We are Promising Investors Better 2016-GMD Courteville

Bola Akindele2

In this interview with PETER OBIORA of InvestAdvocate, Adebola Akindele, Group Managing Director of Courteville Business Solutions Plc discussed issues regarding the company’s recent performance on the Nigerian Stock Exchange, its current share price, the N1.0 billion new corporate head office, challenges in delivering the AutoReg service and other matters arising. Excerpts:

What’s happening to the share price of Courteville Business Solutions Plc on the Nigerian bourse?

Nothing untoward, nothing different from what the economy has shown, nothing outside what has bedeviled the Exchange in the past two, three years. I have always maintained the fact that the Nigerian bourse is one, I don’t know of many more. It’s one that does not really react to information, other than the fact there would always be profit-takers around. The lack of response to any relevant information stimulus bedevils almost every stock that I know. Outside Forte Oil, how many stocks has recovered to the level of 2008, 2009 and 2010; none, even the best performing stock or the highest buy price stock has been Guaranty Trust Bank Plc and it’s still hovering around at N20 or thereabout, Zenith Bank Plc has refused to just cross that path. It’s not because the results are not good, I’m sure you know that, they have been declaring huge profits and paying humongous dividends; showing all the reasons people should take almost permanent positions in them.

People in the capital market take profit because that is all they can do to sustain their businesses. Stock market operators, the stockbroking firms as soon as results are announced, if prices go up, profit-taking start happening and it kind of hitting back at us. Now the thing for Courteville is that it’s been at 50 kobo per share and remain so because there hasn’t been anything that we haven’t done; not in terms of trying to influence the price; but efforts at making sure the operators or investment community understand that Courteville is a very strong company and its shares should be with them permanently. It is the one that is not so available out there, the bulk of the stock is in the hands of not too many people, over 80 percent; but the remaining 20 percent or thereabout is what is floating and that is what is going up and down in the market. The bulk of the 80 percent or so, if we do not sell, it won’t have that kind of impact or free fall; but because we have like 20 percent of people, who wait, it goes up they buy and then they sell, it affects the price.

Also, we have just refused to throw anything at it beyond the fact that investors need to know what the stock is all about, we have been profitable for the past seven years and we have paid dividend over this period. Even in the face of the economic realities of 2015/ 2016, we haven’t done as much as we thought we will do in 2016. I cannot go into it; the figures are with the Stock Exchange, but we had been there, in our sector of the market. For a long time Courteville was the outperformer; until maybe last year or two years ago when companies like E-Tranzact started coming up; probably because of their involvement in Banking activities or so. We were just there like a permanent star; but you cannot be a star in a sinking ship alone for too long. When the ship is sinking especially if you are in an ocean with no Island in sight, you may eventually get to sink with the ship. The information in the market regarding the kind of reports that have been shown by the so-called stable companies, I don’t want to mention names; but when you start reporting the greatest corporate losses in the history of the economy, when you start coming up with those kind of losses that we are seeing, in Oil and Gas, Insurance and Banking sectors; all around the economy and we have tried as hard as possible to make sure that our processes and policies, everything we do, our operations reflect beyond the economy. So, if the economy was performing at the level of one, we have always struggled to be at the level of 2.5 and that’s what we still continue to do.

Why are investors not buying the shares of Courteville?

