Earnings ReportFeatured

Exit From LSAH Boosts Lafarge Africa Full Year Earnings, As Management Proposes N1.00 Cash Divdend

Coy: Lafarge Africa Plc. (WAPCO)
Rating: Hold

Current Market Price: N9.80
Latest Cash Dividend: N1.00

Year High: N17.60
Year Low: N8.95
Fair Value: N9.25
By: Jeariogbe Tunde Segun

Introduction

  • This report on observed the financial result of Lafarge Africa for the year ended 31st December, 2019 and compare it with that of 2018 to establish growth and projection where necessary.
  • We observed that the dividend was possible since it earned outstandingly from disposing the company’s investment in Lafarge South Africa Holdings (LSAH) via a planned sale of total equity interest held by the company in LSAH to Caricement B.V, a related party within the Lafarge Holcim Group.
  • In other words, the said sale boosted the company’s Total Comprehensive Income to N7.14 as against the Earning Per Share (EPS) of N0.96
  • Observed that the company used lower finance cost through the year which translated to a huge drop in its liabilities instruments. This is because it utilized part of its proceed in the above sale to augment its liabilities items
  • In the report, the Board of Directors proposed a gross dividend of N1.00 (2018: Nil) on every ordinary share in issue amounting to 16,107,795,721.00 (2018: Nil).
  • The closure date for the said dividend is 4th to 8th May, 2020. That is, the qualification date is 30th April, 2020
  • According to the released document, the dividend will be paid on 26th May, 2020 to all shareholders whose names appear in the registrar books on 30th April, 2020
LAFARGE AFRICA
Bourse Nigerian Stock Exchange
Code Name WAPCO
Sector INDUSTRIAL GOODS
Market Classification PREMIUM BOARD
Nature of Business Manufacturing of Cement
Date of Incorporation February 24th 1959
Date Listed  
End of Accounting Year DECEMBER
Website www.lafarge.com.ng
Registrar CARDINAL STONE REGISTRARS LIMITED
Auditor Akintola Williams Deloitte
Share Price@Relsd (N)                                                    9.80
Earnings per Share                                                    0.96
Intrinsic Value(N)                                                    9.25
Share Outstanding 16,107,795,496
Market Capitalisation                                157,856,395,861

Statement of Comprehensive Income

  • The Turnover figure posted at the end of the year was N212.99 billion compared to N217.81 billion posted in the corresponding year
  • Cost of Sales inched up by 4.21% to stand at N157.04 billion versus N150.70 billion in the corresponding year
  • Operating profit for the year was estimated at N34.91 billion as against N38.52 billion posted at the end of 2018 financial year
  • Operating Expenses reasonably adjusted down by 21.65% to stand at N23.41 billion against N29.89 billion in 2018
  • Finance Cost used through the year was valued at N20.17 billion lower than the N41.56 billion in the corresponding year
  • Profit before Tax was valued at N17.01 billion, this is an outstanding performance when compared to the Loss before Tax of N1.50 billion posted in 2018
  • Having taking care of all tax liabilities, the company reported N15.51 billion as profit for the year versus N8.09 billion in the corresponding year
  • Meanwhile, adding the remaining profit from the sale of its holdings mentioned above, the Total Comprehensive Income got a boost to N115.03 billion compared to N9.24 billion loss in the corresponding year
LAFARGE AFRICA
Statement of Comprehensive Income
  2019 2018 %CHG
Turnover                212,999,066,000            217,813,136,000 -2.21
Cost of Sales                157,046,768,000            150,701,035,000 4.21
Operating Profit                  34,910,208,000               38,528,313,000 -9.39
OPEX                  23,419,653,000               29,891,470,000 -21.65
DEPRECIATION                  29,497,370,000               22,288,279,000 32.34
AMORTISATION                        672,260,000                     494,990,000 35.81
FINANCE COST                  20,176,509,000               41,562,883,000 -51.46
NET FINANCE INCOME                  17,017,923,000               40,038,081,000 -57.50
PBT                  17,892,285,000               (1,509,768,000) -1,285.10
TAX                     2,374,499,000                 9,606,799,000 -75.28
PAT                  15,517,786,000                 8,097,031,000 91.65
TOTAL COMP INCOME                115,039,204,000               (9,241,118,000) -1,344.86
Statement of Financial Position
Current Assets                  75,045,721,000               93,360,441,000 -19.62
Non Current Assets                422,106,487,000            447,376,222,000 -5.65
Total Assets                497,152,208,000            540,736,663,000 -8.06
Current Liabilities                  84,411,770,000            212,649,717,000 -60.30
Non Current Liabilities                  67,826,437,000            193,545,857,000 -64.96
Total Liabilities                152,238,207,000            406,195,574,000 -62.52
Net Assets                344,914,001,000            134,541,089,000 156.36
Retained Earnings                155,801,325,000            138,272,355,000 12.68
Shares Outstanding                  16,107,795,496               16,107,795,496  

