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Tag: AG Leventis

  • Union Bank, AG Leventis seek extension of deadline to restructure shares

    Union Bank of Nigeria (UBN) Plc and AG Leventis (Nigeria) Plc have applied to the Nigerian Stock Exchange (NSE) to grant them waiver and extend the deadlines for the restructuring of their share capital.

    The NSE had given Union Bank and AG Leventis Friday, June 30, and July 31, 2017 respectively as deadlines to restructure their issued share capital to dilute the existing concentrated shareholdings of the core investors and allow more investments from the general investing public.

    The latest report by the Nigerian Stock Exchange (NSE) on companies in violation of post-listing rules indicated that Union Bank and AG Leventis are still in violation of the listing requirement on free float, which mandates companies on the Exchange to have a certain minimum percentage of their shares in the hand of investing public.

    A regulatory report at the Exchange indicated that Union Bank and AG Leventis have sought for extension of the deadlines.

    Free float, otherwise known as public float, refers to the number of shares of a quoted company held by ordinary shareholders other than those directly or indirectly held by its parent, subsidiary or associate companies or any subsidiaries or associates of its parent company; its directors who are holding office as directors of the entity and their close family members and any single individual or institutional shareholder holding a statutorily significant stake, which is 5.0 per cent and above in Nigeria.

    Thus, free float’s shares do not include shares held directly or indirectly by any officer, director, controlling shareholder or other concentrated, affiliated or family holdings.

    Companies listed on the Exchange are required to maintain a minimum free float for the set standards under which they are listed in order to ensure that there is an orderly and liquid market in their securities. The free float requirement for companies on the premium and main boards is 20 per cent while companies on the third tier board, otherwise known as Alternative Securities Market (ASEM) are required to have 15 per cent free float.

    According to the report, Union Bank has a free float of 14.94 per cent; 5.06 per cent below the required 20 per cent for the bank’s listing status on the main board of the Exchange. AG Leventis has free float of 11.64 per cent, 8.36 per cent below the 20 per cent free float for companies listed on the main board.

    The report indicated that other companies, which have free float deficiencies have either started arrangements to resolve the deficiency or still have longer period to comply. For instance, Champion Breweries, which has a free float of 17.30 per cent, has obtained approval for restructuring while five other companies-Capital Hotels, E-Tranzact International, Ekocorp, Interlinked Technology, Transcorp Hotels, Caverton Offshore Supports Group and African Paints, are expected to resolve their free float deficiencies between October and December 2017.

    Two other companies- Chellarams Plc and Infinity Trust Mortgage Plc have deadlines of February and May 2018 respectively.

    Failure by any company under free float deficiency to restructure its share capital at the expiration of the deadline or secure extension of the deadline may lead to delisting of its shares from the NSE.

    Free float deadline is usually in deference to application by the management of a company for some period to comply with the free float. However, the company is required to provide quarterly disclosure report to the NSE on the efforts being made to fully comply by the deadline.

    At the expiration of the deadline, a company is mandatorily required to have completed partial divestments or dilution of the ‘non-public’ shareholdings to free 20 per cent equity for public holding, unless the management of the NSE grants fresh waiver and extension of the deadline. In the extreme instance, a company with deficient public float may opt to delist its shares.

    Stock markets maintain minimum public float to prevent undue concentration of securities in the hands of the core investors and related interests, a situation that can make the stock to be susceptible to price manipulation. Besides, it provides the general investing public with opportunity to reasonably partake in wealth creation by private enterprises.

  • AG Leventis eyes foreign investors to boost growth

    LG Leventis (Nigeria) Plc has started discussions with foreign investors with a view to raising new capital to be invested in the major areas of the conglomerate’s businesses.

    The management of AG Leventis, one of the oldest listed companies, presented the underlying operational facts of the conglomerate to stakeholders at the Nigerian Stock Exchange (NSE) yesterday.

    Executive vice chairman and chief executive officer, AG Leventis (Nigeria) Plc, Mr. Michael Economakis, said the conglomerate was hoping to inject fresh capital to boost its turnaround plan and sustain the growth of its businesses.

    He outlined that the strategic priorities of the company in the meantime would be in the areas of fast moving consumer goods, automobile, agriculture and real estate noting that the conglomerate would seek to develop its businesses in these sectors over the next two years.

    According to him, AG Leventis is already discussing with foreign investors to inject new capital into the fast moving consumer goods sector of its businesses.

    “We are discussing with foreign investors, hopefully there will be capital inflow very soon, this capital inflow will assist us in having better cash flow, there will be reduction in our cost of fund and we will be able to expand our products portfolio”, Economakis said.

    He added that injection of new capital would enable the conglomerate to expand its product portfolio into some niche products with a potential long-term technical service partnership with Pick n Pay, one of the two largest retailers in South Africa.

