Economy
Ardova Positions Business for Future Growth, Cuts Borrowing Cost by 69% in 9 months
By Dipo Olowookere
Despite the huge challenges businesses across the globe, especially the oil industry, have faced this year, Ardova Plc has been able to come out stronger.
This has been made possible by the cost-optimisation, superior customer experience, operational efficiency, innovation, and strategic partnerships strategies of the board and management.
In the first nine months of 2020, the energy firm significantly reduced its borrowing cost by 69.6 per cent to N0.7 million from N2.3 billion in the same period of last year.
This was mainly due to the lower interest paid on bank loans and overdrafts in the period under consideration as N299.1 million was paid in contrast to the N1.3 billion paid last year.
Business Post reports that the superior customer experience offered by Ardova resulted in the 3.7 per cent rise in revenue to N128.2 billion from N123.6 billion, with the cost of sales up to N119.2 billion from N115.4 billion, leaving the company with a gross profit of N9.0 billion versus N8.1 billion in the same period of 2019.
In strict compliance with its cost-optimisation policy, Ardova cut is administrative expenses to N5.2 billion from N6.0 billion and this was mainly because of the reduction in board and AGM costs, personnel costs, transport and travel costs, amongst others.
In the first nine months of the year, the distribution expenses reduced to N1.6 billion from N1.7 billion and the operating profit went down to N2.9 billion from N4.2 billion.
Business Post observed that the bottom line of the results was not too palatable in the first nine months of the year, but in the third quarter, the firm bounced back into profitability.
In Q3 of 2019, the company had a net loss of N190.8 million but in Q3 of 2020, it was a net profit of N875.4 million, while the balance sheet closed very strong as the total assets closed at N49.8 billion versus N47.0 billion in FY 2019.
The CEO of Ardova, Mr Olumide Adeosun, in his reaction to the company’s performance in the period under consideration, said it “reflects our continued resolve towards operational excellence despite the challenging operating environment.”
“In the third quarter, we made significant strides in optimizing our core assets, built a resilient balance sheet, and worked extensively in positioning our business for future growth.
“Consequently, this led to increasing top-line revenue, higher margins, and improved operational efficiency.
“Specifically, our business transformation initiatives resulted in a sterling growth of over 2,000 per cent in normalized profit with operating expense ratio and gross margin printing at 5.2 per cent and 7.0 per cent,” he added.
Continuing, he said, “As a forward-thinking organisation, we will continue to explore opportunities in clean energy solutions and appraise the ever-changing downstream regulatory environment to build a socially responsible and formidable integrated downstream energy company.
“These opportunities and reforms, where required, will lead to one-off investments and collaboration with the right partners to deliver sustainable future returns to the business in the short to medium-term.”
“Overall, we are pleased with the progress we have made so far, especially in what has been the most challenging year for businesses across the globe and our industry in particular,” Mr Adeosun, who has transformed the firm since it was acquired from Mr Femi Otedola last year, stated further.
“Nonetheless, we remain committed to continue enhancing shareholder value. The focus over the coming periods will be to consolidate and build on the gains achieved and further refine our processes to ensure we achieve our set objective of superior customer experience, operational efficiency, innovation, and strategic partnerships,” he assured.
By Adedapo Adesanya
Dangote Petroleum Refinery will not pursue an overseas listing until it has established at least three years of proven production and financial performance, its chief executive, Mr David Bird, has said.
Mr Bird said the decision would allow the refinery to build a stronger operational track record before seeking an international listing that could support a higher valuation.
London has been mentioned as a possible destination for the refinery’s eventual foreign listing, although Mr Bird said the company would focus on its planned Nigerian initial public offering (IPO) in the near term.
The refinery is preparing for an October IPO on the Nigerian Exchange that could become Africa’s largest, with the oil firm seeking to encourage broad participation from Nigerians.
“We really want to drive participation,” Mr Bird told Reuters. “The mandate of the IPO was to be the people’s IPO.”
The refinery has submitted an application to the Securities and Exchange Commission for a potential $5 billion IPO, according to a source cited by the publication, although the final size of the offer has not been determined.
However, Mr Bird declined to comment on the proposed IPO size or the refinery’s valuation.
The company raised $2.5 billion in a private placement in July, a transaction that valued the refinery at about $40 billion. Africa Finance Corporation, which led a group of strategic investors in the deal, said the placement was 3.7 times oversubscribed.
Mr Bird said investor interest in the IPO had been strong during pre-marketing and the private placement, while preparations remained on schedule.
The refinery, owned by Mr Aliko Dangote, is also planning to double its refining capacity to 1.4 million barrels per day within three years, with the expansion expected to be funded partly through the IPO and debt.
