FACILITY APPROVAL MEMORANDUM

Prepared by: Uti Maleghemi

Department: CBG
Location : Opebi

Date : February 2017

Borrower : Nidaco Nigeria Limited (“the Company”)
Ownership : Mr. Johari Akram (Nigerian) – 75%
Mr. Nidal Al. Johari (Syrian) – 12.5%
Mrs. Raghidah Jarmakari (Syrian) – 12.5%
Location : Plot 2/4, Fatai Atere Way, Matori, Lagos.
Risk Rating : 3
Business : Steel Fabrication, Civil Engineering and Construction

Related Company : Biella Nigeria Limited

Facility Type : Bond and Guarantee Line – Renewal
Facility Amount : N300,000,000.00 (Three Hundred Million Naira only)
Purpose : To enable the company meet part of the pre-conditions for the award of
contracts and/or secure advance payments on such contracts.
Beneficiary : Federal and State Governments, Government Parastatals, reputable
Private Organizations and High Networth Individuals.
Tenor : 2 years (renewable annually)
Issuance : Upon compliance with all necessary pre-conditions.
Management Fee : 0.5% flat (N1,500,000.00) on the Bond and Guarantee Line amount
payable upfront upon acceptance of the offer, being fee charged for putting
in place the guarantee line for Nidaco Nigeria Limited.

Commitment Fee : 0.5% flat (N1,500,000.00) on the Bond and Guarantee Line amount
payable upfront upon acceptance of the offer, being fee charged for putting
in place the guarantee line for Nidaco Nigeria Limited.

Security : 1. 30% Cash backing on Advance Payment Sum.

2. Personal Guarantee of the Company’s Managing Director/Chief
Executive Officer, Mr. A. F.Johari supported by a duly notarized
Statement of Personal Networth. – In place

CONDITIONS PRECEDENT TO UTILIZATION

The facility shall be available to Nidaco Nigeria Limited upon receipt by the bank of the following:
1. Duly accepted Offer Letter for the facility signed by authorized signatories of the company

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2. Duly executed Board Resolution accepting the facility and naming those mandated to accept the
offer on behalf of the company
3. Duly executed Counter Indemnity of Nidaco Nigeria Limited to pay upon demand if any
Bond/Guarantee is called in.
4. Duly executed Letter of Set-Off by Nidaco Nigeria Limited
5. Duly executed Personal Guarantee of the Managing Director/Chief Executive Officer, Mr. A. F.
Johari supported by a duly notarized Statement of Personal Net worth.

OTHER CONDITIONS
 A late repayment fee of 1% flat per month (approximately 12% p.a.) over the approved lending
rate shall be applied on the outstanding unpaid obligation without recourse to Nidaco Nigeria
Limited.
 All legal fees, stamp duties and other costs associated with the documentation, execution and
administration of this facility will be for the account of Nidaco Nigeria Limited.
 All legal or other costs and expenses arising from the facility or of enforcing the terms and
conditions herein should such occasion ever arise shall be claimed from Nidaco Nigeria
Limited.
 It is expected that Nidaco Nigeria Limited will continue to improve on its business relationship
with the Bank through the operation of its current account.
 Nidaco Nigeria Limited agrees to continue to carry on and maintain its business in conformity
with all Health, Safety and Environmental Laws applicable in Nigeria, whether required by
the Bank or not, and supply evidence to verify its fulfilment of this obligation to the Bank.
 Nidaco Nigeria Limited also acknowledges that non-compliance with any Health, Safety and
Environmental laws shall be an event of default, and the Bank shall at its discretion take
steps to compel Wihu with all Health, Safety and Environmental obligations, at a cost to be
borne.
 The Bank may apply any credit balance (whether or not due and in whatever currency), which
is at any time held by any branch of the Bank in favour of Nidaco Nigeria Limited, towards the
satisfaction of any of the company’s liabilities on any or other accounts, whether such
liabilities be actual or contingent, primary or collateral and several or joint.
 Regular updates on the progress of the contracts for which the Bank has issued a
bond/guarantee shall be supplied to the Bank. This will include but will not be limited to pictures
of the project and certificates duly issued by the project supervisor appointed by the beneficiary
of the bond/guarantee.
 The Bank may use any information relating to Nidaco Nigeria Limited for evaluating the credit
application. The Bank may at its sole discretion as it shall consider appropriate give to and
receive from credit bureaus and reference agencies whether based locally or abroad, other
financial institutions, regulatory and law enforcement agencies and relevant third parties
information about Nidaco Nigeria Limited, including information on your Directors and other
personnel, transactions and conduct on your account together with details of any non-payment
or delayed payments for the purpose of assisting them and/or the Bank in making lending or
rating decisions about Nidaco Nigeria Limited.
All other terms and conditions as contained in the Facility Agreement shall be binding upon Nidaco
Nigeria Limited.

