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Chairman's Report


Distinguished Shareholders, members of the Board, Ladies and Gentlemen, I welcome you to the 39th Annual General Meeting of our Company, University Press Plc.
I am pleased to present a report on the review of the operating results for the year ended 31st March 2017 and our outlook for 2017/2018 financial year.

 

Economic and Operating Environment


Global GOP declined marginally from 3.2% in 2015 to 3.1% in 2016.
Nigeria's economy slipped into recession in 2016 reflecting economic shocks, inconsistent economic policies and security challenges. Crude oil prices fell below $30 per barrel, the lowest in eleven years compared to a Federal Government Budget benchmark price of $38 per barrel. The crash in oil price accounted for the acute dollar shortage which adversely affected the ability of the Central Bank of Nigeria to provide the needed foreign exchange (FX) to manufacturing and other sectors of the economy. This resulted in the closure of an estimated 272 firms, dropping of industrial capacity utilization from 51.4% to 35.4% in 2016, increased rate of unemployment and serious decline in aggregate demand in both public and private sectors.

Nigeria was unable to maximize her revenue at the period of higher prices of crude oil during the year under review due to activities of the militants in Niger Delta region, hence crude oil production was very low for many months. There was a sharp drop in revenue allocation to the three tiers of government in Nigeria which accounted for their inability to meet their obligations, especially payment of salaries to workers. The activities of the militants in the Niger Delta region also affected power supply which contributed to increased costs of operations in Nigeria.

In addition to the above, the Central Bank of Nigeria liberalized the foreign exchange market in June 2016 which led to the devaluation of Naira by 44%, the exchange rate of Naira for a US Dollar moved from N197 to N283 and continued to increase to N520 until the apex bank started intervening in the market.
Inflation rose as high as 18.6% by December, 2016 and this led to decrease in the purchasing power of consumers.
Security remains a challenge despite gains made in the fight against Boko Haram in the North-East and dialogue with militants in the Niger Delta.

 

Publishing Sector


The Publishing sector was also hard hit as a result of its dependence on foreign exchange to purchase raw materials for printing and settling financial obligations to foreign printers. The Company incurred foreign exchange loss of N59m due to payment for goods bought in 2015 between February and March 2017. The suppliers could not be paid in 2015 due to the lack of foreign exchange. The pirates continued to cause revenue leakages to Publishers in the Country.

 

Financial Performance


Despite the challenging year, our Company recorded a better result than it did in the previous year, with a revenue of N1.61b for the 2016/2017 financial year. When compared with the 2015/2016 revenue of N1.472b, the revenue rose by 9%. This impacted on the profit after tax which increased by 62% from N73.3m in 2015/2016 to N118.4m in 2016/2017.

The assets of the Company stood at N2.4 billion as at 31st March,2017.

 

Dividend


In view of the Company's performance, the Board is pleased to recommend for your approval a dividend of 10k per 50k ordinary share in respect of the 2016/2017 Financial Year to reflect an increase of 100% when compared with 5k per share paid last year. The amount if approved will translate to a cash outlay of N43.1m.

 

Capital Expenditure


Total capital expenditure for the year was N104.5m. The amount was invested on the acquisition of field vehicles, office and computer equipment for enhancement of our operations.

 

Human Capital


The Company has continued to enjoy the loyalty and commitment of our result-oriented members of staff. The Company will improve on her investment in the employees for a better result in subsequent years.

 

The Future


Going forward, we expect a slow acceleration in global growth. The expected improvement in the global economy should benefit commodity exporters and commodity currencies. However, the domestic economic recovery is expected to continue as the expected moderate global recovery slowly leads. Diversification of the Nigeria's economy is expected to save foreign exchange on importation and increase foreign exchange inflow through export.

The Federal Government budgeted N7.44trn for 2017 with a total revenue projection of N5.08trn thereby showing a shortfall of N2.36trn to be financed through borrowing. The expansionary budget for 2017 was meant to address infrastructural deficiencies among other objectives. The Federal Government has developed a framework in the Nigeria Economic Recovery Plan (2017-2020), which focuses on five key areas, namely, improving macroeconomic stability, economic growth and diversification, improving competitiveness, fostering social inclusion, and governance and security.

Given the Company's achievements in recent years, the Board, Management and Staff will continue to seek and take full advantage of existing opportunities in moving the Company forward.

Thank you for your loyalty and continued support.

 

 

Dr. Lalekan Are