Kajola: No going back on dividend payment

 

 

“Kajola Integrated Investment Plc was incorporated in March 22nd, 2006 with the objective of establishing a modern private sector investment company that would play in both the domestic and global markets.

 

The company’s authorised and fully paid share capital as at incorporation was N75 million. The share of the company has been increased to N1billion. The rationale behind this establishment is to have a holding company that would carve a niche in the national, sub-regional and global markets”

 

(Source: Kajola Integrated Investment Limited official website)

 

 

investadvocate in its usual manner sought to find out more about Kajola Integrated Investment Plc (Kajola) as a follow up to activities unfolding in the company.

 

In this interview with PETER OBIORA of investadvocate, Adelani Ajanaku, MD/CEO of the Company at its Head Office in Lagos Nigeria discusses issues relating to the company’s post Private Placement era,  listing of the company on the Nigerian Stock Exchange (NSE), Kajola’s business opportunities in the Real Estate sector of the Nigerian economy, Oil and Gas, equipment leasing and its creation of wealth for all through its KJL Microfinance Bank established in Oshogbo Nigeria .

 

Other issues discussed include dispatch of share certificates to the company’s over 6,500 investors who took part in its year 2008 Private Placement, return on investment and future outlook among others. Excerpts:

 

Kajola and post Private Placement era

 

Kajola as a name in Yoruba language connotes  let’s prosper together, we had a Private Placement (PP) in year 2008 and the focus  was to enable us reach out to the nooks and crannies of Nigeria; so that the company can attract funds to go into the businesses which it has outlined for itself.

 

Again we wanted to ensure that Kajola is owned by quite a number of Nigerians; though when we had the Placement, we wanted to raise N3.0 billion but was unable to achieve that. We raised slightly N1.0 billion and today the company has well over 6,500 shareholders nationwide.

 

EDITOR’s PICK:

 

It would be recalled that the Company set out to raise through Private Placement, a 2,500,000,000 Ordinary Shares of N1.00 each at N1.05 per share, all payable in full on application between February and April 2008.

 

However, due to the slow response to the offer by the targeted investors, the closing date for offer was extended till August last year. At the close of the exercise, we eventually raised about N1.2billion out of the expected inflow of N2, 625,000,000.00 representing a shortfall of 54%.

 

 

 

Kajola is a company whose ownership cut across all people of Nigeria; irrespective of tribal background. As part of our plans for raising funds via Private Placement, we sought to establish Microfinance Bank and today we have a Microfinance Bank presently operating in Oshogbo Osun State Nigeria. The Microfinance Bank has a Capital base of N100 million and it is doing very well. The choice of Oshogbo was informed by the need for Kajola to empower individuals and ensure that we better their lives; through the support of businesses.

 

In the past one year, we have been doing this successfully and quite a number of artisans, Market women, youths and so on has benefitted from our operations by accessing funding ranging from N50, 000 to N1.0 million. We have also granted loans to a lot of Co-operative Societies and Women Groups and in terms of repayment, they have kept to their own side of the bargain.

 

Also we are trying to leverage on our success in this area of business and seek expansion beyond Oshogbo in terms of microfinance banking.

 

Like I affirmed earlier, the most important trademark of Kajola is creating opportunities for people to benefit from what the company has in stock; that’s why people form the focus of our attention all the time.

 

Other business opportunities Kajola projected in the Private Placement of year 2008

 

We also projected going into the Real Estate Sector of the Nigerian economy, by looking at opportunities in cities such as Abuja, Lagos and Port Harcourt where we can take advantage of the demand for housing. This we have embarked upon by starting in Lagos State; where we have some investments in housing development. In Ikeja Government Reservation Area, (GRA) we have started a multimillion Naira Housing development called Kajola Gardens, we acquired an acre of land in Ayoola Coker Street at the heart of the Ikeja GRA. We have set out to develop units of terrace houses; between 12 and 14 units.

