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Chairman’s Report


Distinguished Shareholders, Members of the Board of Directors, Ladies and Gentlemen,

It is with great pleasure that I welcome you to the 35th Annual General Meeting of our formidable Company, University Press Plc and to present the Annual Reports and Financial Statements for the year ended 31st March, 2013.

Before I proceed to unveil the details of your company's performance in 2012/2013, permit me to present an overview of the operating environment during the period under review.

The objective is to enable us fully appreciate the opportunities and challenges that your company faced during the period.

 

Business Environment


The nation's Gross Domestic Product (GDP) grew by 6.58 per cent in 2012, which is lower than the 7.43 per cent recorded in 2011. The non-oil sector remained the major driver of growth, recording 8.23 per cent increase in contrast to the oil sector, which contracted by 0.17 per cent during 2012. The relatively robust growth projections, despite the slowing global economy, reflected the somewhat favourable performance of wholesale and retail trade; the services sectors; outcome of banking sector reforms; and initiatives by government to stimulate the real economy.

During the period under review, the Nigerian capital market rallied as equities' market indicators trended upwards. Market data show that the All-Share Index (ASI) increased by 35.45 per cent from 20,730.63 points to 28,078.80 points between December 30, 2011 and December 31, 2012. Market Capitalization (MC) also increased by 37.38 per cent, from N6.53trillion to N8.97 trillion during the same period.

The industrial sector also gave a better performance, with the Central Bank's industrial production index making year-on-year gains in each of the first three quarters of 2012. The bulk of the growth was attributed to increased activities in the electricity, mining and manufacturing sub-sectors. However, while the manufacturing capacity utilisation rate showed consistent gains in the first three quarters of 2012, its modest contribution to GDP has prompted some concern.

But while the economy in GDP terms was doing relatively well, inflation remained a major challenge all through the year under review. The Central Bank of Nigeria's (CBN) Monetary Policy Committee (MPC) in its Communiqué Number 87, observed that, on the average, inflationary pressure was elevated in 2012. The average inflation rate in 2012 stood at 12.24 per cent. The major drivers of inflation in 2012 included food and non-alcoholic beverages, housing, water, electricity and transport.

Improvements in social welfare indicators have been much slower than would have been expected in the context of this growth.

Poverty reduction and job creation have not kept pace with population growth, implying social distress for an increasing number of Nigerians. The official unemployment rate had steadily increased from 12 per cent of the working age population in 2006 to 24 per cent in 2011. Progress towards the fulfilment of many of the Millennium Development Goals has been slow, and the country ranked 153 out of 186 countries in the 2013 United Nations Human Development Index.

 

The Publishing Industry


The publishing industry has become intensely competitive. However, we have good reasons to be confident in our capability, ability and zeal to surmount challenges, mitigate risks, take advantage of profitable opportunities, sustain our pedigree and in fact, surpass achievements year-on-year.

In 2012/2013, our Company delivered a very good performance – in a very challenging year characterized by severe costpressures and intensified competition – due to the result-oriented strategies of the Company. We continued to deliver outstanding results despite the difficult economic environment of 2012 and the deteriorating security situation in the country.

This is characterized by the Boko Haram insurgency in the Northern parts of the country that resulted in the declaration of a state of emergency in Yobe, Borno and Adamawa States. This made business opportunities in those areas almost non-existent for those in the book business. However, we are pleased to have maintained the positive momentum on our path towards long-term sustainable, profitable and capital efficient growth, in spite of all these challenges. We will continue to explore other areas of operations to cushion the effects of the challenges.

 

Operating Result


In spite of the external environment, our Company remained focused and was able to build on the previous year's success by increasing its turnover by 11% from N2.082 billion in 2011/2012 to N2.313 billion in 2012/2013. The earnings also increased by 15% from N227.4 million in 2011/2012 to N260.7 million in 2012/2013.

 

Dividend


In light of the Company's performance, the Board of Directors is pleased to recommend a dividend payout of 35k, resulting in a total dividend payment of N150.9 million, having considered the future cash requirement for investment and profitable growth.

 

Capital Expenditure


During the period under consideration, a total sum of N121 million was spent on acquiring property, plant and equipment.

This was spent majorly on acquisition of field vehicles and office equipment. 

 

Corporate Social Responsibility


The Company continued to make substantial contributions to improving the education of our community. In 2013, books worth N5million were donated to nine (9) public secondary schools and Oyo State Government for Education Summit.

This gesture will be extended to the other five (5) geo-political zones in the coming years.

 

Human Resources


We have always held our staffs in high esteem as there is no gainsaying that they are the most important resource that has given rise to the Company's unprecedented accomplishment. The successes that the Company has been recording hinge on the invaluable contribution of the staff. Consequently, we will continue to enhance their productivity through training and development in order to equip and keep them abreast of dynamic trends in the industry.

On behalf of the Board of Directors, I hereby express my profound gratitude to the Managing Director for his exceptional leadership, the Management team, as well as the staff, for their passion for excellence, diligence, outstanding dedication, hard work, strong commitment and willingness to succeed in the face of the harsh economic climate and ever-growing competition.

 

Board Appointments/Retirements


In the course of the financial year, our Executive Director (Marketing/Distribution), Mr. M.O. Morawo retired from the services of the Company with effect from 12th March, 2013. I also wish to inform you that subsequent to the financial year end, Chief O.B. Okuboyejo who had served as a Non-Executive Director retired from the Board of the Company with effect from 31st May, 2013.

To ensure that the composition of the Board of Directors is in compliance with the best corporate practices, Prof. (Mrs.) Theodora A. Ezeigbo has been appointed as a Non-Executive Director with effect from 1st June, 2013. Also, Mrs. F.O.Bademosi has been appointed as Executive Director (Publishing) with effect from 13th March, 2013. Until her appointment, Mrs. F.O. Bademosi was the Company's General Manager (Publishing).

We wish Mr. M.O. Morawo and Chief O.B. Okuboyejo well in their future endeavors and a happy retirement. We also wish both Prof. T.A. Ezeigbo and Mrs. F.O. Bademosi successful tenure of office.

 

Future Prospects


Distinguished shareholders, notwithstanding the daunting challenges in the operating environment, your company has continuously retained its position as the foremost publishing company in the nation and is fully equipped to surpass previous landmarks by utilizing state of the art technology and processes in developing quality world-class products, an efficient and effective marketing and distribution network and well-motivated staff.

For us to succeed in this respect, we need to improve the capital at the disposal of the Company. To this end, and in line with suggestions that most of you have made, we are proposing to increase the authorized share capital, paid-up share capital, hence we are seeking your approval at the 2013 Annual General Meeting to raise funds from the Capital Market. I look forward to your approval of all the resolutions in this regard.

With the strength of our management, in-depth market knowledge, unflinching professionalism combined with consistent excellent performance, there is enough reason for optimism, prominent amongst which is management's and staff's rare disposition that constantly demands improvement over previous achievements.

We will continuously analyse our strategies and, where necessary, adjust our objectives based on the business environment.

 

Conclusion


On behalf of the Board and Management, I wish to thank our shareholders for their unqualified support and the continued trust and confidence reposed in us. I also express my gratitude to our numerous customers within and outside for their continued patronage.

My heartfelt gratitude also goes to my colleagues on the Board, the Management and Staff for their immeasurable contribution towards the continued growth of this great company, as well as our bankers and the External Auditors – Messrs BDO Professional Services for their invaluable services.

 

I thank you for your attention.

 

Dr. Lalekan Are

Chairman

Thursday, September 26th, 2013