    He noted that the conglomerate had commenced production of vehicles from mid 2015 and now looking at expanding it plans to assemble for other distributors in the region.

    He said AG Leventis is also looking at the large-scale farming in Nigeria that would lead the company to backward integration in agriculture.

    AG Leventis had recently announced that it had entered into a joint venture agreement with Pick n Pay Retailers (Pty) Limited, a South African company, to establish retails stores in Nigeria.

    The board of directors of the company had recommended distribution of N265 million from its reserves as cash dividends after the conglomerate posted a loss after tax of about N177 million in the 2015 business year. The board recommended that a dividend per share of 10 kobo be paid to all shareholders on the book of the company as at August 19, 2016.

    Key extracts of the audited report and accounts of AG Leventis for the year ended December 31, 2015 showed that the conglomerate’s profit before tax dropped from N534.04 million in 2014 to N329.38 million in 2015. After taxes, the company recorded a net loss of N176.99 million in 2015 as against net profit of N211.81 million in 2014. The company’s shareholders’ funds also declined from N9.39 billion in 2014 to N9.09 billion in 2015.

    Meanwhile, the company’s turnover rose from N11.79 billion in 2014 to N12.54 billion in 2015. Gross profit improved from N3.47 billion in 2014 to N4.17 billion in 2015.

  • AG Leventis to pay N265m dividends on N177m loss

    The board of directors of AG Leventis (Nigeria) Plc has recommended distribution of N265 million from its reserves as cash dividends after the conglomerate posted a loss after tax of about N177 million in the 2015 business year.

    Key extracts of the audited report and accounts of AG Leventis for the year ended December 31, 2015 showed that the conglomerate’s profit before tax dropped from N534.04 million in 2014 to N329.38 million in 2015. After taxes, the company recorded a net loss of N176.99 million in 2015 as against net profit of N211.81 million in 2014. The company’s shareholders’ funds also declined from N9.39 billion in 2014 to N9.09 billion in 2015.

    Meanwhile, the company’s turnover rose from N11.79 billion in 2014 to N12.54 billion in 2015. Gross profit improved from N3.47 billion in 2014 to N4.17 billion in 2015. Operating profit increased marginally from N1.12 billion in 2014 to N1.15 billion in 2015.

    The company’s shareholders’ funds consisted of retained earnings and other reserves of N3.82 billion and N4.78 billion respectively in 2015 as against N4.22 billion and N4.36 billion respectively in 2014. The board has recommended that a dividend per share of 10 kobo be paid to all shareholders on the book of the company as at August 19, 2016.

    The dividend recommendation comes as AG Leventis announced that it has entered into a joint venture agreement with Pick n Pay Retailers (Pty) Limited, a South African company, to establish retails stores in Nigeria.

    In a statement, Company Secretary and Legal Adviser, AG Leventis, Ms Titi Talabi, had said the new joint venture company would engage in retail services, especially for fast moving consumer goods (FMCGs).

    Analysts said they expected the new business line to boost the fortunes of AG Leventis, one of the oldest listed companies on the stock market. AG Leventis has struggled in recent years and it is one of the 12 companies that have been given deadlines by the Nigerian Stock Exchange (NSE) to restructure their share capital to allow for the minimum free float of 20 per cent of issued share capital. AG Leventis has a free float of 11.64 per cent and it has been given up till March 31, 2017 to free up additional shares for the general investing public.

    Free float, otherwise known as public float, refers to the number of shares of a quoted company held by ordinary shareholders other than those directly or indirectly held by its parent, subsidiary or associate companies or any subsidiaries or associates of its parent company; its directors who are holding office as directors of the entity and their close family members and any single individual or institutional shareholder holding a statutorily significant stake, which is 5.0 per cent and above in Nigeria.

    Bloomberg reported that Pick n Pay Stores Limited, based in Cape Town, saw Nigeria as an engine of growth.

    “A key part of the group’s strategy is to establish a second engine of growth in markets in the rest of Africa,” the company stated. Pick n Pay will hold 51 per cent of the operation in Nigeria, “which will roll out a combination of large and smaller formats to meet consumer needs.”

  • AG Leventis vs Scoa Nigeria: Changing tides

    AG Leventis vs Scoa Nigeria: Changing tides

    AG Leventis (Nigeria) Plc and Scoa Nigeria Plc are two of the oldest surviving and earliest listed companies in Nigeria. Generally regarded as diversified industries, the nature of the two companies as conglomerate implies several business lines.

    Both AG Leventis and Scoa Nigeria have striking similarities that make them competitive peers. From historical antecedents, ownership structure to business operations, they present the image of being in the same category.

