equity (D/E) ratio increased to 163.18 percent in the third quarter of 2014 as against 157.23 percent in 2013.

A high D/E ratio means the company utilizes over 100 percent of lender’s money to finance its growth. Total debt as at September 2014 was N355.71 billion, an increase of 39.34 percent from N255.28 billion recorded in the corresponding period of 2013.

The large chunk of debt incurred by Oando is attributable to its appetite for acquisition of assets with a view to maximizing the value of owners and increasing its share of the market.

It acquired Conoco Phillips Nigeria oil and gas Limited, for a consideration of $1.5 billion, a strategic move that transformed the company into Nigeria’s largest indigenous oil and gas producer.

How long will hedging gains last?
more on.... http://nairametrics.com/analysis-making-sense-of-oandos-levered-balance-sheet/

The Board of Red Star Express are set to meet June 25 to approve the company’s result and perhaps declare dividends. The press release issued last week has added renewed impetus to the share price movement of Red Star turning it into a hot cake for some investors.

This makes you wonder what it is that could have made the share price gain 33% year to date. Custom street has a way of hoarding information and when that is the case stocks like Red Star can sometimes enjoy a dose of herd mentality.

Nevertheless, could there be something in its result that can suggest a bountiful of returns for shareholders?

Higher profits?

Red Star’s most recent result was its 2014 9 Months result were it reported a relatively unchanged pre-tax profits of N441 million (2013: N414million). Last year, it reported a full year profit after tax of N404 million up 32% from the year before. Profit after tax was N309 million in its 9 months to December 2014 results. Nairametrics does not expect any significant increase in profits and actually feel it may not meet the 2014 figure of N404 million.

Dividends

This perhaps may be the reason for the rally. In 2014 it paid 35 kobo per share in dividends. A repeat of that dividends will suggest a gross dividend yield of 6.6%. This market has seen dividend yield of 10% without a rally of this nature. Perhaps there might be something stronger in the offing. Bonus issue? Red Star had about N400 million in the bank as at December. A 35 kobo dividend per share will cost it about N206 million. The company has just 589.5 million outstanding shares leaving some room for Bonus.

Red Star could be a bull trap like we have seen happen to the likes of NPF & NEM. If you are not in the company for the long term then make sure you get your entry and exit well timed, lest you get eroded by the smart money.
more on .... http://nairametrics.com/analysis-why-is-red-star-a-hot-cake/

Nnamdi has been dating Amaka for about 3 years now and pressure is mounting on for them to take the relationship to the next level. Nnamdi is approaching his mid-thirties and Amaka is also not getting any younger making time not exactly their friend. Their respective parents are also mounting pressure and do not just understand why their children would not just get married soon enough.

Unbeknownst to either parents, Nnamdi and Amaka have a major stumbling blocks. Apart from being career focused individuals they also believe more importantly that their combined salary is not enough for them to build a home and at the same time pursue their career objectives.

Many of us fall into this trap at some point in our life and if not handled carefully can lead to serious emotional and financial distress. How does one get married without enough money? I will attempt to respond by addressing some of the common excuses we give.

1) I can’t afford wedding “ceremoney” – The thought of preparing for a wedding ceremony is one that scares many off early marriages. Most people consider it a very special event and believe the only way to live a lasting memory is to splurge on it. Having a memorable wedding is important for everyone however, not everyone can afford an expensive and memorable wedding. With proper planning you can have a cheap and memorable wedding as well. Wedding ceremony shouldn’t be seen as a do or die affair as all you have to do is spend what you can afford. What you should realise is that at the end of the day it’s about you and your spouse being happily married thereafter and not about the drinks, food and the pageantry that comes with the ceremony. There will be many, many more opportunities to be merry with friends and family.

2) Where will we live after we get married? –My friend, Victor once told me he got married to his wife when he was still living in a one bedroom flat. After the wedding they came back home to their one room apartment happier than they could ever imagine. I asked him why and he said the thought of them spending the night together forever was all they wished for and could as well have lived in the car if that’s what it will take. The point here is that you need not live in a three bedroom or four bedroom apartment to get married. Heck you could even have just married and still living in your parent’s apartment provided you are both focused on the goal. Just have it at the back of your mind that this is only temporary as experience has shown that finances do improve more frequently after marriage. If you both work hard and remain steadfast you will soon move to an apartment befitting of your status.