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 COMPANY BACKGROUND AND OPERATIONS

Nidaco Nigeria Limited was incorporated in Nigeria in 1988 as an engineering construction

company, mainly steel fabrication and design work. The company’s Administrative Head Office is
located at Plot 2/4, Fatai Atere Way, Matori, Lagos. The company’s main objective is to meet the
construction needs of its client’s in the Public and Private sectors of the economy.

Nidaco’s clientele base spans across companies in various sectors of the economy as follows:

 May & Baker Plc

 Daywaterman College
 House on the Rock Church
 Procter & Gamble
 Vita Construction
 Bi-Courtney Consortium Limited
 Nampak
 Westcom Wireless
 Ikoyi Hotel
 Sara Foods Nigeria Limited
 British High Commission
 G. Cappa Plc
 Texaco Nigeria
 Arab Contractors
 MTN South Africa
 Prince Ebeano & Co
 Coral Beach Estate Limited

Nidaco has over 28 years’ experience in the Nigerian construction sector and has gathered
reputation from the long list of executed projects which are attributable to high quality and timely
delivery of projects.

The company has a good track record of fast mobilization and prompt project execution. Its
specialty is in Steel Structure Fabrication. The prime objective of the management of Nidaco is to
provide services in a manner which conforms to contractual and regulatory requirements. In order
to achieve this objective, the company continues to recognize the salient inputs of modern project
management approach and the benefits of technological advancement while not allowing profit
maximization to overshadow the global trend of environmental protection and timely service
delivery.

The company has carved a niche for itself amongst the major employers in the construction industry
through the quality and pace of completion of executed projects. The table below shows contracts
executed by the company and it is worthy of note that GTBank issued Advance Payment
Guarantees of over N2bn for some of these projects.

Completed Projects

S/N Project Contract Client Year of

Sum completion
(N’mm)
1 Domestic Airport, Ikeja (Steel work) Bi-Courtney 2007
Consortium
138 Limited
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2 Remodelling of Procter & Gamble Procter & 2007
Factory, Ibadan 177 Gamble
3 AIM Consultants, Royal Chocolate, AIM Consultants 2007
Victoria Island 50
4 Ikoyi Hotel, Ikoyi 42 Ikoyi Hotel 2007
5 Popham Walter Diesel Tank, Lagos Popham Walter
12 Odusote
6 Sara Food – New Factory Sara Foods 2007
Warehouse, Apapa 45 Nigeria Limited
7 New Pharma Plant Factory for May May & Baker Plc 2008
& Baker Plc 240
8 Construction of Central Warehouse May & Baker Plc 2008
at May & Baker new Pharma Plant
at Idiroko 51
9 Construction of the Church Main House on the 2008
Auditorium Roof Steel Works 109 Rock Church
10 Day Waterman College, Abeokuta Day Waterman 2009
– Phase 1 101 College
11 New Pharma Plant Factory for May May & Baker Plc 2009
& Baker Plc 240
12 Construction of Central Warehouse May & Baker Plc 2010
at May & Baker new Pharma Plant
at Idiroko 51
13 Construction of the Church Main House on the 2010
Auditorium Roof Steel Works 109 Rock Church
14 Day Waterman College, Abeokuta Day Waterman 2010
– Phase 2 College
101
15 Stanbic-IBTC Bank at Ajose Vita 2010
Adeogun Street, Victoria Island 82 Construction
16 Stanbic-IBTC Bank at Allen Vita 2011
Avenue, Ikeja, Lagos 82 Construction
17 External works, minor buildings and MO&A Project 2011
structures at Ibis Lagos Airport Partner
Hotel 113
18 Residential development for Dr. 116 Cost Model 2012
Victor Adesimbo Kiladejo at Jagun Associates
Street, Off PPL Road,
Okokomaiko, Ojo, Lagos
19 Remodeling of Procter & Gamble Procter & 2012
Factory, Ibadan – Phase 2 for 180 Gamble
Procter & Gamble
20 Construction of Stainless steel Allied Atlantic 2013
Tanks & Erection of Fabricated Distilleries
Structural for Fermentation -
Section 210
21 Construction of Steel works for Nigeria 2013
Extension of empty store 130 Breweries
22 Construction of steel roof for Fountain of Life 2014
Fountain of Life Church 90 Church