 

With this development, people can live in a more serene environment, we acquired the land last year and the process of approval of the buildings is on course. In Lagos State, it takes awhile to complete this process because of due diligence, but we are on it. Again, the design has been completed and we are hopeful to get the needed approval from the State Government before year 2010 is over. And once this is done, we would immediately commence work, we have done all the cost benefit analysis and we feel that Ikeja GRA is a place that is not saturated; but well moderated; where some top executives would like to live.

 

Like I affirmed earlier, if Kajola gets approval for the Ikeja GRA housing units; the Kajola Gardens, we will commence work immediately and in about six months time we will finish the work. Do not forget the fact that this approval has to move from one table to the other to ensure there is total compliance. From our perspective, the necessary environmental impact assessment has been done; we have complied with the rule of property development in Lagos State and they have to certify that we comply with laid down rules and regulations.

 

Beyond the 14 units’ houses we are going to develop in Ikeja GRA, we also have some properties in Victoria Garden City (VGC), Ikota International Shopping Complex and we bought some properties also from Lagos State Property Development Company (LSDPC) in Lagos; which we have rented out to a lot of people. This is how far Kajola has gone in terms of Real Estate and we have committed well over N600 million in this drive and by the time Ikeja GRA commences, we will also put in about N500 million to develop the place and if we complete the project, we will move to places like Ikoyi  for further development.

 

Kajola’s Oil and Gas opportunities

 

The oil and Gas is a market that is capital intensive and one of the beauties of the business in Nigeria in recent times is the local content policy which is about to be signed by the President. What we have done in this respect was to identify key players in this sector and go into partnership with them; especially those that get jobs from Shell, Agip Mobil and so on.

 

Kajola is also in the area of supply of equipments, fabrication and other related fields, for some of our customers working for multinational Oil Companies, we have done well in this area and I am sure that in the last six months, what we have done in terms of collaboration in this area is well over N300 million for some of our clients working in the Oil and Gas Sector of the Nigerian economy. We have just leased high technology equipments to one of our customers; equipments such as excavators.  We have the drive to do more in this respect as the year goes on; because we realised that this equipment leasing is one of our niche market; due to the fact that we are conversant with it.

 

In equipment leasing, as long as the contract is properly executed, one can go to sleep; because you know that the multinational companies; if they are satisfied with your contract, they will make payments. Some of these Oil Companies do not get involved in the day to day of acquisition of equipment, they rather outsource it. Like I affirmed earlier, we are collaborating with few of these Oil and Gas Servicing Companies that works for the oil majors.

 

Kajola and 2.5 Kobo dividend payout in year 2008 FYE

 

Though we had projected paying 0.9 Kobo, but unfortunately we couldn’t do that due to the fact that we didn’t realise the amount we had wanted to raise in our Private Placement. Rather than paying 0.9 Kobo, we paid 2.5 kobo in year 2008. For year 2009, activities were bedeviled with a lot of crisis; especially in the Financial Sector where a lot of things happened coupled with the global economic crisis. However, currently we are getting stabilised in Kajola  and with the level of our involvement in Oil and Gas, equipment leasing, we are very optimistic that things would improve in terms of dividend payout to shareholders of Kajola than the 2.5 Kobo we paid last year.

 

FACTS CHECK:

The company in its financial results for the year ended December 31, 2008, recorded a gross turnover of N90.44m, representing a rise by 469 percent up from N15.89m in the previous year, while profit after tax rose by 7,617 percent from N599, 682 to close the year at N46.28m.

 

Activities in year 2009 have not been in order, but for year 2010, I know that we have done wonderfully well. For the half year period of year 2010, our Unaudited for the review period was fantastic. Our Gross Earnings was close to N85 million which we believe that before the full year, we will double that. By middle of this month of August, the Board of Directors (BOD) would meet to deliberate on the result before we make it public to our shareholders.

 

EDITOR’s PICK:

 

As at the time of filling in this Report, the year 2009 Audited Financial Statement and year 2010 unaudited half year was not made available to Investadvocate.