Statement of Financial Position

  • Current Assets at the end of the 2019 financial year was valued at N75.04 billion, a 19.62% drop from the N93.36 billion estimated in 2018
  • Non-Current Assets on the other hand is estimated at N422.10 billion versus N447.37 billion in 2018. Thus, Total Assets is totalled at N497.15 billion as against N540.73 billion in the corresponding year
  • Similarly, Current Liabilities at the end of the year is estimated to worth N84.41 billion, 60.30% down for the previously estimated N212.64 billion.
  • Non-Current Liabilities equally stood at N67.82 billion, same as 64.96% below the N193.54 billion in the similar year. Thus, Total Liabilities is valued at N152.23 billion against N406.19 billion
  • Net Assets is estimated at N344.91 billion same as 156.36% above the previous estimate of N134.51 billion in the corresponding year.
  • Retained Earnings at the end of the year was worth N155.80 billion, this is 12.68% above the N138.27 billion stated in its 2018 financial

Financial Strength

  • The amount reported as Total Liabilities is same as 31% of the Total Assets figure for the year. In other words, the Debt Ratio is 0.31x this is 59.24% below the 0.75x in the corresponding year.
  • Total Debt to Equity Ratio is currently estimated at 0.44x against 3.02x in the corresponding year, this implies that the Total Debt Value for the year can replicate Equity 0.44 times, this is a better position when compared to 3.02 times replicate of the previous year
  • Equity Ratio is also valued at 0.69x versus 0.25x, that is Equity is same as 69% of the Total Assets Value for the year. When compare to 2018 estimate, it is an improvement in the company’s financial strength
  • Going by the current estimated beta value, the shares of Lafarge Africa can be said to be less liquid as its beta value currently stands far below the market beta
Financial Strength/Solvency Ratio
TICKERS 2019 2018 %CHG
Debt Ratio                                        0.31                                    0.75 -59.24
Total Debt to Equity Ratio (MRQ)                                        0.44                                    3.02 -85.38
Equity Ratio                                        0.69                                    0.25 178.84
TICKERS 2019 2018 %CHG
Beta Value                                        0.67                                    0.63 6.35

Profitability Ratio

  • EBITDA Margin is Currently estimated at 16.39% versus 17.69% estimate at the end of 2018 financial year
  • Pre-Tax Margin stood at 8.40% as against the negative margin of -0.69% in 2018
  • Cost of Sales is estimated to be 73.73% of the Turnover Figure this is 6.57% higher than the 69.19% in the corresponding year.
PROFITABILITY RATIOS
TICKERS 2019 2018 %CHG
EBITDA MARGIN 16.39% 17.69% -7.34
PRE-TAX MARGIN 8.40% -0.69% -1,311.89
EFFECTIVE TAX RATE 15.30% 118.65% -87.10
CS TO TO 73.73% 69.19% 6.57
ROE 4.50% 6.02% -25.24
ROA 3.12% 1.50% 108.45

Efficiency Ratio

  • Operating Expenses is estimate at 11.00% of the Turnover Value, an appreciable improvement in the management efficiency when compared to the 13.72% estimated in 2018
  • Turnover Value is 42.84% of the Total Assets Value, the ratio is 6.36% above the 40.28% estimated from 2018 figures.
  • At 22.74x Working Capital Turnover grew from the previously estimated 1.83x
  • Working Capital Ratio, within the two compared year stood below unity and confirmed the firm’s weakness to settle its current liabilities with current assets as at when due through the season
EFFICIENCY RATIOS
  2019 2018  
OPEX TO TO 11.00% 13.72% -19.88
TO TO TA 42.84% 40.28% 6.36
Working Capital Turnover                                   (22.74)                                  (1.83) 1,145.49
Working Capital Ratio                                        0.89                                    0.44 102.50

