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First Watch: The 2012 Company Results

Dr Akintola Omigbodun

A number of companies have announced their results for the year ending 31 December 2012 and some of the companies have held their Annual General Meetings, AGMs, within the last two months. I notice that a lot of the dividends due to shareholders would have been paid by the end of June 2013.

The reports from the AGMs of the companies were generally that shareholders were satisfied with the performance of their respective companies and that they would want the companies to declare bonus shares in addition to dividends. I have not heard of any reports in which shareholders were asking for a dividend payout from all the profit and no bonus shares.

There is an event that comes to mind whenever one considers the merits of dividend payout from all the profit against an issue of bonus shares. Several years ago, a bank which was not on the trading lists of the Nigerian Stock Exchange, NSE, declared bonus shares at its AGM.

One possibly prescient shareholder who was not happy with the bonus shares indicated that the directors and staff of the bank were earning salaries and those shareholders should earn something like a salary too. As the company was not listed on the NSE, the bonus shares could not be readily sold. This shareholder might have had a glimpse into the future because that particular bank went out of business after this AGM.

The story just above would make one ask just how much an investor knows about the company he has invested in. The annual report and accounts of a company is perhaps the only opportunity a shareholder has to learn something about the company in which he is an investor.

A number of companies have passed resolutions allowing the companies to send their annual reports and accounts in CD-format. The reasons the companies have given for the change from the paper-format include the advancement of environmental sustainability and the creation of long term value for the shareholders. However, since this change started, I have not received a single CD from either of the two major banks in which my family interests have invested.

The companies appear to believe that their annual reports and accounts are for the purposes of their AGMs only. A large number of shareholders do not attend AGMs but some of these shareholders would want to know what the companies are up to.

We are constantly advised that shareholding assets should be considered as long-term and not short-term investments. Long-term investors should be given the chance to have a full assessment of a company from one year to the next year.

The real problem, whether the paper-format or the CD-format is used, is how to ensure delivery to the shareholder. I should receive three CDs from each of the banks I indicated earlier. The reasons given for non-delivery of annual reports include wrong postal addresses provided by shareholders and inadequate response from the postal system.

In the case of my family interests, I know that the Registrars have the correct addresses as dividend warrants have been posted to and received at these addresses in the past before arrangements were concluded for e-dividend payments.

What the companies should do to resolve the problem is to spend part of their budgets for Corporate Social Responsibility, CSR, on reaching their shareholders. In the first place, rather than dumping sacks of mail at Bulkpost, the companies should sort the letters town by town and post office by post office and the companies should carry the sorted letters to the respective towns and post offices where the letters will be posted. If the companies say that this is too expensive or there may be regulatory issues, I will want to say that a Nigerian company, Nestle, delivered annual reports to street addresses in Lagos this year by courier.

In the second place, if the companies follow the suggestion made above, the companies should indicate to the post office that they would come back to collect undelivered letters after an appropriate period, possibly 3 months. With the collection of undelivered letters, the companies would begin to have a better idea of the shareholders that they have difficulty in reaching.

I realise that some of the companies now have more than 1 million shareholders. However, the effort they put into reaching their shareholders would be a first and useful step in resolving the issue of unclaimed dividends. Some of the companies advertise to the whole world that part of their strength is in the diversity and numbers of their shareholders.

If these companies truly believe what they are telling the world, they should spend part of their CSR budget in reaching their shareholders. I will want to use this medium to inform FBN Holdings Plc that I did submit at Samuel Asabia House on May 21 2013 a request for a paper copy of the 2012 Annual Report.


Disclaimer

Comments expressed here do not reflect the opinions of vanguard newspapers or any employee thereof.