CWG Plc, Global Spectrum Energy Services Plc and Portland Paints & Product Nigeria (PPPN) Plc have less-than-required minimum volume of shares for public trading in the stock market, a major infraction that may adversely affect liquidity and efficient price discovery on the companies.
A report by the Nigerian Stock Exchange (NSE) indicated that the three companies have free float deficiencies, a reference to over concentration of the shareholdings of the companies in the hands of directors, other insiders and related persons.
Under the rules at the Exchange, companies listed on the main board are required to have a minimum free float of 20 per cent of their market capitalisation, implying that 20 per cent of the companies’ shareholdings must be available for minority retail shareholders. CWG, Global Spectrum Energy Services and PPPN are listed on the main board of the Exchange.
PPPN, a subsidiary of UAC of Nigeria (UACN) Plc, slipped into deficiency after a 2017 rights issue, which was undersubscribed by 34 per cent.
CWG has been unable to undertake proposed capital issue as it struggles with declining performance. CWG recorded a net loss of N1.58 billion in 2017, relapsing into a losing streak that had seen the technological company with a pre-tax loss of N1.75 billion in 2015. Key extracts of audited report and accounts of CWG for the year ended December 31, 2017 showed that turnover dropped from N10.166 billion in 2016 to N8.827 billion in 2017. The company recorded pre and post tax losses of N1.511 billion and N1.576 billion respectively in 2017 compared with profit before tax of N142.04 million and profit after tax of N127.68 million in 2016.
Global Spectrum Energy Services, which was listed in November 2017, has neither been able to float new issue nor actively trade existing shares to dilute pre-listing concentration of shareholdings.
Free float, otherwise known as public float, refers to the number of shares of a quoted company held by ordinary shareholders other than those directly or indirectly held by its parent, subsidiary or associate companies or any subsidiaries or associates of its parent company; its directors who are holding office as directors of the entity and their close family members and any single individual or institutional shareholder holding a statutorily significant stake, which is 5.0 per cent and above in Nigeria.
Thus, free float’s shares do not include shares held directly or indirectly by any officer, director, controlling shareholder or other concentrated, affiliated […]
