Ashaka Cement’s Profit Falls by 27% to N2.0bn

The challenging operating environment impacted the 2016 financial performance of Ashaka Cement Plc as the company ended with lower profit. The company, which has applied for voluntary delisting from the Nigerian Stock Exchange (NSE), recorded a decline of 27 per cent in profit after tax (PAT) for the year ended December 31, 2016.

According to the audited results, the company posted a revenue of N17.351 billion, showing a marginal fall from N17.415 billion in 2015. Cost of sales rose from N12 billion to N14.57 billion, reflecting the high cost of doing business during the revenue period.

Although the company strived to reduce general and administrative expenses, finance cost went up. Specifically, general and administrative costs fell from N4.35 billion to N2.535 billion, while finance cost rose from N10 million to N22.7 million.

However, Ashaka Cement ended the year with profit before tax of N2.663 billion, down from N3.209 billion in 2015, and PAT of 2.01 billion, compared with N2.76 billion in 2015.

The Board of Directors of Ashaka Cement Plc had opted for a voluntarily delisting of the company from the NSE in violation of the exchange’s Free Float Deficiency provision of 20 per cent.

According to the directors, Lafarge Africa Plc currently holds 84.97 per cent of Ashaka Cement, bringing the free float that is tradable on the NSE to 15.03 per cent as against 20 per cent stipulated by the exchange.

The directors explained that it is not improbable that given this free float deficiency, the NSE could take enforcement action and initiate a regulatory delisting, given that the free float deficiency is not likely to be remedied, hence the decision to delist and operate as an unlisted company.

Shareholders of the company last December approved delisting from the NSE. Following the approval, which was given at an extra-ordinary general meeting (EGM), shareholders of the company had a 90-day window as specified by NSE rules on voluntary delisting to decide on the exit plan on offer to shareholders.

As proposed by the board of directors and passed by shareholders at the EGM, shareholders may exit the company within the regulatory 90 days period prior to the official delisting of the company by either trading their shares on the NSE through their nominated stockbroker or receive 57 shares of Lafarge Africa Plc in exchange for 202 Ashaka Cement shares and a cash consideration of N2 per every AshakaCem exchanged.

Speaking at the EGM, the Vice-Chairman of Ashaka Cement, Mrs Edith Onwuchekwa, who represented the Chairman, Alhaji Suleiman Yahyah, who was unavoidably absent, said: “The voluntary delisting will not occasion loss of shares held by shareholders. As such, shareholders may retain their membership in the unlisted company if they so wish. Post the delisting, AshakaCem will continue to operate as a legal entity with its own board of directors.”