    Both have large business interests spanning foods and beverages, automobile, general trade, power, appliances and merchandise. With several decades of operations, several subsidiaries, foreign ownership and control and hundreds of thousands of shareholders, they are both household names. With same year-end, their fundamentals are also easily comparable.

    AG Leventis (Nigeria) has some eight business lines spanning the wide gamut of the economy from foods and beverages to automobile, real estate, hotel, general trade and merchandise. Although it has some 30,000 shareholders but the Leventis family still owns about 88 per cent controlling equity stake. Scoa Nigeria also has some eight business lines. With three subsidiaries, Scoa Nigeria engages in sales, maintenance, distribution and leasing of automobile, manufacturing, power generation, foods and fruit juice production, general merchandise, technical sales and services, furniture and agriculture.

    In terms of size, AG Leventis’ balance sheet is fundamentally more than twice the size of Scoa Nigeria’s but the relative difference in market capitalisation is smaller. AG Leventis opened this week with a market capitalisation of N4.4 billion while Scoa Nigeria opened with N3.5 billion.

    Latest audited reports and accounts of the two companies for the year ended December 31, 2012 showed similar highpoint-negative bottom-line, though the route was remarkably different for each company. While Scoa Nigeria showed strong top-line resurgence, operating and financing expenses stifled the recovery, turning the 61 per cent growth in sales to 28 per cent decline in net profit. AG Leventis showed a worse outlook, falling all through the top-line to the bottom-line. It, however, showed a somewhat better cost management than its competitor.

     

    Sales Generation

    AG Leventis suffered a reversal in 2012 as sales dropped by 9.9 per cent. It had grown sales by 35.5 per cent in 2011. Average sales growth over the year thus narrowed down to 12.8 per cent. On the other hand, Scoa Nigeria’s turnover rose by 61 per cent in 2012.

     

    Profitability

    AG Leventis showed negative profit performance in 2012. Both actual and underlying profit measures ended the year on the downside. Gross profit dropped by about 11 per cent in 2012 as against an increase of 36 per cent in 2011. Profit before tax dwindled by about 21 per cent in 2012 compared with increase of about 30 per cent in 2011. While gross margin had steadied at 21.1 per cent in 2012 as against 21.4 per cent in 2011, average pre-tax profit margin dropped from 4.6 per cent to 4.0 per cent. After taxes, net profit further slumped by 13.5 per cent, sustaining a downtrend that had seen a drop of 16.3 per cent in 2011.

    Strong sales growth and relatively lower cost of sale initially boosted the performance of Scoa Nigeria. Gross profit jumped by 67 per cent in 2012. With significant increase in financing charges and operating expenses, profit before tax recorded a lower growth of 10.8 per cent. This also reflected in the wide gap between the top-line margin and the bottom-line margin. While gross profit margin improved from 22.9 per cent in 2011 to 23.7 per cent, pre-tax profit margin dropped from 3.9 per cent to 2.6 per cent. Net profit after tax ended with a decline of 28 per cent.

    On the average, the companies appeared tied. AG Leventis has sustained average gross profit margin of 21.25 per cent slightly lower than 23.3 per cent posted by Scoa Nigeria, which has a lower average pre-tax profit margin of 3.25 per cent as against 4.3 per cent made by AG Leventis.

     

    Actual Returns

    The returns outlooks of the two conglomerates showed almost similar outlook, in single digit and declining. Scoa Nigeria returned 2.3 per cent on total assets in 2012 as against 2.4 per cent in previous year. Return on equity also slipped from 3.9 per cent to 2.2 per cent. AG Leventis increased return on total assets from 2.6 per cent to 2.9 per cent. However, return on equity nearly halved at 2.8 per cent in 2012 as against 5.1 per cent in 2011. On the average, AG Leventis maintains a substantial edge, with two-year average returns on equity and total assets of 3.95 per cent and 2.75 per cent as against Scoa Nigeria’s 3.05 per cent and 2.35 per cent.

     

    The Bottom-line

    Across the divides, margins and returns were generally low, indicating the dicey balancing act that often characterizes slow sales growth and high costs of business. The results underlined major challenge facing several companies- suffocating high costs of finance due to dependence on short-term bank loans in the face of the continuing dormancy of the primary market. With businesses strewn across several sectors of the economy, conglomerates would appear to possess cushions against sectoral dislocation and minor macroeconomic corrections. However, with global fluctuation in primary input costs, high domestic operating costs, huge interest expenses due to exposures to banks and challenges from small niche players, conglomerates are struggling to maintain their balance. Most conglomerates had trimmed their businesses, but jumpstarting the synergies and unlocking the intrinsic values in the remaining businesses remain a challenge. They may still need to take more pains to look again; where the economy of scale and cross-selling advantages lie and where the drain pipes lie.