Michael Economakis, CEO of AG Leventis Plc

AG Leventis Plc released its results for the 2018 financial year over the weekend. The conglomerate surprisingly returned to profitability, after incurring a loss in 2017.

Revenue increased by 7% from N11.4 billion in 2017 to N12.2 billion in 2018. The firm recorded a N720 million profit before tax in 2017, as against a N3.8 billion loss recorded in 2017.

Profit after tax stood at N876 million, as against a N3.4 billion loss recorded in 2017. Retained losses of N2.6 billion, however prevented the group from paying a dividend.

The profit driver

In the key audit matter section of the report, the firm disclosed it sold 69% of its stake in Leventis Foods Limited (LFL) to Dalphon Holdings Limited. Discussions began on the 21st of May, 2018 and were concluded on the 19th of December, 2018.

Leventis Foods Limited was founded in 1999, and according to the company has one of the largest bakeries in Nigeria. Products produced include Valu Bread and Meaty sausage rolls.

Terms of the deal

  • Dalphon agreed to acquire 69% of the firm for N581 million.
  • Prior to this, AG Leventis Plc owned 99.9% of Leventis Food.
  • Receivables of N1.03 billion owed AG Leventis were converted into equity, after the sale.
  • AG Leventis currently owns 30% of Leventis foods, following the debt conversion.
  • A gain on disposal of N1.4 billion was recorded.

Behind the times

Leventis Foods may have fallen behind the times, going by a section in the financial statements. The firm stated that the revenue and production lines were operating below capacity and were old. The equipment was eventually impaired at a cost of N1.6 billion in 2017. This eventually led the group to making a loss.

In 2018 however, following improvements to the facilities, N812 million of the impairments was written back.

Red Flag 

For a transaction that commenced in March 2018 and ended in December 2018, one would have expected that the company inform the Nigerian Stock Exchange. No such notice was provided either at the beginning of talks or on conclusion.

The company needs to provide clear details of this transaction, and others that may occur going forward.

Disposal of Joint Venture

AG Leventis also disposed its 50% stake in DruckFarben Nigeria Limited for N160 million.

DruckFarben Nigeria Limited is into the sales and distribution of flexography and rotogravure inks for flexible packaging products and paints. The joint venture commenced in 2011.

Expanding to Ibadan?

While AG Leventis Plc may have pulled back on some ventures, it may be considering expansion into Ibadan. In a section in the statements, the company disclosed that it had made advance payment of N318 million for a piece of land in Ibadan.

About A.G Leventis Plc

A.G Leventis was incorporated in Nigeria as a private limited liability company in 1952, and was converted to a public limited liability company in 1978. It was listed on the Nigerian Stock Exchange on the 29th of November 1978.

The group’s primary activities are the sales and service of commercial vehicles, agricultural, mining and construction equipment. They also include property development and management.

Coronation Research

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