3) I haven’t bought a car yet? – A younger friend once told me he could never get married before buying a car. He just did not see him and his wife walking together to the bus stop to take a bus ride to work. I could understand his point of view and only hoped that it was more of a challenge for him than a principle. If I were him, owning a car will probably be tops on my priority also. However, whilst owning a car is very important in a marriage there are no rules barring one from buying it after marriage. A car and married to the person you love are both mutually exclusive and because you do not have the funds to buy the car yet, does not mean you won’t have it soon after your wedding. It really boils down to your priorities and how they align to your goals. If your goal is to settle down then owning a car can’t be prioritized over marriage.

more on.... http://nairametrics.com/how-to-get-married-even-when-you-are-broke/

Nnamdi has been dating Amaka for about 3 years now and pressure is mounting on for them to take the relationship to the next level. Nnamdi is approaching his mid-thirties and Amaka is also not getting any younger making time not exactly their friend. Their respective parents are also mounting pressure and do not just understand why their children would not just get married soon enough.

Unbeknownst to either parents, Nnamdi and Amaka have a major stumbling blocks. Apart from being career focused individuals they also believe more importantly that their combined salary is not enough for them to build a home and at the same time pursue their career objectives.

Many of us fall into this trap at some point in our life and if not handled carefully can lead to serious emotional and financial distress. How does one get married without enough money? I will attempt to respond by addressing some of the common excuses we give.

1) I can’t afford wedding “ceremoney” – The thought of preparing for a wedding ceremony is one that scares many off early marriages. Most people consider it a very special event and believe the only way to live a lasting memory is to splurge on it. Having a memorable wedding is important for everyone however, not everyone can afford an expensive and memorable wedding. With proper planning you can have a cheap and memorable wedding as well. Wedding ceremony shouldn’t be seen as a do or die affair as all you have to do is spend what you can afford. What you should realise is that at the end of the day it’s about you and your spouse being happily married thereafter and not about the drinks, food and the pageantry that comes with the ceremony. There will be many, many more opportunities to be merry with friends and family.

2) Where will we live after we get married? –My friend, Victor once told me he got married to his wife when he was still living in a one bedroom flat. After the wedding they came back home to their one room apartment happier than they could ever imagine. I asked him why and he said the thought of them spending the night together forever was all they wished for and could as well have lived in the car if that’s what it will take. The point here is that you need not live in a three bedroom or four bedroom apartment to get married. Heck you could even have just married and still living in your parent’s apartment provided you are both focused on the goal. Just have it at the back of your mind that this is only temporary as experience has shown that finances do improve more frequently after marriage. If you both work hard and remain steadfast you will soon move to an apartment befitting of your status.

3) I haven’t bought a car yet? – A younger friend once told me he could never get married before buying a car. He just did not see him and his wife walking together to the bus stop to take a bus ride to work. I could understand his point of view and only hoped that it was more of a challenge for him than a principle. If I were him, owning a car will probably be tops on my priority also. However, whilst owning a car is very important in a marriage there are no rules barring one from buying it after marriage. A car and married to the person you love are both mutually exclusive and because you do not have the funds to buy the car yet, does not mean you won’t have it soon after your wedding. It really boils down to your priorities and how they align to your goals. If your goal is to settle down then owning a car can’t be prioritized over marriage.

more on.... http://nairametrics.com/how-to-get-married-even-when-you-are-broke/

Segun is currently in his early thirties and has been working for about 10 years now. He is considering getting married very soon and feels this might just be the right time for him. However, he faces one huge problem. He has no money in the bank to fund the wedding ceremonies let alone sustain a family. He is even more appalled when he realizes that he has earned over N30million combined in his last 10 years as a salaried worker, yet he had nothing in term of savings in the bank or investments to show for it. What could be the problem?

A lot young bachelors I know face serious issues with finances despite relatively having little responsibilities when compared to their married counterparts. This can be a real problem for an economy that is fast transforming as more and more graduates churn out to replace our ageing work force. Why is being broke such a problem for bachelors? Here are some of the reasons I can point out.

