CSCS Continues Boosting Investors' Confidence
By Uche Obike
The Central Securities Clearing System (CSCS) has continued to live up to the expectations of operators in the nation's capital market. The increasing confidence of the investors in the activities of the capital market had been attributed to the efficiency and transparency of the CSCS operations.
There is no doubt that the CSCS has continued to demonstrate its mission statement: "Our mission is to operate a Central Securities Depository (CSD) that is efficient, investor-friendly and transparent in a world that has been reduced to a global village by Information Technology with a dynamic integration of the needs of the domestic and foreign investors in the Nigerian capital market."
The yearly growth in the performance of the CSCS further reveals consistent service delivery to the users of the depository.
As at December 31, 2003, the CSCS recorded a total assets of N2.342 billion, as at July 2004, representing an increase of 584 per cent over N342 million it recorded in 2003.
The Chairman, Apostle Hayford Alile, recently told shareholders of at the company's Annual General Meeting that the shareholders' fund stood at N2.267 billion in the review period, an increase of 749 per cent over N267 million in 2003.
He expressed satisfaction over the company's phenomenal growth in its performance indicators despite the inclement operating environment.
Meanwhile, the shareholders endorsed the resolution to increase the authorised share capital from 500 million ordinary shares of N1.00 each to one billion ordinary shares of N1.00 each, a measure of strong financial strength.
The company raised over N2 billion from its recently concluded hybrid Offer of Rights Issues and Private Placements. According to Alile, the Offer was over-subscribed by more than 60 per cent, an indication of the growing confidence in the organisation. "The board has decided to absorb the over-subscription so as to put the company in sound financial position."
In his assessment of the company's performance during the period under review, the Managing Director, Mr. Onyewuchi C. Asinobi said the outstanding performance was a justification of staff professionalism and dedication to duty.
Asinobi noted that transactions worth N113.88 billion was cleared and settled by the CSCS in the review period. He enjoined the investing public to take advantage of the CSCS to invest through the Nigerian Stock Exchange. "CSCS will soon unveil its plan to transit from T+3 transaction cycle to T+ 0", Asinobi said.
The company recorded a profit before tax of N152 million, an increase of 120 per cent over the N69 million made in the preceding year.
Asinobi had earlier disclosed that the clearing house cleared and settled trades valued at N113.6 billion in year 2003, against N60 billion in year 2002, representing over 100 per cent increase.
From 1997 to 2003, CSCS cleared and settled transactions worth over N295.7 billion.
In terms volume for year 2003, CSCS cleared and settled transactions of 13.2 billion units as against 6.6 billion units in year 2002, representing over 100 per cent rise, while from 1997 to 2003, it also cleared and settled 37.6 billion units of shares.
Similar, the CSCS dematerialised 484,615 share certificates for year 2003 as against 405,798 share certificates in year 2002, while from 1997 to 2003, the dematerialised 2.5 million share certificates, representing 38.3 billion units of shares.
According to him, only 1,401 shareholders requested for share certificates in year 2003, while since 1997 to 2003, only 7,167 shareholders requested for share certificates, adding that there are over 650,000 shareholders in the CSCS System.
The Managing Director also said that 423 shareholders used their shareholding in CSCS depository as collateral to obtain loan in year 2003 as against 254 shareholders in 2002, while over 1,146 shareholders have used their shareholding as collateral for loan since inception (1997) to year 2003.
Meanwhile, Asinobi said that the company during the year under review recorded a turnover of N370 million as against N220 million recorded in the previous year.
Meanwhile, the shareholders recently approved the board's resolution passed to conserve available cash to suppress the company's impending new Business Model. The resolution approved that a total of N100 million of the profits be allotted to shareholders as bonus on the basis of two ordinary shares of N1.00 each to every three shares held. This implies that profit has been ploughed back for expansion.
Asinobi assured the investing public of the resolve of the CSCS management team to provide world class services in the capital market and the economy.
The company was incorporated in Nigeria as a private limited liability company on July 29, 1992 and commenced operations on April 14, 1997.
Its principal activities are to function as agency for central depository for all share certificates of quoted securities including Government stocks for safekeeping (custodian services) as well as certificates for foreign investors, a sub-registry for all quoted securities in conjunction with registrars of quoted companies, the issuance of central securities identification numbers to stockbrokers for local and foreign instruments.
Despite its short-coming, the CSCS which commenced operations with T+5 settle cycle (i.e. six working days) for emerging markets, had reduced to T+3 settlement cycle (4 working days) on March 1, 2000 in satisfaction of the demand by local and foreign institutional and high net-worth individual investors. The level of transparency has greatly improved.
It could be recalled that before the introduction of the CSCS, it took between three months to 12 months to receive share certificates from transactions made.
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