21 June 2019

Africa: Lafarge Africa Reduces Loss to N8.8 Billion On Tax Credit

Cement firm, Lafarge Africa Plc has posted a loss of N8.8 billion for the year ended December 31, compared with N34.39 billion in 2017. The company had delayed the filing of the results due to some pending actions required for the resolution of key matters.

However, the audited results have been released showing revenue of N308 billion as against N299 billion in 2017. Finance cost rose to N45.973 billion from N43.217 billion, while loss before tax stood at N19.508 billion. But a tax credit of N10.707 billion reduced the loss after tax to N8.802 billion.

Meanwhile, the company is to sell 100 per cent of the issued share capital in Lafarge South Africa Holdings Limited to Caricement B.V, a subsidiary of LafargeHolcim for $316.3 million. The proceeds is expected to reduce the liabilities, which the company's auditors, KPMG Professional Services raised concerns about.

The auditors had said Lafarge Group incurred a loss after tax for the year ended 31 December 2018 of N8.8 billion (2017: N34.6 billion), noting that as of that date, the Group's current liabilities exceeded its current assets by N119.3 billion (2017: N189.6 billion) while the company's current liabilities exceeded its current assets by N114.2billion (2017: N174.1 billion).

However, the auditors explained that December 4,2018, the company launched a Rights Issue scheme to raise N89.2 billion which was fully subscribed, while on 24 May 2019, the board approved the disposal of LSAH.

"The disposal was negotiated and the sales price was agreed at USD 316.3 million (N115.2 billion). The proceeds from the sale will be used to settle the company's shareholder loan which represents the only existing foreign currency loan in the books of the company. The full repayment of the Shareholder Loan will result in a significant reduction in debt, interest charges and foreign exchange exposures which will in turn enhance the company's profitability, financial position and cash flows. Additionally, the deconsolidation of LSAH which has been loss making and in a net current liabilities position will further enhance the Group's financial performance and position," the auditors said.

"Based on the foregoing, the directors believe that the Group and company will continue to be able to meet their obligations as they become due in the normal course of business. Accordingly, these financial statements have been prepared on the basis of accounting policies applicable to a going concern," they added.

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