1) Cars and Houses – A familiar characteristics of a young thriving bachelor is owning a nice car and living in a rented apartment. These require huge outlay of cash as landlords collect a minimum one year rent upfront and cost of good cars are also not cheap. They end up borrowing from their offices or banks at very high rates to pay back over time. The loan repayment including interest leaves them with little or no money to save. Whereas if they had saved first, they would have had enough money to at least fund either of a car or a house.

2) Poor disposition towards saving – Most bachelors I know hardly cultivate the habit of saving. This could be because they do not feel any level of responsibility to a spouse or even children. Therefore, every income they receive they channel towards maintaining their lifestyle leaving them with little or no disposable income not to talk of an savings. One other reason could be that there is this deceptive belief that there is no goal. As a Bachelor, you must inculcate the habit of saving at all times. Rather than think you have no goals that warrant savings, you should save towards, Marriage, your unborn kids education, welfare, house, and even Insurance.

3) Reckless Lifestyle – Some Bachelors also live a reckless lifestyle of partying, drinking, traveling and being a spend thrift. Whilst it’s not so bad partying or drinking there is every likelihood that this can be done excessively as a bachelor. These habits are inimical to a good savings culture as they are hardly compatible. When you save, you have little disposable income and limits your ability to fund some of these lifestyles.

4) Family Pressure – Young bachelors also feel this intense need to give back soon after they are employed. They have parents, younger ones and even relatives who now rely on them for some source of income. This puts immense pressures on their finances making them seldom save or even invest for themselves. In fact, some cultures in Nigeria require that a newly employed give their complete first month salary to their parents. Whilst it is good to give back, wouldn’t saving your entire first month salary be a good head start in life?

5) Peer group influence – Peer group influence is another strong factor affecting savings culture of Bachelors. Young bachelors often have friends who are also not married and in most cases are simply excited with the newly found freedom of life to even bother to save. There is this unannounced competition to out do each other in terms of spending. They often misplace their priorities choosing to chase more materials aspects of life than meaningful ones. Whilst belonging to a peer group is human nature in itself, joining one with a better focus in life can be a very useful tool for saving. This is why groups such as an investment club or a cooperative are very wonderful forms of peer group influence that can aid the culture of saving.

6) Women and Fashion – This needs to introduction as most bachelors I know indulge in womanizing and trying to look good. Both habits are very expensive to maintain and these days the price is even much higher than it used to be. Women are wiser and more demanding of their men both financially and physically. They want you to dress really nice and lavish some of your money on them. Whilst these are not bad demands in its totality, they can be quite expensive for a young bachelor. It is very possible for this behavior to not only stop you from saving but to even make you borrow chronically and keep you indebted

7) Education – Acquiring further education is very encouraging, however they do come at a huge cost. A masters degree locally cost between N500,000 and N2million , whilst same abroad can be between N5million to N10million. Young bachelors have identified the advantage post graduate degrees can bring for their careers in future thus making them want to spend every money they have acquiring it. The risk here is that, they take up these degrees full time thus resigning from their jobs. Upon graduating they are mostly broke with most not even having enough money to pay off the balance of school fees. Student debts is a crisis even in developed world

8 Cars and Houses – A familiar characteristics of a young thriving bachelor is owning a nice car and living in a rented apartment. These require huge outlay of cash as landlords collect a minimum one year rent upfront and cost of good cars are also not cheap. They end up borrowing from their offices or banks at very high rates to pay back over time. The loan repayment including interest leaves them with little or no money to save. Whereas if they had saved first, they would have had enough money to at least fund either of a car or a house.

9) Poor disposition towards saving – Most bachelors I know hardly cultivate the habit of saving. This could be because they do not feel any level of responsibility to a spouse or even children. Therefore, every income they receive they channel towards maintaining their lifestyle leaving them with little or no disposable income not to talk of an savings. One other reason could be that there is this deceptive belief that there is no goal. As a Bachelor, you must inculcate the habit of saving at all times. Rather than think you have no goals that warrant savings, you should save towards, Marriage, your unborn kids education, welfare, house, and even Insurance.