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23 Construction and Installation of Arab 2015
Front Steel Shed in New 200 Contractors
Governor’s Office in Enugu
24 Construction of the foundation and
concrete framed structure of the Prince Ebeano 2015
propsed Prince Ebeano & Co
Supermarket at Lake View Park, 367
Ajah, Lagos.
25 Construction of a block of 24 flats at Coral Beach 2016
Lekki Free Trade Zone, Ibeju-Lekki, 631 Estate Limited
Lagos.
TOTAL 3,669

SCHEDULE OF EXPECTED PROJECTS

Project Contract Client Contract

S/N Sum Requirement
(N’mm)

Just awarded in
January, 2017.
Development of GTBank Lekki Mobilization of
Branch, Admiralty Way, Lekki, contractors in
1 Lagos. 19.8 GTBank progress.
TOTAL 19.8

The company works in affiliation with the following consultants to ensure it conforms to contractual
and regulatory requirements:

Architects

S/N Name Location

1 INCUI Limited 7b Adebisi Da-Silva Close, Surulere, Lagos
2 Design Group Nigeria 11 Ajasa Street, Onikan, Lagos
3 PACS Associates 20 Evo Road, GRA, Port Harcourt, Rivers

Quantity Surveyors

S/N Name Location

1 Cost Model Associates 20 Oweh Street, Fadeyi, Lagos
2 Isaac James Associates 11 Raymond Street, Sabo, Yaba, Lagos
3 Jabaks Consultants 90 Shyllon Street, Palmgrove, Lagos

Engineers

S/N Name Location

1 Morgan Omonitan & Abe Limited 241 Igbosere Road, Lagos
2 Multidine-Pacifics Nigeria Limited 21 Idowu Olaitan Street, Gbagada Phase II, Lagos
3 Encon International Limited 21 Igbosere Road, Lagos
4 Masodak Associates 186 Ikorodu Road, Lagos
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It is worthy of note that most of the consultants have their accounts in the Bank.

Board and Management

The company's management comprises highly intelligent, competent and well experienced
professionals who are committed to the course of Nidaco Nigeria Limited. These individuals are
men of high integrity with good characters and technical competence.

Mr. Akram F. Johari- Managing Director/Chief Executive

Mr. A.F Johari is a Civil Engineer. He has over 28 years of experience in the construction sector.
He has acquired a lot of experience as a Project Manager. He coordinated the construction of
Kaduna State stadium, Bristow Helicopter Terminal, Fort-Knox Investment Storage Facility at
Oregun, etc. He has been the MD/CEO of NIDACO since inception in 1988 and can comfortably
be regarded as the “Administrative Power” house of the Company.

Mr. H. F. Johari- Executive Director of Finance

He holds a Bachelor of Science degree in Mechanical Engineering from the Regional Engineering
College, Calicut, Kerala-India. He has been in the employment of NIDACO since 1990. He
oversees all activities related to plant supplies and maintenance. He is a Syrian by Origin.