The organisation currently supplies most of Nigeria’s gasoline and diesel demand and all of the country’s jet fuel needs.
It is also planning to establish a similar structure in Kenya to serve the East African market.
By Adedapo Adesanya
Airtel Africa Plc is considering listing its mobile payments subsidiary, Airtel Money, in US Dollars when it debuts on the London Stock Exchange (LSE) later this year, in a move that could make it one of the few companies to pursue a Dollar-denominated listing in the UK market.
According to Bloomberg, the group is evaluating whether to price Airtel Money’s shares in US Dollars rather than British Pounds Sterling to align with its reporting currency, citing people familiar with the matter.
The publication also reported that more banks have been invited to work on the deal, including lenders based in Africa and the Middle East.
The business is reportedly targeting a valuation of about $10 billion, which would make it the largest new flotation in London since July 2021, when British fintech Wise was valued at nearly £9 billion in a landmark direct listing.
Earlier this month, Mr Gopal Vittal, executive vice-chair of Bharti Airtel, said the company’s finance business has “achieved meaningful scale”, with quarterly revenue now exceeding $400 million.
He said the business has been growing by 25 per cent annually on a constant-currency basis. The opportunity remains significant, as nearly 65 per cent of adults across Airtel’s African markets still do not have access to formal bank accounts.
Airtel Money has a wide presence in Africa, including Kenya, Nigeria and Tanzania. Unlike in India, where Airtel operates its finance business as a payments bank, Airtel Money in Africa operates independently of the banking system. In Nigeria, Airtel Money operates through its licensed subsidiary known as SmartCash Payment Service Bank Limited
The service allows customers to transfer money through the mobile network, pay bills, and make international payments through virtual cards.
Airtel believes a London listing would give Airtel Money access to a broader base of investors than a listing in India or other places previously considered, including the United Arab Emirates (UAE).
Airtel Africa, which operates in 14 countries and is dual-listed in London and Lagos, is majority-owned by Indian billionaire, Mr Sunil Mittal, through Bharti Enterprises.
The company is also expanding its financial services business in India. In February, it secured a licence from the Reserve Bank of India to operate as a non-banking finance company (NBFC).
The licence allows the business to expand its operations, disburse loans, offer microcredit products and develop other financial solutions. Airtel also has access to digital data from its telecoms business, which it can use to improve its financial products.
Following the NBFC licence, Airtel announced a $2.2 billion (Rs200 billion) capitalisation plan for its finance arm.
A London listing would therefore mark a major step for Airtel Money, transforming it from a small unit within the telecoms business into a separately valued company with room to expand across Africa and India.
The UK is also strategically important to Mr Mittal, who is now the largest shareholder in British Telecom with a 24.95 per cent stake. Airtel Money’s planned listing would give the billionaire a second major footprint in the London market.
By Adedapo Adesanya
The duo of 11 Plc and Central Securities Clearing System (CSCS) Plc helped flip the NASD Over-the-Counter (OTC) Securities Exchange from a three-day losing streak to a 0.27 per cent gain on Thursday, August 13.
11 Plc, which used to be known as Mobil Nigeria, garnered N22.28 to close at N245.03 per unit compared with the preceding day’s N222.75 per unit, and CSCS Plc appreciated by N3.76 to N109.76 per share from N106.00 per share.
The gains offset the N10.00 loss recorded by FrieslandCampina Wamco Nigeria Plc, closing at N160.00 per unit compared with N170.00 per unit it finished at midweek.
When the bourse closed for the day, the market capitalisation increased by N7.31 billion to N2.727 trillion from N2.720 trillion, and the NASD Security Index (NSI) went up by 12.17 points to 4,544.20 points from 4,532.03 points.
Yesterday, the volume of securities exchanged by investors skyrocketed by 1,173.8 per cent to 1.9 million units from 150,340 units, the value of securities jumped by 1,029.5 per cent to N210.8 million from N18.7 million, and the number of deals soared by 6.3 per cent to 34 deals from 32 deals.
Great Nigeria Insurance (GNI) Plc remained the most active stock by value on a year-to-date basis, with 3.4 billion units worth N8.4 billion, followed by Infrastructure Credit Guarantee (Infracredit) Plc with 2.3 billion units valued at N6.5 billion, and CSCS Plc with 79.1 million units exchanged for N5.7 billion.
GNI Plc also closed the day as the most traded stock by volume on a year-to-date basis, with 3.4 billion units sold for N8.4 billion, followed by Infracredit Plc with 2.3 billion units transacted for N6.5 billion, and Resourcery Plc with 1.1 billion units traded for N415.7 million.