10) Reckless Lifestyle – Some Bachelors also live a reckless lifestyle of partying, drinking, traveling and being a spend thrift. Whilst it’s not so bad partying or drinking there is every likelihood that this can be done excessively as a bachelor. These habits are inimical to a good savings culture as they are hardly compatible. When you save, you have little disposable income and limits your ability to fund some of these lifestyles.

11) Family Pressure – Young bachelors also feel this intense need to give back soon after they are employed. They have parents, younger ones and even relatives who now rely on them for some source of income. This puts immense pressures on their finances making them seldom save or even invest for themselves. In fact, some cultures in Nigeria require that a newly employed give their complete first month salary to their parents. Whilst it is good to give back, wouldn’t saving your entire first month salary be a good head start in life?

12) Peer group influence – Peer group influence is another strong factor affecting savings culture of Bachelors. Young bachelors often have friends who are also not married and in most cases are simply excited with the newly found freedom of life to even bother to save. There is this unannounced competition to out do each other in terms of spending. They often misplace their priorities choosing to chase more materials aspects of life than meaningful ones. Whilst belonging to a peer group is human nature in itself, joining one with a better focus in life can be a very useful tool for saving. This is why groups such as an investment club or a cooperative are very wonderful forms of peer group influence that can aid the culture of saving.

13) Women and Fashion – This needs to introduction as most bachelors I know indulge in womanizing and trying to look good. Both habits are very expensive to maintain and these days the price is even much higher than it used to be. Women are wiser and more demanding of their men both financially and physically. They want you to dress really nice and lavish some of your money on them. Whilst these are not bad demands in its totality, they can be quite expensive for a young bachelor. It is very possible for this behavior to not only stop you from saving but to even make you borrow chronically and keep you indebted

14) Education – Acquiring further education is very encouraging, however they do come at a huge cost. A masters degree locally cost between N500,000 and N2million , whilst same abroad can be between N5million to N10million. Young bachelors have identified the advantage post graduate degrees can bring for their careers in future thus making them want to spend every money they have acquiring it. The risk here is that, they take up these degrees full time thus resigning from their jobs. Upon graduating they are mostly broke with most not even having enough money to pay off the balance of school fees. Student debts is a crisis even in developed worlds.

http://nairametrics.com/young-working-class-nigerian-bachelors-broke/

Are you in your thirties or probably in the twilight of your twenties? Then this article is for you. For some of us who are in the twilight years of the thirties it’s easy to look back and wish there were things that we did that we probably should’ve done better or things that we perhaps shouldn’t have done. There are also things we should have done that we did not do. These are financial missteps that younger people must avoid making. I have picked out some.

1) Avoid depending on one source of income – Whether you are an entrepreneur or employee an alternative source of income is always a welcome financial buffer. This becomes even more important in your thirties, when the demand of bills and other financial commitments bite harder. In your thirties, you have age on your side, experience and wisdom to take on other jobs, investments or businesses that can help augment your cash flow.

2) Avoid not having an emergency fund – An emergency fund is a dedicated savings account that caters for any emergency that may arise periodically. It could be a health problem or an accident or you suddenly lose a job or presented with a deal you can’t refuse. An emergency funds is there for you to rely on when such needs arise. Not having an emergency fund can be a catastrophic.

3) Avoid not having any insurance – You can’t be in your thirties and don’t have either of a life insurance, Motor Insurance or health insurance. A life insurance ensures your loved ones are catered for in the event of death or that you are taken care of in the event of a physical injury. Health Insurance on the other hand ensures you and your dependents can be catered for whenever anyone falls ill, without having to pay anything extra. Insurance should be an important element of your financial life cycle and shouldn’t be avoided.

4) Avoid being jobless – Being in your thirties involves taking up a lot of responsibilities and it’s a period where you begin to establish a legacy for yourself. You can’t achieve this without a job. You can be self-employed or working for someone else or an organization. Bottom line is that you need to have a job that provides you with a decent level of economic security. It’s easier to be without a job in your twenties than in your thirties as getting a job gets more difficult the older you get.

5) Avoid Spending too much on women, fashion and parties – Being thirty often coincides with financial buoyancy giving many a financial leverage they never had. What typically ensues for many is a desire to spend on women, fashionable things and fun. It’s a flock mentality that makes it hard to resist for even the most conservative. Whilst it may not be completely avoidable it can be curtailed. The price for not curtailing it is financial ruin. Avoid it!!

