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.
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.
Covid-19 Update in Nigeria
On the 27th of May 2020, 389 new confirmed cases and 5 deaths were recorded in Nigeria bringing the total confirmed cases recorded in the country to 8,733.
The spread of novel Corona Virus Disease (COVID-19) in Nigeria continues to rise as the latest statistics provided by the Nigeria Centre for Disease Control reveal Nigeria now has 8,733 confirmed cases.
On the 27th of May 2020, 389 new confirmed cases and 5 deaths were recorded in Nigeria.
To date, 8733 cases have been confirmed, 2501 cases have been discharged and 254 deaths have been recorded in 35 states and the Federal Capital Territory having carried out 48,544 tests.
Covid-19 Case Updates- May 27th 2020
- Total Number of Cases – 8,733
- Total Number Discharged – 2,501
- Total Deaths – 254
- Total Tests Carried out – 48,544
The 389 new cases were reported from 22 states- Lagos (256), Katsina (23), Edo (22), Rivers (14), Kano(13), Adamawa (11), Akwa Ibom (11), Kaduna(7), Kwara (6), Nasarawa (6), Gombe (2), Plateau (2), Abia (2), Delta (2), Benue (2), Niger (2), Kogi (2), Oyo (2), Imo (1), Borno (1), Ogun (1), Anambra (1).
The latest numbers bring Lagos state total confirmed cases to 4012, followed by Kano (936), Abuja at 519, Katsina (358), Borno (257), Oyo (252), Ogun (242), Jigawa (241), Edo (240), Bauchi (233), Kaduna (215), Rivers (171), Gombe (152), Sokoto (116), Plateau (97).
Kwara State has recorded 85 cases, Zamfara (76), Nasarawa (62), Delta (51), Yobe (47), Osun (44), Adamawa (38), Ebonyi (36), Akwa Ibom (35), Imo (34), Kebbi (32), Niger (30), Ondo (24), Ekiti (20), Taraba and Enugu (18), Bayelsa (12), Anambra (11), Abia (10), Benue (7), while Kogi state has recorded 2 cases.
Lock Down and Curfew
In a move to combat the spread of the pandemic disease, President Muhammadu Buhari directed the cessation of all movements in Lagos and the FCT for an initial period of 14 days, which took effect from 11 pm on Monday, 30th March 2020.
The movement restriction, which was extended by another two-weeks period, has been partially put on hold with some businesses commencing operations from May 4. On April 27th, 2020, President Muhammadu Buhari declared an overnight curfew from 8 pm to 6 am across the country, as part of new measures to contain the spread of the COVID-19. This comes along with the phased and gradual easing of lockdown measures in FCT, Lagos, and Ogun States, which took effect from Saturday, 2nd May 2020, at 9 am.
|Date||Confirmed case||New cases||Total deaths||New deaths||Total recovery||Active cases||Critical cases|
|May 27, 2020||8733||389||254||5||2501||5978||7|
|May 26, 2020||8344||276||249||16||2385||5710||7|
|May 25, 2020||8068||229||233||7||2311||5524||7|
|May 24, 2020||7839||313||226||5||2263||5360||7|
|May 23, 2020||7526||265||221||0||2174||5131||7|
|May 22, 2020||7261||245||221||10||2007||5033||7|
|May 21, 2020||7016||339||211||11||1907||4898||7|
|May 20, 2020||6677||284||200||8||1840||4637||7|
|May 19, 2020||6401||226||192||1||1734||4475||7|
|May 18, 2020||6175||216||191||9||1644||4340||7|
|May 17, 2020||5959||388||182||6||1594||4183||7|
|May 16, 2020||5621||176||176||5||1472||3973||7|
|May 15, 2020||5445||288||171||3||1320||3954||4|
|May 14, 2020||5162||193||168||3||1180||3815||4|
|May 13, 2020||4971||184||164||6||1070||3737||4|
|May 12, 2020||4787||146||158||6||959||3670||4|
|May 11, 2020||4641||242||152||10||902||3589||4|
|May 10, 2020||4399||248||142||17||778||3479||4|
|May 9, 2020||4151||239||127||11||745||3278||4|
|May 8, 2020||3912||386||118||10||679||3115||4|
|May 7, 2020||3526||381||108||4||601||2818||4|
|May 6, 2020||3145||195||104||5||534||2507||1|
|May 5, 2020||2950||148||99||5||481||2370||4|
|May 4, 2020||2802||245||94||6||417||2291||2|