Investment Ratios

  • Within the two periods compared, traders were seen largely revaluing the share price of Lafarge Africa on the floor of the exchange as the price now stood at N9.80 (at release of result) from N39.00 in the corresponding year
  • The estimated Earnings per shares for Laferge Africa is N0.96 this is far above the N0.50 earned at the end of the comparable year
  • Total Comprehensive Income is valued at N7.14 as against the loss of N0.57 in the similar year
  • Thus, of the Total Comprehensive Income, it proposed N1.00 cash dividend. Please note that no dividend was paid in the corresponding year
  • The said dividend represents 103.80% of the amount earned per unit shares – EPS for the year. Meanwhile it is 14.00% of the Total Comprehensive Income
  • PE-Ratio is currently estimated at 10.17x compared to the previous 77.58x in 2018
  • At the price of Lafarge Africa when the result was released, the EPS had a positive yield of 9.83% as against 1.29% in the previous year end
  • The Book Value of Lafarge Africa is currently estimated at N21.41 higher than the N8.35 estimated from the corresponding results. The difference was caused by the large reduction recorded in the liabilities indices which in-turn enhanced the Net Assets
Investment/Valuation Ratios
Tickers 2019 2018 %Chg
Price at Released 9.80 39.00 -74.87
Latest Dividend 1.00 0.00 #DIV/0!
Payout Ratio 103.80% 0.00% #DIV/0!
EPS 0.96 0.50 91.65
TCIP/SHARE 7.14 -0.57 -1,344.86
P/E-Ratio 10.17 77.58 -86.89
Earnings Yield 9.83% 1.29% 662.68
BV/Share 21.41 8.35 156.36
PBV 0.46 4.67 -90.20
CAPEX/SHARE 24.74 21.45 15.33

Valuation

  • While valuing Lafarge Africa, we choose a highly conservative approach, especially in our projections of the income items. We observed that the company still face a very stiff challenge within its industry, and will require a proactive approach to surpass the current performance. Although it now worked with reduced liabilities, we are of the opinion that the current economic state where even the federal government budget had to be re-worked due to oil price crash, will largely tell on its performance indices for 2020. Thus, on the strength of these and other key factors, we have valued each units of Lafarge Africa for N9.25, thus we rated it a HOLD.

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Earnings ReportFeatured

Exit From LSAH Boosts Lafarge Africa Full Year Earnings, As Management Proposes N1.00 Cash Divdend

Coy: Lafarge Africa Plc. (WAPCO)
Rating: Hold

Current Market Price: N9.80
Latest Cash Dividend: N1.00

Year High: N17.60
Year Low: N8.95
Fair Value: N9.25
By: Jeariogbe Tunde Segun

Introduction

  • This report on observed the financial result of Lafarge Africa for the year ended 31st December, 2019 and compare it with that of 2018 to establish growth and projection where necessary.
  • We observed that the dividend was possible since it earned outstandingly from disposing the company’s investment in Lafarge South Africa Holdings (LSAH) via a planned sale of total equity interest held by the company in LSAH to Caricement B.V, a related party within the Lafarge Holcim Group.
  • In other words, the said sale boosted the company’s Total Comprehensive Income to N7.14 as against the Earning Per Share (EPS) of N0.96
  • Observed that the company used lower finance cost through the year which translated to a huge drop in its liabilities instruments. This is because it utilized part of its proceed in the above sale to augment its liabilities items
  • In the report, the Board of Directors proposed a gross dividend of N1.00 (2018: Nil) on every ordinary share in issue amounting to 16,107,795,721.00 (2018: Nil).
  • The closure date for the said dividend is 4th to 8th May, 2020. That is, the qualification date is 30th April, 2020
  • According to the released document, the dividend will be paid on 26th May, 2020 to all shareholders whose names appear in the registrar books on 30th April, 2020
LAFARGE AFRICA
Bourse Nigerian Stock Exchange
Code Name WAPCO
Sector INDUSTRIAL GOODS
Market Classification PREMIUM BOARD
Nature of Business Manufacturing of Cement
Date of Incorporation February 24th 1959
Date Listed  
End of Accounting Year DECEMBER
Website www.lafarge.com.ng
Registrar CARDINAL STONE REGISTRARS LIMITED
Auditor Akintola Williams Deloitte
Share Price@Relsd (N)                                                    9.80
Earnings per Share                                                    0.96
Intrinsic Value(N)                                                    9.25
Share Outstanding 16,107,795,496
Market Capitalisation                                157,856,395,861