6) Avoid Easy Money Making Investments – People get more vulnerable when they attain a certain level of financial security. In your thirties you probably may have worked between five to ten years and may have qualified for perks and allowances that give you bulk money. You soon get bombarded with all sorts of investment outlets that promise you quick returns on your money. What follows next off course is tears and sorrow. You don’t want to be caught up in that.
More on..... http://nairametrics.com/financial-missteps-avoid-30s/

Alex has been saving up for months now and looks set to finally purchase a brand new car. It hasn’t been easy considering the sacrifices he had to make just to save N3million in a year. Even after all the sacrifices and diligence, he still needs to get another N2million from his bank to complete the money. It hasn’t always been like this for Alex who over the years had relied on “tokunbo” cars for his daily commute.

Being a conservative guy, he never thought buying a new car was worth the fuss when he could simply get a car for half the price. Now that his status is changing, he feels the time has come to step up even though deep down his conviction tells him buying a new car probably isn’t worth it. He believes if not for the hype, he probably will just stick to his Tokunbo vehicles. “Brand new vehicles are not worth him” he says.

1) Expensive to maintain

Contrary to most opinions, Alex believes brand new cars are quite expensive to maintain. He recalled a friend telling him how he spent over N400, 000 just to fix a windscreen that was shattered. For most brand new cars, replacing parts can be very expensive leaving car owners with no choice but to pay. Four sets of shock absorbers can range between N100, 000 to N300, 000 for some cars. Contrast that to “Tokunbo” cars which are fairly cheaper to maintain.

2) Limited market for spare parts

Alex, follows up his claim of parts being expensive by alluding that our spare part market shops do not cater adequately for new cars compared to tokunbo vehicles. For example, parts for a made in 2014 car is harder to find compared to an older model of the car. This boxes inadvertently forces car owners into buying from the car sellers at a rate that can’t be appropriately negotiated.

3) Limited choice of service providers

Buying new cars also limits you to using one or two service provider. Typically, car owners are forced to this for reasons such as warranty benefits, free service, car parts, vehicle maintenance, specialty etc. This is different with tokunbo cars as you are inherently not bound to any service provider.

4) Warranties don’t go far enough

Brand new cars typically come with Warranties that last one year or 100,00km whichever comes first. Whilst that is the norm, he feels these are mostly just words backed up with little action. The other day a friend noticed the AC of his brand new car stopped working just 6 months after he purchased it. The car company fixed the AC free of charge only for the fault to develop again. They fixed it the second time and told him he had exhausted his warranties. When he discovered another factory fault he had no option but to pay from his pocket. There is also the issue of vehicle recalls that we get in the news, he believes it hardly applies to Nigeria.
more on... http://nairametrics.com/9-reasons-why-brand-new-cars-are-not-worth-it/

The National Bureau of Statistics has reported that inflation rate for the month of May was 9%. This represents a 0.3% rise from April 2014 and the highest month on month percentage change since June/July 2013.

Nigeria’s inflation rate has been rising every month since November 2014 when it was 7.9%. This month’s 9% is incidentally the highest since May 2013 when it hit 9% as well.

According to the National Bureau of Statistics, inflation rose higher due to a higher increase in food prices.

''Food prices edged higher in May as a result of the late onset of rains which have pushed back the harvest season coupled with higher transportation costs due to limited Premium Motor Spirit (PMS) availability. The Food Sub-index rose by 9.8 percent (year-on-year) in May, up by 0.3 percentage points from 9.5 percent in April. All groups which contribute to the Food sub-index increased at a faster pace during the reporting period with the highest year-on-year rises recorded in the Fish, Potatoes, yams and Tubers and Meats groups''.
more on.... http://nairametrics.com/more-pressure-for-emperor-emefiele-as-inflation-rate-jumps-to-highest-in-2-years/

If you were a pig (bulls make money: bears make money: pigs get slaughtered) and you bought and held First Bank stock over the past five years your holdings would have gone nowhere fast.
As a matter of fact you would have lost money.
First Bank is Nigeria’s biggest Bank by assets with the potential to be the lender generating the highest profit due to the numerous revenue levers it has in view of its dominant position in Africa’s largest economy.
Read more on..... http://nairametrics.com/analysis-fbn-holdings-perpetual-underachiever/

The Director-General, National Agency for Food and Drug Administration and Control, Dr. Paul Orhii, spoke at a stakeholders’ forum organised by the Small and Medium Scale Enterprise Group of the Lagos Chamber of Commerce and Industry in Lagos on Wednesday. This is what he had to say about consumption of bottled water in Nigeria.