Mr. J. A Ajiroba- Finance Controller

He holds a Higher National Diploma in Accounting from the Polytechnic of Ibadan. He has been
with Nidaco Nigeria Limited since inception. He is a member of the Institute of Chartered
Accountant of Nigeria (ICAN). He takes financial decision for the company.

Other Project Technical team is as follows:

Name Position Profession Years of

Experience
1 Engr O. O. Balogun Projects Engineer Civil Engineer 18
2 Engr Dayo Ogunsan Site Engineer Civil Engineer 13
3 Engr Edia Uhumwangho Structural Engineer Civil Engineer 17
4 Bola Baruwa Projects Quantity Surveyor Quantity Surveying 12

INDUSTRY ANALYSIS
The building and construction sector in Nigeria involves all activities surrounding the establishment
and erection of physical structures such as infrastructures, commercial and industrial structures
and buildings. The size of the industry is estimated to be about N300 billion as at 2013. It is vital to
the growth of an economy since it is responsible for putting in place, the physical infrastructure
necessary to support the growth of other sectors of the economy. Despite its critical importance to
the development process, however, the sector’s impact on the Nigerian economy has been
negligible, contributing no more than 1.5% to GDP per annum in real terms over the last five years.

Modern construction activity in Nigeria dates back to the colonial era when expatriates construction
companies first came to Nigeria to meet the needs of the colonial administration and the European
trading firms. During the post-independence era, the number of construction companies increased
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with the entry of new companies, largely European origin. The nature of any construction project
determines the number of construction companies that may be assigned to it i.e. large commercial
and industrial plants are either turnkey projects or are assigned to a consortium of companies.

Construction companies can be classified into top tier, middle tier and lower tier companies. The
top tiers are those with turnover exceeding N15billion. These class, though few in number accounts
for the bulk of the industry’s turnover and largely engage in civil engineering projects and the
construction of infrastructures. Julius Berger Nig. Plc falls into this tier.

The middle tier companies generate turnovers between N1billion and N15billion and constitute the
largest number of companies in the sector. Companies in this tier include P.W. Nigeria Limited,
RCC Limited, CCECC Nigeria Limited, Cappa & D’alberto Plc, Borini Prono, ITB Nigeria Limited.
The lower tier companies generate turnovers of less than N1billion and are largely indigenous
companies involved in trade and specialty construction.

The categories of services offered by companies in the sector can be classified into civil
engineering construction, building construction and trade and specialty construction. The projects
that are won are determined by the degree of personal contacts with the people awarding the
contracts, the track record of the contractor, the quality of execution of previous contracts, and to
a lesser extent the bid price.

The source of projects for the industry can be categorized into The Public sector, Oil & Gas and
the Private Sector. The Public sector accounts for over 50% of the turnover of the industry, the
Other Private sector for less than 10% of the industry turnover, while the Oil & Gas sector accounts
for the remainder. However, the Public Sector is also responsible for most of the huge outstanding
receivables that the industry carries. The construction companies have been hard hit since this
millennium because of the downturn in the economy and the characteristic Federal Government
delay in making payment for jobs executed. The major construction names have therefore begun
to re-invent themselves by developing skills and capacities for serving the Oil & Gas and the Private
sectors.

The huge debt which the federal government owes the construction industry and the operators
decision to engage in build-as-you-earn mode have generally increased the cost to government of
executing contracts as the major players have increased their margins significantly to cater for such
costs as mobilizing on and off site and the effect of the devaluation of the naira. Government on its
own has attempted to combat this by setting up the due process mechanism. However, these
companies have largely been able to maintain their turnover and earnings from the contract awards
in the oil and gas sector of the economy.

The recent move by the federal government to repay all outstanding money owed to construction
companies through the issuance of bonds will go a long way in boosting the image of the federal
government in fulfilling its contractual obligations and also strengthen the confidence in the industry
as a whole.