Statement of Comprehensive Income

  • The Turnover figure posted at the end of the year was N212.99 billion compared to N217.81 billion posted in the corresponding year
  • Cost of Sales inched up by 4.21% to stand at N157.04 billion versus N150.70 billion in the corresponding year
  • Operating profit for the year was estimated at N34.91 billion as against N38.52 billion posted at the end of 2018 financial year
  • Operating Expenses reasonably adjusted down by 21.65% to stand at N23.41 billion against N29.89 billion in 2018
  • Finance Cost used through the year was valued at N20.17 billion lower than the N41.56 billion in the corresponding year
  • Profit before Tax was valued at N17.01 billion, this is an outstanding performance when compared to the Loss before Tax of N1.50 billion posted in 2018
  • Having taking care of all tax liabilities, the company reported N15.51 billion as profit for the year versus N8.09 billion in the corresponding year
  • Meanwhile, adding the remaining profit from the sale of its holdings mentioned above, the Total Comprehensive Income got a boost to N115.03 billion compared to N9.24 billion loss in the corresponding year
LAFARGE AFRICA
Statement of Comprehensive Income
  2019 2018 %CHG
Turnover                212,999,066,000            217,813,136,000 -2.21
Cost of Sales                157,046,768,000            150,701,035,000 4.21
Operating Profit                  34,910,208,000               38,528,313,000 -9.39
OPEX                  23,419,653,000               29,891,470,000 -21.65
DEPRECIATION                  29,497,370,000               22,288,279,000 32.34
AMORTISATION                        672,260,000                     494,990,000 35.81
FINANCE COST                  20,176,509,000               41,562,883,000 -51.46
NET FINANCE INCOME                  17,017,923,000               40,038,081,000 -57.50
PBT                  17,892,285,000               (1,509,768,000) -1,285.10
TAX                     2,374,499,000                 9,606,799,000 -75.28
PAT                  15,517,786,000                 8,097,031,000 91.65
TOTAL COMP INCOME                115,039,204,000               (9,241,118,000) -1,344.86
Statement of Financial Position
Current Assets                  75,045,721,000               93,360,441,000 -19.62
Non Current Assets                422,106,487,000            447,376,222,000 -5.65
Total Assets                497,152,208,000            540,736,663,000 -8.06
Current Liabilities                  84,411,770,000            212,649,717,000 -60.30
Non Current Liabilities                  67,826,437,000            193,545,857,000 -64.96
Total Liabilities                152,238,207,000            406,195,574,000 -62.52
Net Assets                344,914,001,000            134,541,089,000 156.36
Retained Earnings                155,801,325,000            138,272,355,000 12.68
Shares Outstanding                  16,107,795,496               16,107,795,496  

Statement of Financial Position

  • Current Assets at the end of the 2019 financial year was valued at N75.04 billion, a 19.62% drop from the N93.36 billion estimated in 2018
  • Non-Current Assets on the other hand is estimated at N422.10 billion versus N447.37 billion in 2018. Thus, Total Assets is totalled at N497.15 billion as against N540.73 billion in the corresponding year
  • Similarly, Current Liabilities at the end of the year is estimated to worth N84.41 billion, 60.30% down for the previously estimated N212.64 billion.
  • Non-Current Liabilities equally stood at N67.82 billion, same as 64.96% below the N193.54 billion in the similar year. Thus, Total Liabilities is valued at N152.23 billion against N406.19 billion
  • Net Assets is estimated at N344.91 billion same as 156.36% above the previous estimate of N134.51 billion in the corresponding year.
  • Retained Earnings at the end of the year was worth N155.80 billion, this is 12.68% above the N138.27 billion stated in its 2018 financial

Financial Strength

  • The amount reported as Total Liabilities is same as 31% of the Total Assets figure for the year. In other words, the Debt Ratio is 0.31x this is 59.24% below the 0.75x in the corresponding year.
  • Total Debt to Equity Ratio is currently estimated at 0.44x against 3.02x in the corresponding year, this implies that the Total Debt Value for the year can replicate Equity 0.44 times, this is a better position when compared to 3.02 times replicate of the previous year
  • Equity Ratio is also valued at 0.69x versus 0.25x, that is Equity is same as 69% of the Total Assets Value for the year. When compare to 2018 estimate, it is an improvement in the company’s financial strength
  • Going by the current estimated beta value, the shares of Lafarge Africa can be said to be less liquid as its beta value currently stands far below the market beta
Financial Strength/Solvency Ratio
TICKERS 2019 2018 %CHG
Debt Ratio                                        0.31                                    0.75 -59.24
Total Debt to Equity Ratio (MRQ)                                        0.44                                    3.02 -85.38
Equity Ratio                                        0.69                                    0.25 178.84
TICKERS 2019 2018 %CHG
Beta Value                                        0.67                                    0.63 6.35