The CEO of the Nigerian Stock Exchange was on the CNN in Davos, and what he was talking is different from this, it can go up 1.5 percent and thereafter it drops. Thus far, if you take the absolute performance this year, just in 20 days, you will know the market has lost more than a trillion naira in less than three weeks. You are up today, down tomorrow, it no longer bothers me and that’s my personal opinion, because I have seen Courteville shares go up and I have watched it come down. Now, probably if I have personal funds, I will continue to acquire more; but I already have substantial amount, my colleagues and I. Like I said, the volume of those that are out there is not substantial enough to actually be the determinant of what happens to Courteville stock value. If it goes up nobody is talking Courteville probably because or maybe they don’t know or are looking for the ones that can move up and they take profit and come down. Now, I would enjoin you to track those same stocks that changed between yesterday and today, track them by next week and see if profit taking has not taken them down again. That’s what happens and until first of all funds is available, liquidity improves, until the fact that Banks are in a position to be able to fund some capital acquisitions.  Until the fact that what is in the pocket of consumers or individuals in the system, until the fact that they can have capital investment in shares, can actually have a share of the pocket of the people, until States can pay salaries so that people can have savings; until companies can be profitable and then invest in people and give people salaries. Until things improve I cannot imagine what will happen. The fact is this; we know that the Stock Exchange has done a lot, very innovative and robust things over the past few years. Some polices has not also been particularly helpful. The NSE has showcased courteville severally and I must thank them for that; but policies like this market maker thing that never worked, when last did you see any market maker come in. Is it not the kind of thing that market maker should fill up? Market maker policy is totally moribund, then they now came up with premium board, they start discussions of actually removing the cap for the pricing of stock to go below par, people lose confidence, they do not know what is going to come up. Based on what Courteville does, corporate governance, we are excellent, in terms of performance, we have been out there, in terms of showcasing what we do and promoting Nigerian businesses outside the continent, we have been there. We do not showcase enough, some criteria that include something that we can’t control in terms of corporate governance, profit we are there, and then there is a criterion that only allows very few such that even Access Bank Plc did not qualify. Some of the criteria they brought are they saying if I do not meet these criteria, I cannot qualify for premium board? Now Access Bank I think should be worth more than $1.00 billion; but the point is this, you cannot rate a Company on account of its size alone in terms of quality; you are talking about quality. Quality is not determined by size, as a matter of fact, the old wide saying is that good things come in small packages. So, out of four critical qualifying criteria to be on the Premium Board, I qualify as Courteville, fully qualified, the only one is about size, if you have a premium board based on size and others. We were told that Couryeville was one of the two companies that was given to Augusto & Co by the Stock Exchange in terms of appraisals to showcase SMEs that were doing very well; that are not been fully showcased by the analysts market.

With your business expansion across Nigeria, Africa and the Caribbean why are investors not interested in Courteville’s shares? In Q3 2015, we learnt that new vehicles about 1 million come in and you do AutoReg, investors know full well that funds are coming and the company is profitable.