Industry Characteristics

 The business is cyclical, with activities corresponding to the budget of federal and state
governments and liquidity in the money market.
 There’s climatic influence, with the sector experiencing pronounced lull from March to
September due to the rainy season.
 There’s over dependence on public sector clients.
 It is capital intensive and technologically sophisticated requiring significant investment in skilled
labour, plant and machinery
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 It is import dependent with high cost profile
 There’s marginal local participation and ownership
 It has a large investment in contract receivables
 There is pronounced capacity underutilization, especially for top and middle tier companies
 It is highly leveraged though non-interest-bearing debt until the guarantee crystallizes

Key Success Factors

 Track record for quality and timely execution of projects
 Ability to mitigate settlement risk, especially for public sector projects
 Access to short and long term finance.
 Competitive project pricing
 Regular contract award
 Degree of personal contacts of top management

BANKING RELATIONSHIP

With GTBank
Nidaco commenced banking relationship with GTBank in May 2008. Several Advance Payment
Guarantees have been issued on behalf of the company without any record of default.

Below is the company’s account performance analysis with GTBank in the last one year:

Turnover Lodgement
Month N'mm N'mm
Feb-16 114 94
Mar-16 91 92
Apr-16 78 66
May-16 156 148
Jun-16 37 43
Jul-16 67 60
Aug-16 52 58
Sep-16 30 26
Oct-16 57 57
Nov-16 123 128
Dec-16 69 62
Jan-17 71 102
TOTAL 945 936

As a result of the increase in the clientele base of the customer and different contracts awarded, the
company had increased collections into its account in the months of May and November 2016 as well
as January 2017. We are confident that this will be the trend going forward as we remain the
company’s sole Bank.

Pg 8 of 13
 WITH OTHER BANKS
The company currently maintains non-borrowing relationship with Zenith bank and UBA. However,
its only other active account is the one in UBA. Below is the company’s account performance
analysis with other Banks in the last one year:

Turnover Lodgement
Month N'mm N'mm
Feb-16 1 5
Mar-16 5 2
Apr-16 0 0
May-16 0 0
Jun-16 25 25
Jul-16 0 0
Aug-16 0 0
Sep-16 0 0
Oct-16 0 0
Nov-16 0 0
Dec-16 0 0
Jan-17 1 1
TOTAL 32 33

From the table above, over 90% of its business is done with GTBank.

SCHEDULE & STATUS OF BONDS/ GUARANTEES AVAILED TO NIDACO

S/N Project Contract Client Status

Sum
(N’mm)
1 New Pharma Plant Factory for May & Baker May & Baker Plc Fully Discharged
Plc 240
2 Construction of Central Warehouse at May May & Baker Plc Fully Discharged
& Baker new Pharma Plant at Idiroko 51
3 Construction of the Church Main Auditorium House on the Rock Fully Discharged
Roof Steel Works 109 Church
4 Day Waterman College, Abeokuta – Phase Day Waterman Fully Discharged
1 College
101
5 Stanbic-IBTC Bank at Ajose Adeogun Vita Construction Fully Discharged
Street, Victoria Island 82
6 Stanbic-IBTC Bank at Allen Avenue, Ikeja, Vita Construction Fully Discharged
Lagos 82
7 External works, minor buildings and MO&A Project Partner Fully Discharged
structures at Ibis Lagos Airport Hotel 113
8 Residential development for Dr. Victor 116 Cost Model Fully Discharged
Adesimbo Kiladejo at Jagun Street, Off PPL Associates
Road, Okokomaiko, Ojo, Lagos

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9 Remodeling of Procter & Gamble Factory, 180 Procter & Gamble Fully Discharged
Ibadan – Phase 2 for Procter & Gamble
10 Construction and Installation of Front Steel 200 Arab Contractors Fully Discharged
Shed in New Governor’s Office in Enugu
11 Construction of the foundation and concrete
framed structure of the propsed Prince Prince Ebeano & Co Fully Discharged
Ebeano Supermarket at Lake View Park, 367
Ajah, Lagos.
12 Construction of a block of 24 flats at Lekki 631 Coral Beach Estate Fully Discharged
Free Trade Zone, Ibeju-Lekki, Lagos. Limited
Total 2,272

