By Adewale Raji
THE year 2016 was characterised by global political shocks in advanced economies notably with the United Kingdom “ Brexit Vote” in June and the election of Donald J. Trump in November 2016 as US President.
On the national front, the year 2016 will arguably be one of the toughest years for businesses in recent history. A regime of weak Global Crude Oil prices and declining volume output due to production shortage in the Niger Delta grievously affected Federal Government revenue resulting in unprecedented foreign exchange shortages. The country recorded its first negative GDP rate in 20 years. Following two consecutive quarters of negative GDP growth, the economy unfortunately slipped into recession with all the attendant repercussion of macro-economic tremors that affected the well-being of the populace.
The Non Oil revenue receipts did not fare better during the period too. The fiscal and monetary authorities deployed many tools whose impact was minimal due to the recession mode that the economy had found itself. Under the circumstances, the devaluation of the Naira against the US Dollar was inevitable. The Naira official rate took a plunge from N197 to N280 for $1 before stabilising in the N360-N380 band. This development resulted in huge financial losses to companies with foreign currency liabilities thereby translating to poor corporate earnings for a lot of them. The Nigeria Stock Exchange was not immune from the economic uncertainties as the NSE-ASI(All Share Index) dipped by 6%(i.e. N605b) closing the year capitalisation at N9.25trillion from an opening of N9.85trillion.
It is under above circumstances that your company operated in 2016. Rentals from our various commercial, residential and rental properties stagnated and in some cases particularly in the rental segment had reduction in the course of the year to retain occupancy. Due to these circumstances and despite our various revenue growth initiatives, Group revenue managed a 5% increase from N3.73b to N3.92b when compared with previous year. For the holding company, revenue increased by 11% from N1.69b in 2015 to N1.88b in 2016.
Based on aggressive cost management and efficiencies put in place during this turbulent year that capped our administrative expenses at almost previous year level and drastic reduction of our finance cost as a result of efficient capital deployment, we are able to increase our Profit Before Tax by 32% from N597m to N789m in 2016. This is after stripping out the impact of the recent revaluation of our Real Estate asset as required by IFRS.
This encouraging performance in 2016 has made the Board to increase the Dividend payout to our esteemed shareholders from N194m to N222.23m for 2016 Financial year representing a 14.3% increase over previous year. This amount will be recommended for your approval at the Annual General Meeting.
I am delighted to report that our modest effort in re-launching Odu’a Brand in Real Estate Development has culminated in the successful completion within nine months of an exquisite Detached Duplexes residential development at Jericho GRA,Ibadan. We shall continue such intervention through both direct and JV partnerships to re-develop a lot of our inherited properties to unlock value from such passive assets.
The current Federal Government Economic Recovery Plan is hinged on improved Oil Revenue, improved tax administrator and collection, investment in infrastructure notably power; roads and rail, investments in Agriculture and Solid Minerals, more support for the manufacturing sector and job creation initiatives. We are positioning to take advantage of business opportunities provided by these and the renewed commitment of our Shareholders to regional integration and their charge that ”Odu’a should be the engine room for the economic development of Western Nigeria”.
The Company’s performance in 2016 was an improvement over 2015 result. We are assiduously making efforts to grow our revenue in current businesses also diversify our revenue generation sources. Latching on our agricultural farmlands at Ogboro and Ikerre(Oyo State), we are at advanced stages on some of them in concreticise JV partnership with credible technical investors to establish integrated agricultural value chain businesses that have outgrower initiatives. We are confident of kick starting some before the end of 2017.
The repositioning approval to attract investors as equity holders into our hospitality business to bring about major transformation into world class hotels under”Project Rebirth” is making progress with KPMG as the anchor.
The company will forge ahead in assimilating more private sector principles in organisational structure,benchmarks, corporate governance and performance measurement(KPIs). We shall also continue to run as an organisation with entrepreneurial spirit and ethos, develop and deploy more business models that leverage on the socio-economic competitive advantages of all Western States and in synergy with DAWN Commission.
We shall remain focused on our Shareholders,Stakeholders and the Business with purposeful leadership and Board-Management goals alignment and cooperation.
Presently, Odu’a runs two commercial Farmers’ Academy(Oyo-Odu’a Famers’ Academy, Awe in Oyo State and Osun-Odu’a Farmers’ Academy, Ede in the State of Osun). The Academy programmes provide practical skills training to new and emerging farmers in the quest for food security. Youths and Retirees who wish to acquire modern skills and techniques in agricultural practices are admitted annually into the academics to undergo one year intensive training in commercial agriculture. Through collaboration with State Ministries of Agriculture and local governments, the graduates are assisted with farmland, farm inputs and credit facilities after forming themselves into visible cooperative groups.
In the near future, Odu’a’s growth strategy is to explore competitive and comparative advantages in integrated agric value chain business that will also transform the Farmers’ Academy programme into out grower supported commercial farming with processing to industrial raw materials or branded food products.