You said cars are still coming in and that is wrong, cars are no longer coming as many as the volume that you know, they have materially dropped since the advent of the new government and it’s understandable. Ports reforms are there since the new man came on board and the fact is that beyond Port reforms, there has been very tight liquidity. People don’t have money to eat not to talk of buying new cars, is been very tough, Banks are no longer available so much to give out loans to buy cars; it’s difficult for those who have not earned salaries to go and be borrowing money to buy new cars when they have not feed. Our business should not be mistaken or being tied to the number of cars that come in, it shouldn’t be, what we do is to have vehicle licenses renewed amongst other services. Historically, the volume of vehicles that come in up until 2014 ending, have always been like 20 percent over and above what it was the volume of vehicles in Nigeria, between 15 and 20 percent year-on-year. At least in all the States that we operate for now, new vehicles registration, plate numbers and all that are not part of what we do; but we still want to stick to what we do; because we are the best at that for now. Truth is that throughout last year, there were stories about States not been able to pay, also throughout last year, there were issues surrounding Banks, the Treasury Single Account thing came and rubbished everything that Banks have been able to do. The fact is that Banks were no long in such a position to be able to fund expansion or even working capital. Banks are no longer so willing or are no longer so profitable for Banks to deal with small businesses as such. Combined with the fact that people are not even able to get new cars in, Banks are not there for companies like Courteville to be able to expand and the fact that States that are not paying salaries, you expect them to pay Courteville easily? Cash flows even for Courteville have tightened up materially; that’s one. Two, we started this business of AutoReg in 2007, that’s not only what we do, we do a lot more than that; but is the main stay of what we do. Like I said earlier, we started in 2007 and we have done well thank God; but the point is that the level of commission that we are able to charge since 2007 has not changed by one percent; because progressively, it’s been tight for States themselves to even manage with what they get, Federal Allocation and Internally Generated Revenue (IGR) is not enough, so no State is interested in listening to you coming to say that I want to review upward our commission because when we started, dollar was 95 or 97 to the naira. Now at that time, I have cost recoveries, I still have cost recoveries. If I tell you that my cost has gone up since 2007 to date, it has gone up by 200 percent without my revenue going up; now you understand the implication of that and we are talking about per transaction reviews. If my cost recovery was about N200 when I started, now is almost N400; meanwhile my commission has not changed. Apart from expanding, we are not in this business to expand just because of the profit we want to make per State, it’s because there are other externalities that are attached when we built the database, I may not be making a profit in a particular state; maybe a small State; but we still do it so that eventually the country and the whole system will be better for it and benefit. Now, cost have gone up, I have not been able to increase my revenue added to the fact that because liquidity is tight to the States, payments are not as regular; but we still manage, however, I still have borrowing in Banks whose interest cost has also gone up not to necessarily reflect the state of the economy; even when it wasn’t this bad. By 2014 ending, we still had investments in various sectors of the economy, we had business going, and the economy was still growing somewhat, end of 2014 and the whole of 2015 was spent on elections. And funds that would have gone into investments to turnaround activities in the economy were directed somewhere else. It’s not a rocket science to understand that if we do not invest, there can’t be growth, if there are no growths, everybody would suffer, if your pocket does not grow, how you are going to grow any business. The activities of Courteville in the past; you are talking about third quarter 2015, as a matter of fact; I can assure you 2015 fourth quarter was even a lot worse. Was even a lot worse and my prayer, the result is already on its way, it’s with the Stock Exchange. We are not making losses, we are not going to make a loss, but would not make as much as we did last. But the point is that everybody has come out this year with their dirty linen in public; if not everybody; most people. Courteville is not immune to these things, as we speak we have to write off some challenged receivables, we are losing business, not because of the quality of service, but because of the state of the economy. Our size of the private sector oriented services that we provide is about 25 percent of what we do. As an individual, as a businessman, I am an Entrepreneur; if I came to you that I have a website offer for you that I can design develop and so on. And the best I can do for you because of the cost of dollars and other factors is to charge you a N100, 000. Now very likely you will think if it’s a N100, 000, what I could charge two years ago, a N100, 000 that you would willingly give up, you will not this year. As at the middle of last year, the dollar was about N155 or thereabout and today we are talking about N300; that’s more than doubled. I have refused to lay off staff, everybody is laying off staffs, all the practitioners in our sector has done it, Konga, Jumia, IrokoTV etc they have all laid off staff and we haven’t done that. We have not reduced staff salaries. We have led in the area of Corporate Social responsibility, we have led in the area of stakeholder satisfaction, a survey was conducted in the area of great places to work last year and we were rated far ahead of every single Nigerian company; including the multinationals far ahead. We were rated better than most Fortune 100 company of the United States. We were rated better than all the professional services. We believe this is a passing phase and it would pass. The moment you start looking at it and saying as an international company, if this is not working, let me look for other areas. That’s why we are spreading into places like Zimbabwe, Jamaica. In Jamaica it was wholly an acquisition, now the first thing to do was to turn a loss making local company into the one that has broken even and can cover its cost. Now the next thing is to look at profit, we invested 300 Jamaica dollars about US$2.5 million. Also, in Zimbabwe we have invested over $2 to $3 million; that has not come from any Bank, it came from within, we are about to start. We have the same kind of investment in Guinea, we are pursuing in the different countries, your business development cost is non-stop, in fact they go higher even when business has not come in and the gestation period from when you start; that’s if you are lucky to even start is quite long, a minimum of two years. Now, we had problem in Sierra Leone and I will be open with it, part of what we started provisioning for this year. We had challenges in Sierra Leone because of our nationality that’s the truth, they never saw us as a local company; but we are back at the desk. Nigeria helped Sierra Leone; but they hate Nigerians; everyone hates Nigerian in West Africa, we have gotten more success in South and East Africa than we have in the West Africa sub-region. Now, we are back to the table hopefully and we are discussing with the people with whom we had the challenge; hoping that out of a 10-year contract, we would be brought back to the table and have it reviewed. All these are what we are passing through and that’s what the average investor of our company is not aware of and I know the average investor of Courteville is one that does not sell their shares in the company. They hold on to it and we don’t regret anything, we paid 4 kobo per share interim dividend, the plan was to do more. We are looking for a better 2016 not just for Courteville; but for the economy. Courteville is a unit of the economy, like I said earlier you cannot have a star on a sinking ship, so if the economy improves, hopefully the company will improve.

Why some of the Banks Courteville contracted not helping to deliver the AutoReg services promptly and efficiently?