|May 3, 2020||2558||170||88||2||400||2070||2|
|May 2, 2020||2388||220||86||17||351||1952||2|
|May 1, 2020||2170||238||69||10||351||1751||2|
|April 30, 2020||1932||204||59||7||317||1556||2|
|April 29, 2020||1728||196||52||7||307||1369||2|
|April 28, 2020||1532||195||45||4||255||1232||2|
|April 27, 2020||1337||64||41||0||255||994||2|
|April 26, 2020||1273||91||41||5||239||994||2|
|April 25, 2020||1182||87||36||3||222||925||2|
|April 24, 2020||1095||114||33||1||208||855||2|
|April 23, 2020||981||108||32||3||197||753||2|
|April 22, 2020||873||91||29||3||197||648||2|
|April 21, 2020||782||117||26||3||197||560||2|
|April 20, 2020||665||38||23||1||188||466||2|
|April 19, 2020||627||86||22||2||170||436||2|
|April 18, 2020||541||48||20||2||166||356||2|
|April 17, 2020||493||51||18||4||159||317||2|
|April 16, 2020||442||35||13||1||152||277||2|
|April 15, 2020||407||34||12||1||128||267||2|
|April 14, 2020||373||30||11||1||99||263||2|
|April 13, 2020||343||20||10||0||91||242||2|
|April 12, 2020||323||5||10||0||85||228||2|
|April 11, 2020||318||13||10||3||70||238||2|
|April 10, 2020||305||17||7||0||58||240||2|
|April 9, 2020||288||14||7||1||51||230||2|
|April 8, 2020||274||22||6||0||44||226||2|
|April 7, 2020||254||16||6||1||44||204||2|
|April 6, 2020||238||6||5||0||35||198||2|
|April 5, 2020||232||18||5||1||33||194||2|
|April 4, 2020||214||5||4||0||25||185||0|
|April 3, 2020||209||25||4||2||25||180||0|
|April 2, 2020||184||10||2||0||20||162||0|
|April 1, 2020||174||35||2||0||9||163||0|
|March 31, 2020||139||8||2||0||9||128||0|
|March 30, 2020||131||20||2||1||8||121||0|
|March 29, 2020||111||22||1||0||3||107||0|
|March 28, 2020||89||19||1||0||3||85||0|
|March 27, 2020||70||5||1||0||3||66||0|
|March 26, 2020||65||14||1||0||2||62||0|
|March 25, 2020||51||7||1||0||2||48||0|
|March 24, 2020||44||4||1||0||2||41||0|
|March 23, 2020||40||10||1||1||2||37||0|
|March 22, 2020||30||8||0||0||2||28||0|
|March 21, 2020||22||10||0||0||1||21||0|
|March 20, 2020||12||4||0||0||1||11||0|
|March 19, 2020||8||0||0||0||1||7||0|
|March 18, 2020||8||5||0||0||1||7||0|
|March 17, 2020||3||1||0||0||0||3||0|
|March 16, 2020||2||0||0||0||0||2||0|
|March 15, 2020||2||0||0||0||0||2||0|
|March 14, 2020||2||0||0||0||0||2||0|
|March 13, 2020||2||0||0||0||0||2||0|
|March 12, 2020||2||0||0||0||0||2||0|
|March 11, 2020||2||0||0||0||0||2||0|
|March 10, 2020||2||0||0||0||0||2||0|
|March 9, 2020||2||1||0||0||0||2||0|
|March 8, 2020||1||0||0||0||0||1||0|
|March 7, 2020||1||0||0||0||0||1||0|
|March 6, 2020||1||0||0||0||0||1||0|
|March 5, 2020||1||0||0||0||0||1||0|
|March 4, 2020||1||0||0||0||0||1||0|
|March 3, 2020||1||0||0||0||0||1||0|
|March 2, 2020||1||0||0||0||0||1||0|
|March 1, 2020||1||0||0||0||0||1||0|
|February 29, 2020||1||0||0||0||0||1||0|
|February 28, 2020||1||1||0||0||0||1||0|
Why 2020 Q1 GDP is not a surprise
If the Q1 2020 GDP looks too good to be true, it is because it really is. But Q2 results will be a better representative of our challenges
Owing to the novel Covid-19 pandemic, reduced demand in the oil market, and restricted international trade activities, the outlook of the nation’s Gross Domestic Product (GDP) had been expectedly negative.
The International Monetary Fund (IMF), for one, predicted that the plunge in crude prices could cause GDP to contract by 3.4% in 2020, a rate that is by far the highest in at least four decades. The Minister of Finance Zainab Ahmed projected a far worse outcome of an 8% contraction.
As such, when the National Bureau of Statistics on its website on Monday, noted that the country’s Gross domestic product (GDP) expanded by 1.87% in the quarter from a year earlier, many were ecstatic. While the growth, in real terms, represented a drop of 0.23% points compared to Q1 2019 and 0.68% points decline compared to Q4 2019, it has largely been perceived as positive.
