By Peter Egwuatu
LAFARGE Africa Plc has disclosed that the net proceeds from its Rights Issue of N131.65 billion will enable it to refinance a portion of the company’s foreign currency denominated shareholder loan, by way of a debt-to-equity conversion and also boost its profitability in the future.
Group Managing Director/CEO, Lafarge Africa Plc, Mr. Michel Puchercos, who revealed this at the company’s ‘facts behind the Rights Issue’ presentation on the Lagos floor of the Nigerian Stock Exchange, NSE, stated that the company has started to overcome some of the challenges facing it as it has returned to profitability in the first half of this year, 2017.
According to him:“Despite the challenging economic and regulatory operating environment, our company has continued to make significant progress on a number of fronts; thereby ensuring solid operating performance. I am pleased to inform you stockbrokers and other stakeholders that the results of the company’s transformation are already evident, as seen in first quarter, Q1, and second quarter,Q2, 2017 unaudited results of the company. We have returned to profitability and we hope that part of the proceeds from this Rights Issue will further boost our profitability in the future.”
He enjoined shareholders to exercise their rights as the offer was in their best interest and the company at large.
While, answering questions from stockbrokers on why the company’s performance went down in the past, the Group CEO of Lafarge, said : “ The harsh operating environment, lower sales due to recession faced in Nigeria and turbulent macro- economic conditions including the naira devaluation, amongst others, affected the our performance. However, the company has robust cash flow generating capability, as evidenced by operating cash flows of N57.8 billion and strong balance sheet at the end of the 2016 financial year. But, in half year 2017, we have grown Profit Before Tax, PBT to N18.160 billion, Profit After Tax, PAT to N34.803 billion from losses recorded in 2016.”
Continuing, Puchercos, stated: “ The company’s performance shows that revenue grew at Compound Annual Growth Rate, CAGR, of 20 percent between 2012 and 2016 driven by improved operating activities, increased production capacity and operational consolidation. Revenue jump in 2013 was largely due to increased production in Ewekoro II cement plant; Earnings, Before Interest, Tax, Depreciation and Amortisation , EBITDA, declined to N29.1 billion in 2016 from N67.3 billion in 2015 in line with general market conditions.”
Meanwhile, Mr. Bola Adeeko, Head, Corporate Services Division, NSE, who presided over the Facts behind the Figure presentation, said: “Lafarge Africa’s N131.65 billion Rights Issue is the highest offer in the history of the Nigeria’s capital market in recent time and we encourage their shareholders to participate in the offer as the proceeds from the offer would reposition the company for greater height. We also encourage other companies to approach the market for funds to boost their businesses.”
According to him:“Lafarge’s Rights Issue will help the company to finance working capital and expand operations that will yield better results to shareholders in the form of dividend in the future.”