A cross section of stakeholders and shareholders of AG Leventis Nigeria Plc have expressed concern over the recent partnership talks between Leventis and Pick n Pay, a South African retail chain store.
AG Leventis had recently announced that it had entered into a joint venture agreement with Pick n Pay Retailers (Pty) Limited to establish retails stores in Nigeria.
Mr. Michael Economakis, Executive vice chairman and chief executive officer, AG Leventis (Nigeria) Plc, who disclosed this recently at the Nigerian Stock Exchange (NSE) during the presentation of the company’s facts behind the figures, added that in addition to the investment by Pick n Pay, the conglomerate which intends to inject fresh funds to boost its capital base and expansion project had started discussion with a major foreign investor.
However, stakeholders who reacted on the issue of partnership with Pick n Pay said that the investment by the South African firm would be better appreciated if it was coming to Nigeria to build an industry, as they argued that establishing a retail shop amounts to brief case investment which does not augur well for the country.
“We are expecting that you should go and establish in other countries and bring more funds back to Nigeria from your investments there, instead of partnering with a South African retail shop, when we already have many of them in this country” a stock broker said.
Shareholders who spoke to our correspondent said that the target investment by the South African firm, promotes trading on finished goods, majority of which are produced in other countries.
They maintained that industrialization remains the key to economic development, against promotion of mass consumption of goods produced in foreign countries, a development which chain stores across the country are promoting.
“Let them come here with the machinery to start production of a line of product, they certainly have market for the goods, than establishing shops for the sale of goods produced in other parts of the world which would encourage capital flight from Nigeria” a retail investor said.
Mr. Michael Economakis, the company’s CEO said that the 80 year old company had already commenced talks with a foreign investor to inject new capital into the fast moving consumer goods (FMCG) 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 was now looking at expanding its plans to assemble for other distributors in the region.
He said AG Leventis is also looking at large-scale farming in Nigeria that would lead the company to backward integration in agriculture.
Irrespective of the loss recorded in the 2015 financial year, the company recommended dividend payment which is financed from its reserves, irrespective of the company’s intention to raise fresh funds to boost its business.
This gave concern to a stockbroker who queried why a company that recorded loss in profit after tax, should pay dividend and still come back to the market to raise fresh funds instead of ploughing back its reserves to grow business and pay dividends later through recorded profit.
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.
AG Leventis’ audited report and accounts for the year ended December 31, 2015 showed that 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.
However, its 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.