After a record delay spanning six years, Staco Insurance Plc has finally released its audited results for the year ended December 31, 2018 showing a 158 percent increase in its loss after tax.
The board of NGX RegCo had at its meeting of June 28, 2024, following the presentation of the Regulation and New Business Committee (RNBC) report of its meeting held on May 6, 2024 approved the commencement of the delisting process of STACO Insurance Plc. The stock is still at 48 kobo per share.
The full year 2018 scorecard…majorly negatives
The insurance company’s consolidated financial statement released at the Nigerian Exchange Limited (NGX) shows that its loss after in the review year printed higher at N6.528 billion as against N2.602 billion in 2017.
The Company is yet to file its Audited Financial Statements for the year ended December 31, 2019 (2019 AFS) and 2019 quarterly Unaudited Financial Statements (2019 quarterly UFS). It has also not submitted its 2020 results. In the review year 2018 results which the company just released, its gross written premium decreased to N5.186 billion from N5.753 billion in 2017.
Also, as at December 31, 2018, the Group had a negative N10.57 billion (2017: negative N3.21 billion) in net cash reserves. The company’s loss per share rose to 76 kobo from 28 kobo in 2017. Price earnings ratio, in negative of 1.58 kobo rose from a low of 0.56 kobo in 2017.
Staco is one of the major delinquent filers of financial statements
Looking at the X-Compliance report at the NGX, Staco is one of the major delinquent filers of quarterly and audited financial statements for non-rendition of its unaudited financial statements for 2019 –Q3’ 2024 and non-rendition of audited financial statements for 2018 to 2023.
The Company had in October 2020 obtained the approval of the Nigerian Exchange Limited (NGX) for extension of time to file its unaudited financial statements for the quarter ended September 30, 2020 (2020 Q3 UFS), not later than January 29, 2021.
Management’s comments and analysis
Looking at the management’s comments and analysis as shown in the results, the company said, “There was a decrease of 10 percent and 19percent in gross written premium for group and company respectively in 2018 in comparison with 2017 due to decline in performance in the reporting period.
“The decrease in performance also had a near significant effect on the net premium income decreasing from N4.499billion (2017) to N4.046 billion (2018) and N3.874 billion (2017) to N3.214 billion (2018) for group and company respectively.
“Group underwriting results decreased to N449.217 million (2018) from N1.791 billion (2017) and N18.644 million (2018) from N1.126 billion (2017) for the group and company respectively”.
“The Group’s investment income decreased from N229.184 million (2017) to N225.141 million (2018) representing an increase of 8 percent while that of the Company also decreased from N182.463 million (2017) to N117.012 million (2018).
“The Group’s operating expenses summed up to N2.275 billion (2018) and N4.019 billion (2017). As at the reporting date, the Group had N1.313 billion in the cash and cash equivalents, including short-term deposits of N579.9million with maturity of not more than three months,” they said.
Staco plans to reduce overhead and administrative expenditures
The company said it has made plans to reduce overhead and administrative expenditures and also put in place practical capital expenditure strategies to delay any form of capital expenditure, postpone major maintenance activities and for critical assets that needed to be acquired, the Company said it will lease rather than outrightly purchase.
It noted that the Board plans to re-capitalise the Company by way of sourcing for the service of a financial advisor (Cardinal Stone Financial Services) to help look for a would-be investor/s that would enable the Company meet up with its capital requirement. The Company also signed a Non-Disclosure Agreement (NDA) with a strategic and core investor on August 14, 2020 who is desirous of acquiring over 70 percent of the required operating capital of the Company.
Also, the company said there’s ongoing negotiations with Daewoo Debenture holders of the JPY 902,000,000 zero coupon bond due 2029 for part payment of $4 million and a debt for equity swap such the balance debt would give 10 percent of the ordinary equity in Staco Insurance Plc.
“The Company’s cash investment is in accordance with its investments policy and complies with the regulatory requirements. The company’s investment strategy is influenced by a focus on highly liquid financial instruments such as term deposit, equity and debt instruments. At the end of December 2018, the Group had approximately N675.87 million invested in fixed income and N236.56 million in equity instruments,” the company said.
Staco Insurance Plc (formerly known as Standard Trust Assurance Plc) was incorporated on October 10, 1991 as a public limited liability company. The company acquired Alpha Insurance Plc and commenced non-life insurance business on October 1, 1994 having been duly licensed by National Insurance Commission (NAICOM).
Going concern
The company’s solvency margin is below the requirements of the Insurance Act CAP I17, LFN 2004. The Company reported a solvency margin deficit of N7.572 billion for the year ended December 31, 2018 (2017: N.212 billion) which occurred as a result of the backing out or derecognition of the unsubstantiated balances.
Staco Insurance said its group’s management performed an assessment of its ability to continue as a going concern and is satisfied that it has the resources to continue in business for the foreseeable future. This conclusion was based on the Group Executive Management’s plans aimed at returning the Group to profitability and a healthy financial position and would enhance the Group’s Going Concern assumption consideration.
The Company changed its name to Staco Insurance Plc by special resolution on October 30, 2006 following the merger of Standard Trust Assurance Plc and Summit Insurance Company Limited as a result of the directive by NAICOM on the increase in share Capital of insurance companies in Nigeria. The company became listed on The Nigerian Stock Exchange (now Nigerian Exchange Limited) on June 25, 2007.
Details of its major shareholding show that Hat Koobs Industry Limited owns 718.380 units or 7.69 percent, Electron Energy (1 billion units or 10.71 percent), Ventry Development Limited (800 million units or 8.56 percent), Seaforce Investment Limited (764.444million units or 8.18 percent), Sakiru Oyefeso (496.144 million units or 5.3 percent), and Nigerian Citizens and Associations (5.562billion units or 59.5 percent).