It’s unfortunate, we are trying our best and any hitches is not from us, what we do say about Courteville is that our system is 99.95 percent, its always up and running, but you cannot say the same of any Bank, no matter how good the Bank is. Our service is from the quality of what our partner Bank or Agent is able to deliver to the public. We don’t usually deal directly with the public; now these Banks are encouraged regularly and robustly to attend to customers and they get paid a lot for doing so. As a matter of fact, half of our cost recovery is towards those Banks per transaction when they occur. Also, we have not failed in our responsibility to them; not much if any and we expect they should extend this quality of service to outsiders. One of the things that we do as a company is to review and appraise what we offer the public. We have a customer service team that go out monitoring, we also have an operations team that goes out regularly, checking the Bank branches, licensing stations, knowing what the challenges are and coming back with reports. Imagine a scenario when a Bank says it’s about to open a new branch and would want to carry out AutoReg services, we train one or two staffs in there and because it’s what Banks do, they transfer staffs after awhile or the staff is on leave and there is no relief, we do not know, we will just realize that our services have stopped in that branch and it appears that when vehicle owners go in to the Bank branches, they cannot have their vehicle registration done. Meanwhile, we invite them regularly, we call them and do follow up, Sterling Bank is probably the best in this AutoReg service, we are talking about vehicle license, we have NAFDAC that people need to process and pay for their papers, and I know how many times, my customer service monitoring team would come back give updates. We have a customer system that allow them call in or send email and say that they went to certain places and it’s always one excuse or the other when we do eventually get to the Bank. It can’t be our fault that some on their part are inefficient.

What is Courteville doing to correct these loopholes?

It is about training and retraining because for now we still need them; but one thing we did a while back is that we positioned ourselves that we really do not have to be held hostage by these Banks going forward and that’s why we have all these independent agents around. The independent agents make a living with what they earn; people should trust them, once you see the AutoReg banner. This is their means of livelihood, they make efforts to attract customers and currently they carry out about 80 percent of the activities of AutoReg; at least in Lagos State. They do more than the Banks and we know that after awhile we would exit the platform provided by the Banks. The Banks are more concerned with the challenges that they have.

On Vehicle owners not receiving SMS reminder on renewal as purported by Courteville after paying N200 SMS fee

Do you pay for that particular SMS and where did you do it, did it show on your sticker? The above question is not totally correct, up until 2015, what most people do not know outside Courteville and government in Lagos State at least is that Courteville was not the consultant to Lagos State Government in terms of SMS alerts. What we had was just a way of helping the State push that programme. The Government was the one charging the N200 SMS alerts fee; it’s when you come for your documents that it’s best to charge it and we enlighten people regularly; but we were not in any position to come out and say we are not the ones except when we engage one- on- one. As a matter of fact, we have been threatened with law suits on severally occasions; despite our explanation people will say they don’t care and would sue us.

Meanwhile there was a consultant that was even in the picture way before Courteville started AutoReg in 2007. They have been there since 2005 or thereabout, if you check back into history, what they do then was to collect your number and issue a receipt. We were just working for them on behalf of the State, the N200 was going to them; but on our part, we were getting it done better. In order for us to help them collect, what we decided to do was to undertake the reminder part where you got a welcome text and a reminder a month before, then a week before the expiration of your AutoReg document. The truth is that you are right that people actually started complaining that they usually forget; but depended on us for reminder. We were stopped, the contract at that time was being repackaged since last year before the immediate past governor of Lagos State, Babatunde Fashola left office. A committee was set up; they were supposed to look into it. But the whole service was not just about the text, it was about the fact that if you live in Ikeja and there is traffic jam or armed robbery happening on the way, once we have your details, to say avoid these areas that certain things not palatable are happening; the information was suppose to be coming from LASTMA; but that wasn’t coming, I do not know what transpired because we were not part of that. So, maybe the State did not feel the value of that; and they held on to it and stopped it temporarily. I will tell you this, whatever it is that you are getting now is on Courteville’s bill for free; that’s why we want to know where the N200 SMS charges is being paid. Activities reflect the fact that people do not remember regularly anymore and they complained. I know people in Government close to others outside, came back to say our people are complaining that they no longer remember and that’s the truth; so we have to now find a way to do it better than it was. Now rather than going through a third party, the State wants to give it us.