Water consumption amounts to N8bn per day in Nigeria, that is, talking about bottled water only, not taking into consideration other uses and with a population of about 160 million people; it is a very good business. Everybody will want to get into it and so there is a need for training.
http://nairametrics.com/much-money-nigerians-spend-pure-water-daily/

1. Have a good relationship with your bankers – No matter how innovative your business is or how sound its prospects are it often isn’t enough fora bank to grant you a loan. This is because just as you do not have a crystal ball to confirm to you if your business will pay so do your bankers. However, it often takes an influential banker to get you through the rigors of convincing several panels of people waiting in line to scrutinize your request. The higher the person you know within the leadership of the bank, the more plausible your request will be granted.


2. Have a good business plan – A good business plan is the surest way of even getting your application through the lower level management of a bank. Whilst the people who often review your business plan are not the ones who approve it, their opinion actually does count in the vetting process. Your business plan must sound convincing and not confusing. Most people often load business plans/proposals with boring semantics and convoluting technicalities that even the authors themselves do not understand. Your business plan must read like a bestseller simple enough to get the plot and intriguing enough to make the reviewer want to have more. Slides, bullet points, SWOT analysis, financial projections are sure bets which you should include.


3. Have an irresistible collateral – Banks love collaterals and guard them jealously when they posses it. It is the crown jewel of any facility (loan) that they grant. As such the better your collateral the more likely you are to get a loan request granted. By the way, possessing a landed asset or property is not enough to sway the bank. The quality of the property is really key. You cannot have a mansion in your village that has no method of estimating its value and expect a bank to rely on that as a quality collateral. The key therefore is to have collaterals (assets or otherwise) that have marketable value that can easily be determined.
For more....
http://nairametrics.com/5-major-tips-that-can-help-secure-a-bank-loan-in-nigeria/

Back in school one of my favorite topics was the M&M theory. The theorem states that, “under a certain market price process (the classical random walk), in the absence of taxes, bankruptcy costs, agency costs, and asymmetric information, and in an efficient market, the value of a firm is unaffected by how that firm is financed”. What this simply means is that one common factor that differentiates one successful business from another is their individual ability to mitigate and exploit the effect of taxes and market information in their business activity.



Several factors affect the survival of a business no matter how big or small. However, some factors are within the control of the managers of the business and the other outside the control of the business. Whilst the M&M theorem basically focusses on the factors that are not within your control other factors within your control also affect the survival of your business. In my opinion, factors within your control are by far the quickest ways to kill a business. Let us explore some of them;



Not separating the business from the owner/managers – This is simply the way your business is being run. Most small businesses in Nigeria are owned by one person and as a result they are run incoherently without any formal structure. Most times they have no form of separating personal cash from cash meant for the day to day running of their business. It is either they are drawing from the business or lending to it without any record to show who is owing who. Sometimes, they use the cash generated from one business to fund the startup of another ending up killing the original business. A cycle that continues so long as the owners are making ends meet. By running the business as a one man show employees if any, are hardly carried along and merely see the business as a means to survive rather that as a venture that they can help grow. Businesses run this way in no time end up falling by the way side or simply just get sold. The business dies leaving the owner to start another venture.