THE REQUEST
We are seeking approval to renew the existing N300mm Bond and Guarantee Line availed to
Nidaco Nigeria Limited for another 2 years (subject to annual review). The company has carved a
niche for itself in the steel fabrication sub-sector of the construction industry due to the quality it has
maintained on all the jobs executed. Consequently, it has become a preferred contractor in this field.
As a result of this, there has been an increase in the level of patronage which has resulted into an
increase in the company’s clientele base.

We consider this renewal and increase imperative as this will enable the customer meet part of the
pre-conditions required for the award of contracts from its increasing clientele base such as
reputable private organizations, high net worth individuals, Government parastatals, Federal and
State Governments.

This facility shall remain secured as follows:

1. 30% Cash backing on the Advance Payment Sum.

2. Personal Guarantee of the Managing Director/Chief Executive Officer Mr. A. F. Johari
supported by a duly notarized Statement of Personal Networth.

TRANSACTION DYNAMICS

The transaction dynamics for the facility is as highlighted below:

1. Upon approval of the facility, Nidaco accepts the terms and conditions of the facility.
2. Upon winning of a contract bid by Nidaco, copies of award letter and contract agreements are
submitted for processing of Advance Payment Guarantee to cover funds approved for release
by employer.
3. Bonds/Guarantee is raised in line with employers’ standard format and released to Nidaco for
submission.
4. Upon receipt of funds, Nidaco is allowed to utilize up to 70% of the advance payment sum and
regularly update the Bank with interim valuation showing recovered portion of advance
payment.
5. Upon full recovery of advance payment guarantee or expiration, the guarantee is cancelled
whether returned or not.

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FINANCIAL ANALYSIS
It should be noted that in our opinion, the audited Financial Statement of the company probably
has been adjusted and does not reflect the true financial position of the company. Therefore, the
company's Management Financial Statement which appears more accurate when compared with
the audited Financial Report was used for the financial analysis.

SALES AND PROFITABILITY

2013 (Mgt) 2014 (Mgt) 2015 (Mgt)
Sales (N ’mm) 1,152 1,207 1,389
Change in Sales (%) 19.37 4.79 15
CGS/Sales (%) 67 79 80
SGA/Sales (%) 14 13 12
GPM (%) 33 20 20
NPAT (N’mm) 186 43 65

Nidaco’s sales have been on a steady increase from N1.2bn in 2013 to N1.4bn in 2015. This is
mainly due to increased patronage as the company continues to increase its clientele base while
securing contracts from same based on the quality it maintained on all the jobs executed during
the period under review. The company has carved a niche for itself in the steel fabrication sub-sector
of the construction industry and has become a preferred contractor in this field.

CGS/Sales increased during the period under review as a result of the increase in the price of steel
and other costs in the country. The company was able to maintain a good profit margin for the
period under review. However, the drop in GPM in 2014 to 20% was as a result of an increase in
cost of sales for that year due to an increase in the prices of its major raw materials such as iron
steel.

The company remained profitable during the period under review and we expect this trend to
continue.

ASSET MANAGEMENT
2013 (Mgt) 2014 (Mgt) 2015 (Mgt)
Working Investment (N ’mm) 571 645 677
WI/Sales (%) 50 53 21
ARDOH (days) 104 100 87
APDOH (days) 25 18 12
INVDOH (days) 141 139 126

The company’s Working Investment has been positive over the reviewed period; a reflection of the
high receivable and inventory contents of its trading asset. This is typical with players in this
industry. The company stockpiles its raw materials when the prices fall and in anticipation of
contracts that would be awarded as this will enhance immediate mobilization to site. The company’s
raw materials includes, round steel, steel plates, electrodes, galvanizing paints, etc which are used
for steel fabrication.