On Courteville’s N1.0 billion Corporate Head Office and funds borrowed from the Bank to achieve it, investors are asking how that would impact on their returns.

You cannot payout what is capital, I cannot go and borrow money to pay dividend that’s one. Secondly, we knew where we were operating from, there is no point working in an environment where you have inconveniencies in trying to service people. We had too much crowd, we were overcrowded ourselves, we do not have any space to operate, and it was in an area that was residential. A lot of things were wrong and we had an opportunity to come to this place, whether is N1.00 billion or N10 billion it’s a structure that befits what we do. We have interested stakeholders, investors coming from abroad to come and see what we do. We needed an Information Technology department that will show and represent the kind of things that we do.

We needed to have the kind of place that would give confidence to whoever is coming to see what we do. We have had visitors from the UK, US, Zimbabwe, from the Federal Road Safety Commission, from the government; they come around to see what we do. You cannot be in ramshackle building and do business and we do not believe that we need to be paying rent out of our noses in order to work very well. Nobody has been extravagant, we have just made the place conducive; now the staff, customers and visitors are happier coming to Courteville. Whether we went to borrow or not, we did not borrow essentially to build this, it was for expansion and ask me where we are now in terms of the borrowing, they said we borrowed N1.0 billion yes we did from Sterling Bank Plc and we are now having about N300 million to pay off. It’s a term loan and maybe in another two years we will offset the loan. We have never failed in servicing the loan, the issue is more like we are now down to about N300 million or thereabout; it’s not as if we have a bad debt hanging on our neck. We will grow our business to accommodate our size, before we even moved in to the new office; it has become too small for us. We have a training centre here that is so useful; even our clients are coming to make use of it. The building beside of our corporate head office is owned by Courteville’s associated company, we own 50 percent of Foster Estate, they are residential buildings, it’s about to be sold, we have offers.

Future outlook for Courteville and when would investors start smiling with Naira worth dividend?

I’m always optimistic about myself, Courteville and Nigeria, I think the only thing to pray is that things should bottom out quickly and then we go back to the good old days. Nobody is pulling away from the fact that it’s been projected severally within and outside the country by different analysts that emerging economies including Nigeria are going to have a very hard time from last year through this year and it’s hard really, nothing to do with the oil from my opinion; some emerging economies do not have oil and they are still going on. Now the prayer is for us to be able to reap from the benefits of this current government’s efforts at tightening loss ends were investible funds are leaking. We are hoping that efforts in the area of power, transportation, technology and agriculture will come to pass. Now a lot of things have beclouded us over the past five or six years, what I see is that Courteville will always be at the forefront of any revival. We are the first to try exporting technology outside Nigeria.

Would Courteville look at the option of requesting for commission increase from the Government?

That would not be proper going to them now to ask for that, what we will do is to look for other ways of helping government and even the private sector to collect more; so rather than be asking for depths or heights in our commission, we ask for width. Get more services on board; not just for public sector alone; but include the private sector and that’s what we are working on. We have identified a few areas in 2016, for Courteville an entirely IT indigenous company, we don’t rely on anything from India like some others do, and even despite that, we always identify local opportunities and that is the future for Nigeria. However, the more important thing for Courteville is that we would export these new initiatives again to the benefit of the company and Nigeria. People has asked my questions at AGMs, Courteville has held in terms of informing people of what we do; we have consistently held what we call facts behind the figures sessions, we have published everything that we have done, we are in the news regularly, we have contracted a consultant, very close to the capital market and investment economy to push out information, I have been on CNBC regularly, we have been on radio, we advertise, we have told the people what we do, they know about us, you cannot walk into any company and probably you will not see anyone say out of every five, two people will know Courteville somewhere; at least in Nigeria. We have done our part, is for the economy to play its own role. And the economy can play its role when things improve, we now know that we cannot be totally dependent on oil; not even so when it’s now below $30 per barrel. We have to diversify our economy. Courteville is about diversification and that is the future. Shareholders would say are they going to smile? But they have been smiling; but we hope that the smile going forward would hopefully turn into a lot of laughter and Courteville is a company that pay dividend regularly. We would resume that and we have not failed in a year yet to put something down in a calendar year, let them appreciate it and continue to pray for us and we can only do that when we are well and strong.


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