Cash Flow – There was this manufacturing company that announced a 20% increase in revenue leading to a 12% increase in earning per share for shareholders. The company will go on to declare a dividend helping raise shareholder’s confidence. Unfortunately, the company failed to tell its uninformed shareholders they had to borrow to pay dividends despite making profits. Liquidity is the lifeline of any business. Without cash your business will simply fail and it doesn’t matter how much assets you have. Most small businesses often believe in acquiring many assets without stashing of enough cash. I recognize that by investing in assets business owners can leverage on it to borrow money or sell it in times of need. But what if there is an immediate need to source money at a time when lending is tight and asset prices have depreciated? This was the problem Lehman Brothers had when they collapsed in 2008. Whilst they had so much money tied up in assets they could not sell it to raise enough capital to pay their creditors thus leading them to bankruptcy. As a small business, you must always keep adequate cash reserve. One way to know how much cash you need is to do a cash flow analysis of your previous months transactions. If you spend N2million monthly on running your business then it is advisable to always have N4million as cash at the end of every month



Too much debt. As mention above without cash no business can survive as such business without cash mostly result to borrowing. Small Business loans mostly come in the form of overdrafts and are used to fund running cost in the hope to expected revenues will repay the debt. However, in some instances some divert the money into other uses that add no value to the growth of the business. In fact some who utilize loans for the right purpose end up finding it to pay back not to talk of those who use it for other unproductive means. A company with too much debt will someday have to repay the debt and without finding other sources of repaying the debt the banks will have no option but to liquidate the company.



Too Much Creditors – “No credit today come tomorrow” is a common sign post you find at the door of most small businesses. Business do need to grant their customers some credit sometimes. It is a common business metric provided it is properly measured and for the right business model. Some businesses are best suited for credit whilst some aren’t at all. Manufacturing businesses and wholesale ones are more predisposed towards granting credit. However retailers and service providers should try as much as possible to avoid granting credit or limit the the amount of credit given to the minimum. For example, a reseller of recharge card does not expect to sell on credit when MTN hardly does. That s why when you owe a GSM provider they cut your line.




Square Peg in the round Hole – Employees are one of the most important assets of a business. The more skilled and qualified your emloyees are in their job the more likelihood you are expected to succeed. Small businesses should endeavor to recruit the best possible employees they can find to handle job responsibility. No point employing out of pity when you have the financial resources to employ quality. In addition to that, your employees must be frequently trained to ensure that they are ready to compete in a dynamic and competitive environment. Most business owners erroneously see this as a waste of money. Employees have been known to single handedly bring down companies because the managers placed enormous responsibility on them without proper checks and balances. If you employ a staff without proper background checks to handle cash or critical aspects of the business then you stand the risk of loosing your cash and maybe the business itself.



Fixed Cost – A common feature of shopping malls in Nigeria are the rate at which one shop replaces another. You go to a mall today only to come back a few months later and the shop is no longer there. Some attribute this to their inability to sell products as most visitors to the malls often end up window shopping. Another major reason is the amount of Rent these shops pay. Businesses that incur high fixed cot are more likely to fail quicker than those with higher variable cost and lower fixed cost. Imagine having a shop at a mall where you have to pay a yearly rent of N12million. That means your business must be able to generate cash revenues of N12million annually just to at least be able to pay rent. That can be onerous considering that you still have to spend money on marketing, salaries, purchase of goods and services, taxes etc.



Overestimating the Market – Most of us go into businesses with or without a proper business plan. However, having a business plan does not guarantee that a business will be a success. A major reason for this is making very optimistic assumptions about the market without putting a backup plan should our estimates fail. For example, we may believe that by sighting a business at a particular location may seem like a good idea because of the huge population residing in the area. However, their purchasing power and their immediate need for the product is also a crucial factor. Sometimes too we over estimate the demand for a product because of the lack of it. There is hardly a reprieve for businesses that overestimate the market. They fail quickly.



Bad Publicity – Recently a very popular food company had a huge problem at their hand. Someone had spread a rumor that their food was had a chemical that had killed some people. They quickly went on a massive publicity spree to debunk the claim and solicited the heap of regulators such as NAFDAC to help debunk the claim. They knew that negative publicity such as this could in one day wipe out all the brand assets they have toiled to build and nurture over
http://nairametrics.com/how-to-kill-a-business-quickly/

As audited accounts start to trickle in companies will propose dividend payments to their shareholders as recommended by their respective board of directors. It is also important to track these announcements to know who is eligible to collect dividend, when it will be approved and when it will be paid. Dividend payment also affect share prices

Legend

Closure of Register – Only shareholders who own shares before this date will be paid dividend. If you sell before this date you won’t get dividend. If you sell after you will still get dividend but the new owner will not get.

Payment date – This is when dividend will be paid to you either via post (dividend warrants) or direct credit to your bank accounts (e-dividend).


