A Nairobi Securities Exchange staff (left) attends to a customer at the
bourse. The first quarter of last year saw depressed trading numbers due
to the uncertainty surrounding the reintroduced capital gains tax.
PHOTO | FILE
By CHARLES MWANIKI, cmwaniki@ke.nationmedia.com
In Summary
- The bonus offer, which is pending shareholder and regulatory approval, will see existing shareholders get an additional 64.87 million shares, a 33 per cent increase on the 194.62 million already in issue.
- Foreign and East African institutional investors will be the biggest beneficiaries of the bonus issue, being holders of 86.5 per cent of the shares as per the December 2015 shareholder register.
- The NSE bonus issue comes at a time the exchange has announced a 4.5 per cent dip in net profit for the 2015 financial year to Sh305.6 million, attributed to lower trading turnover on both the equities and fixed income platforms last year.
The Nairobi Securities Exchange (NSE) is set to
capitalise cash reserves worth Sh650 million through a bonus issue that
will see shareholders get a share for every three held.
The NSE bonus issue comes at a time the exchange has
announced a 4.5 per cent dip in net profit for the 2015 financial year
to Sh305.6 million, attributed to lower trading turnover on both the
equities and fixed income platforms last year.
The NSE held retained earnings of Sh718.8 million at the close of the year, up from Sh487.1 million at the end of 2014.
The bonus offer, which is pending shareholder and
regulatory approval, will see existing shareholders get an additional
64.87 million shares, a 33 per cent increase on the 194.62 million
already in issue.
They will, however, continue to retain their
proportionate ownership in the company. This will in effect increase the
liquidity of the company’s shares in market trading and possibly reduce
the share price, which closed at Sh23.75 a share Thursday.
“The director’s recommend, subject to regulatory
approvals and that of the shareholders, to increase the authorised share
capital from Sh850 million divided into 212.5 million ordinary shares
of Sh4 each to Sh1.5 billion divided into 375 million ordinary shares of
Sh4 each by the creation of 162.5 million ordinary shares,” said the
NSE in a statement.
Foreign and East African institutional investors
will be the biggest beneficiaries of the bonus issue, being holders of
86.5 per cent of the shares as per the December 2015 shareholder
register.
The capitalisation comes at a time the exchange has
been making capital investments in upgrading its systems such as the
automated trading system for the introduction of derivatives and
exchange traded funds trading.
Last year, the NSE says it invested seed capital of
Sh20 million, Sh100 million and Sh10 million in NSE Clear Limited, the
NSE Derivatives Settlement Guarantee Fund and the NSE Derivatives
Investor Protection Fund respectively.
In terms of financial performance, the NSE said its
4.5 per cent decline in net profit was as a result of a fall in trading
turnover due to the capital gains tax introduced in January — although
the tax was later scrapped by Parliament.
Equity trading turnover fell by three per cent from
Sh431 billion in 2014 to Sh415 billion last year, while bonds turnover
was down by 39.7 per cent from Sh1.01 trillion in 2014 to Sh610 billion
in 2015.
Total income for the exchange fell to Sh808.3
million last year from Sh821.9 million as a result besides a rise in
expenses of 15.1 per cent from Sh389.5 million to Sh448.3 million.
Higher interest rates, especially in the second
half of the year, negatively affected trades on the secondary
fixed-income market as investors were attracted to higher yielding
primary securities issues.
The high interest rates also affected trading in
the equities market, at a time the market was in the middle of a bear
run that saw returns on the main NSE 20 share index fall to a negative
21.9 per cent for the year. The rates also made it expensive for
investors to access credit for investment.
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