 

Kajola and listing on the Stock Exchange

 

We have not shifted grounds but still desirous of getting listing on the Floor of the Stock Exchange within the projected period in our Placement Memorandum. However, a lot of changes has occurred in the economy; even the rules of getting listed on the Exchange is clear, you must have met certain conditions as stipulated by the Nigerian Stock Exchange.  Some companies rushed to the Exchange to get listed in the last one year and today, their share prices has nosedived with less value.

 

At Kajola, we are being strategic, what we are currently doing is to emphasis and focus on our core competencies; for instance, Equipment Leasing, Oil and Gas, Real Estate and Financial Services. By the time we would have worked for a number of years, we would have made our mark; so when we approach the Exchange for listing, the Capital Market Regulators would know that we are capable.

 

Kajola and it’s N100 million Microfinance Bank

 

KJL Microfinance Bank is a one unit Microfinance Bank; which ordinarily ought to have a Capital Base of N20 million, but what we did was to have a Capital Base of N100 million and we have cash centres allover Oshogbo. KJL Microfinance Bank has become a household name in Oshogbo. We do not want to hastily open branches allover and become less effective in our operations; that’s the reason we have just a one unit Microfinance Bank; but well capitalised, and we have also realised the need for consolidation.

 

On dispatch of share certificates following the 2008 Private Placement of Kajola

 

Share certificates for all shareholders of Kajola were dispatched immediately after the Board approved the allotment of shares to individual shareholders in early 2009. If anybody is yet to receive, it is either the person has changed his  or her postal address and did not inform our Registrars, there is no certificate that is still outstanding and majority of the people we have come across has testified that they have received their share certificates in respect of our year 2008 Private Placement.

 

On dividend payment

 

For the dividend payment, we held our Annual General Meeting (AGM) December 2009 and I know certainly well that people initially complained of not receiving their payment; some forgot the postal address they used when they were investing in Kajola. And majority of them has since realised that their dividend warrants are lying down in their various postal addresses; thus for any shareholder to say that he or she has not received dividend warrants, I do not think it is the truth. I certainly believe that a greater percentage of our shareholders even those at the remotest parts of the country has received their dividends as at April 2010.

 

Kajola and e-dividend payment

 

When we had our AGM, we promised our shareholders that they would begin to receive their warrants the second day and the Registrar, Union Registrars Limited began dispatch of the warrants that second day. Due to the inefficiency of our postal services in Nigeria, these dividend warrants were not to be couriered but posted through NIPOST; with their inherent inefficiency, some did not get to the owners until one to two months.

 

But by the time we are doing year 2009 and 2010, definitely we would ensure that the e-dividend payment system is adopted by Kajola.

 

Any dividend to shareholders for year 2009 and 2010 FYE

 

There is no investor who would have put down his funds that would not be desirous of having returns in such an investment. However, in view of what happened last year, the economic crisis, in Kajola, we are very optimistic, though the promise we made to our shareholders may not be achieved; but regardless of that, they will still get something in terms of dividends. Our focus is to work hard and delight our shareholders.

 

Future outlook

 

Beyond what we do today, Kajola is also exploring opportunities in the solid minerals; we are collaborating with a group of local and foreign investors; especially from Australia and South Africa. One of our partners has obtained a mining license. We are holding talks with them to ensure that Kajola has a stake in that business.

 

Another area we are trying to develop serious core competence is equipment leasing like I affirmed earlier; because we have discovered that a lot of companies in Nigeria have spent so much funds acquiring assets which they do not have the cash flow to sustain; but we want to fill in that gap. We buy the equipments, lease them out over a period of one year or two years, which would allow flexibility of cash flow and planning and afford these companies the opportunity to use the money they would have tied down into other areas.

 

We are also talking to some investors in America in the area of Telecomm. And in Lagos with a population of about 18 million people, we are looking at establishing a world class hotel. All these are some of our future outlook in Kajola.

 

End