Nidaco’s ARDOH is acceptable when compared with the industry average. This is because the
company works mostly for private organizations. The company’s projects are mostly backed by
advance payments which are sufficient for the execution of the project and as such, the receivables
are in retention which the company will not be able to collect until the whole project is completed which

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takes an average of 4 months. However, it’s APDOH during the period under review is driven by the
advance payment sums received on the jobs yet to be executed.

INVDOH was maintained at an average of 135 days which supports its policy of stock-piling its major
raw materials for 5 months in anticipation of the expected contracts.

Overall, the company succeeded in efficiently and effectively managing its assets towards
generating good returns.

LIQUIDITY & LEVERAGE

2013 (Mgt) 2014 (Mgt) 2015 (Mgt)

Working Capital (N’mm) 705 961 851
Current Ratio (%) 11 12 18
Quick Ratio (%) 7 7 10
GTB Leverage 0.09 0.08 0.05
Networth (N ’mm) 813 861 926

Working capital has been positive and also increased throughout the reviewed period, an indication
that the company will be able to meet its short term obligations as and when due. This is evidenced
in its current and quick ratios higher than the acceptable industry standard.

The company is lowly geared as shown in its GTB leverage figures recorded during the period
under review. This can be attributed to the non-borrowing nature of the company. It is important to
note that most of its transactions are funded via advance payment from its clients backed by
contingent liabilities from commercial banks.

Also, the company's networth has increased over the years showing that the owners of the
business are committed to maintaining it as a going concern by ploughing back into the business
a significant portion of the profit realised during these years. Networth has grown from N813mm in
2013 to N926mm in 2015.

CASHFLOW ANALYSIS
2013 (Mgt) 2014 (Mgt) 2015 (Mgt)
NOPAT (N’mm) 202 62 84
COPAT(N’mm) 222 82 105
Finance Payments (N’mm) -16 -18 -18
Free Cash Flow (FCF) 206 64 88

The Company’s free cash flow has been positive thus confirming its ability to generate sufficient
cash to cover its operations and as well meet its finance payments.

RISK ANALYSIS

Performance Risk
This is the risk that the company will fail to perform according to the agreed terms of the awarded
contracts.

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Mitigant
Based on historical trend, NIDACO is known for good performance track record. The company is
endowed with seasoned engineers and other technocrats who have been instrumental to the
successful contract execution in time past. This is expected to span into the foreseeable future.

Diversion Risk
This is the risk that the advance payment received on a project will be used for other purposes and
this might hinder the performance of the primary project.

Mitigant
Based on the proven integrity of the company, we expect the company’s usual culture of independent
project management will continue. The company also has a track record of keeping to agreed terms
and conditions on its contracts. However, 30% of the advance payment guarantee sum will be in
pledge funds account until the expiration of the bond.

CREDIT CONSIDERATIONS
1. Nidaco Nigeria Limited has been in this line of business since 1988 (over 28 years ago) and
has recorded an impeccable track record of performance so far. Also, it clientele base has
grown over the years due to its commitment and timely delivery of awarded contracts.

2. The company’s management is competent and stable. Its affairs are also subject to the
policies of a strong management team which comprises of professionals with proven track
records in their respective areas of responsibility.

3. In total, we have issued 24 Bonds/Guarantees which are in excess of N2billion on behalf of

the customer in time past and all these have been successfully discharged with no record
of any Bond/Guarantee being called for non-performance.

4. Nidaco Nigeria Limited remains going concern and very viable. This approval will
demonstrate our commitment and support to the growth of the company.

5. Approval will help ward off competition and enable us retain our position as the customer's
preferred bank.

Based on the foregoing, kindly approve.

Kindly approve.

APPROVAL INFORMATION

Account Officer: UTI MALEGHEMI ________________

Relationship Manager: BAMIDELE BASHIRU ________________

Group Head: DEBORAH ODO-EFFIMI ________________

Divisional Head: ISA OMAGU ________________

Approval: CATHY ECHEOZO ________________

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