For context, the median estimate of three economists in a Bloomberg survey for the quarter was for a 0.8% expansion. However, just before we doff our hats to the seemingly positive growth rate (albeit comparative to projections), here are a few things to bear in mind:
It’s Still A Major Decline
Nigeria’s Q1 GDP of 1.87% reveals that there are indeed challenges that cannot be ignored. Beyond the effect of the pandemic, the oil price wars driven by Saudi Arabia & Russia, have increased the level of uncertainty in the oil market. While the growth rate for the quarter might not have been as bad as expected, the GDP still contracted from the fourth quarter. Also note that in its 2020 budget, the country had significantly cut the benchmark price to $25 per barrel without changing so much in terms of spending, making the nation susceptible to borrowing even more.
We Amped Up Oil Production
A core reason the country’s GDP growth rate was higher than estimated is that it witnessed a four-year rise in oil production. The country had increased its production after crude oil prices started crashing in the first quarter of 2020 as a result of the Covid-19 pandemic as well as the tension between the world’s biggest producers of the commodity. This was in order to curb the crash in income.
Output, consequently, rose to 2.07 million barrels a day, as compared to the 2 million in the fourth quarter and 1.99 million barrels in the first quarter of last year – an output that had not been attained since at least early 2016.
Q2 will be worse
Let’s face it, the pandemic has taken its toll on the Nigerian economy and very little can be done to hide that. However, the impact of the pandemic has not yet been reflected in Q1 results. This is because the economic impact of the pandemic actually commenced in April. If the projections for Q1 were bad, Q2 will be worse – and there are many reasons for this.
Top on the list is that the non-oil economy will likely not offer the solace we need. The statistics office explained that the slowdown reflects “the earliest effects of the disruption, particularly on the non-oil economy.”
With the oil economy down, the non-oil economy had been expected to ease the burden. However, results in ICT and Trade, two main components of the non-oil economy performed below expectations. For one, Trade contracted by 2.82%. Nigeria’s trade sector ranks as the second-largest contributor to Nigeria’s GDP. Consequently, its underperformance has material implications on GDP growth. On the other hand, ICT attained a growth of only 7.65%.
With the typical perils of increasing inflation as well as the continued closure of the border, growth may remain farfetched for the sector. Of course, restrictions in international trade and travel are set to worsen the said outlook. Given the forgoing, there is no gainsaying the fact that bigger challenges will ensue from the second quarter of the year.
AfDB bows to pressure from U.S, orders an independent probe of Akinwumi Adesina
The U.S Government, in its letter AfDB’s board of directors, appeared convinced that the ethics committee of the bank did not do a proper preliminary investigation.
The African Development Bank (AfDB) has succumbed to pressure from the United States Government by ordering a new and independent probe of the bank’s president, Akinwumi Adesina.
The board of African Development Bank (AfDB) decided to go for an independent probe after the U.S. Treasury Secretary, Steven Mnuchin, openly rejected the decision of the bank’s ethics committee to clear Adesina of all the allegations brought against him by some whistleblowers.
According to a monitored report from Bloomberg, inside sources who want to remain anonymous said that the AfDB, which is Africa’s largest multilateral development financial institution, gave in to the request of the U.S Government, by ordering an independent investigation into the activities of Adesina. Note that many other foreign governments such as Denmark, Sweden, Norway, and Finland supported the U.S treasury’s stand on the matter.
The U.S Government, in its letter AfDB’s board of directors, appeared convinced that the ethics committee of the bank did not do a proper preliminary investigation in line with standard practices in the other international multilateral financial institutions and the bank’s own rules and procedures.
He also raised concerns that the wholesale dismissal of all the allegations without appropriate investigation might tarnish the reputation of the financial institution, presenting it as one that does not uphold high standards of ethics and governance.
This view of the United States Government, who is the second-largest shareholder after Nigeria, corroborates the earlier views of the whistleblowers, who claimed that several top officials of the bank including Adesina, worked towards sabotaging the activities of the ethics committee after initially sitting on the allegations for 6 weeks.
The independent probe is coming barely 3 months to the bank’s annual general meeting, where Adesina is expected to be ratified for a second term, having been the sole Presidential candidate.
Prior to the AfDB’s decision to order a fresh probe, S & P analyst, Alexander Ekbom, was quoted to have said that “If there are questions from major shareholders on the appropriateness of an internal process, clearly it’s not harmful if that is put into a different light and looked at from the outside world with fresh eyes.”
It can be recalled that part of the accusations of the whistleblowers against Adesina include claims of giving contracts to acquaintances, appointing relatives and friends to strategic positions, and giving preferential treatment to Nigeria.