This page will be updated frequently
Read more on.....http://nairametrics.com/list-of-dividends-declared-so-far-in-2015/

These days everything can be bought online and delivered to your house. It is the new trend and some manufacturers don’t think they should be waiting on the sidelines. You could consider Vitafoam a pacesetter of some sort. These days you can order a foam online and have it delivered to you within 24hours. In fact, you can even pick up the phone, call one of their “comfort centres” and a delivery will be made to you in 24hours.

Whilst all this seem impressive, the underlying reason for this is far from herd mentality. Rather, this is an arduous attempt to increase top line growth amidst rising operating cost and stiff competition. Revenue growth has been stunted in the last couple of years after growing 37% to N14billion in 2010. In spite of this, operating cost has continued to be a drag on profitability as is evident in the spiralling cost of distributing their products as well as raw material cost. The company acknowledged this much maintaining that these cost could not have been passed on to consumers necessitating the branch expansion that we see.

But branch expansion does cost money and takes time to materialise. This current adventure cost the company some N1.7billion with about N684million spent at the financial year ended September 2012. The asset purchase spree was partly financed with a bank loan of about N450million. But that is not all the loans they have. Total loans at the end of 6months to March 2013 stood at about N3.1billion or 97% of Equity. Out of this total, N2.7billion was used to finance stock replacement and another N1billion in augmenting other working capital requirements. Bad as this may seem, it is some what mitigated by an estimated N1.5billion in Ebitda they generated last year.

According to Vitafoam, if you had bought 10,000 ordinary shares of the company in 1978 and never sold, that quantum of shares would be about 299,993 ordinary shares. Put a value to the latter and you’d get about N1million. Intending investors may not find this gloat impressive considering the effect of inflation over the years. Impressive though is the fact that Vitafoam has consistently paid dividends over the years and in the last five years post ROE of not less than 20% having peaked to 37% in 2008. Only last financial year did they post a lower ROE (17%). The company’s expansion plans and foray into other West African countries such as Ghana and Serra Leone, I believe will yield fruit. Product diversification which they have also embarked upon in recent times should push top line growth northwards.

At the end of first half of this year (March 2013) revenue has jumped 15% and profit after tax 30%.Even though the pressures of operating cost remain the turning point in the short term will be their ability to keep interest cost at under 40% of Operating Profit as well as reduce effective tax rate to 25%. Achieve that and I can bet ROE will hit 24-27% come September. It is important to note that Vitafoam has always paid an effective tax rate of over 30% in the last five years and so dropping it to below that will be a monumental task.
Read more on http://nairametrics.com/vitafoam-plc-buy-sell-or-hold/

Owning a penny stock sometimes can be quite excruciating and very risky. But as they say, the higher the risk the higher the return. For someone who loves to take calculated risk, my appetite for penny stocks is huge and lately I have been getting a lot of satisfaction from it.

Some months back, I took a huge bet on Vono Products “Vono”, a penny stock that was in the doldrums of the bears and had in fact remained a no go area for many investors. This naturally caught my attention and so I decided to dig further.
I have several reasons for deciding whether to buy a penny stock or not. It could be that I think it is undervalued or that the stock has a history of gaining momentum whenever it is about to declare dividends or if it is owned by a parent company that is in its own right a solid company. These are just some of my buy signals.

My main reason for buying Vono was because Vitafoam had a majority stake in the company. With Vono still in the red, Vitafoam would have had to solidify a key investment in its subsidiary since efforts to run it profitably as a stand- alone company had failed. A merger just had to be in the offing.

I also figured buying Vono was an indirect way of buying Vitafoam whose share price had jumped up due to declaration of dividend and bonus. Since Vitafoam was off my reach, I thought Vono was a likely target. Also, Vitafoam had taken months to release its full year results providing so much information asymmetry that most times can create a potential value proposition.
And so I moved in quickly. I bought in tranches at an average of price of ninety-four kobo. I like to buy in tranches, as doing so helps ensure i continue to average down my price especially of it is a bearish stock. As usual, I continued to hope that my prediction of the merger will come through and thus guarantee my returns.
For more on this visit this link....
http://nairametrics.com/how-i-made-100-on-this-penny-stock-within-month/