Profitability Ratio

  • EBITDA Margin is Currently estimated at 16.39% versus 17.69% estimate at the end of 2018 financial year
  • Pre-Tax Margin stood at 8.40% as against the negative margin of -0.69% in 2018
  • Cost of Sales is estimated to be 73.73% of the Turnover Figure this is 6.57% higher than the 69.19% in the corresponding year.
PROFITABILITY RATIOS
TICKERS 2019 2018 %CHG
EBITDA MARGIN 16.39% 17.69% -7.34
PRE-TAX MARGIN 8.40% -0.69% -1,311.89
EFFECTIVE TAX RATE 15.30% 118.65% -87.10
CS TO TO 73.73% 69.19% 6.57
ROE 4.50% 6.02% -25.24
ROA 3.12% 1.50% 108.45

Efficiency Ratio

  • Operating Expenses is estimate at 11.00% of the Turnover Value, an appreciable improvement in the management efficiency when compared to the 13.72% estimated in 2018
  • Turnover Value is 42.84% of the Total Assets Value, the ratio is 6.36% above the 40.28% estimated from 2018 figures.
  • At 22.74x Working Capital Turnover grew from the previously estimated 1.83x
  • Working Capital Ratio, within the two compared year stood below unity and confirmed the firm’s weakness to settle its current liabilities with current assets as at when due through the season
EFFICIENCY RATIOS
  2019 2018  
OPEX TO TO 11.00% 13.72% -19.88
TO TO TA 42.84% 40.28% 6.36
Working Capital Turnover                                   (22.74)                                  (1.83) 1,145.49
Working Capital Ratio                                        0.89                                    0.44 102.50

Investment Ratios

  • Within the two periods compared, traders were seen largely revaluing the share price of Lafarge Africa on the floor of the exchange as the price now stood at N9.80 (at release of result) from N39.00 in the corresponding year
  • The estimated Earnings per shares for Laferge Africa is N0.96 this is far above the N0.50 earned at the end of the comparable year
  • Total Comprehensive Income is valued at N7.14 as against the loss of N0.57 in the similar year
  • Thus, of the Total Comprehensive Income, it proposed N1.00 cash dividend. Please note that no dividend was paid in the corresponding year
  • The said dividend represents 103.80% of the amount earned per unit shares – EPS for the year. Meanwhile it is 14.00% of the Total Comprehensive Income
  • PE-Ratio is currently estimated at 10.17x compared to the previous 77.58x in 2018
  • At the price of Lafarge Africa when the result was released, the EPS had a positive yield of 9.83% as against 1.29% in the previous year end
  • The Book Value of Lafarge Africa is currently estimated at N21.41 higher than the N8.35 estimated from the corresponding results. The difference was caused by the large reduction recorded in the liabilities indices which in-turn enhanced the Net Assets
Investment/Valuation Ratios
Tickers 2019 2018 %Chg
Price at Released 9.80 39.00 -74.87
Latest Dividend 1.00 0.00 #DIV/0!
Payout Ratio 103.80% 0.00% #DIV/0!
EPS 0.96 0.50 91.65
TCIP/SHARE 7.14 -0.57 -1,344.86
P/E-Ratio 10.17 77.58 -86.89
Earnings Yield 9.83% 1.29% 662.68
BV/Share 21.41 8.35 156.36
PBV 0.46 4.67 -90.20
CAPEX/SHARE 24.74 21.45 15.33

Valuation

  • While valuing Lafarge Africa, we choose a highly conservative approach, especially in our projections of the income items. We observed that the company still face a very stiff challenge within its industry, and will require a proactive approach to surpass the current performance. Although it now worked with reduced liabilities, we are of the opinion that the current economic state where even the federal government budget had to be re-worked due to oil price crash, will largely tell on its performance indices for 2020. Thus, on the strength of these and other key factors, we have valued each units of Lafarge Africa for N9.25, thus we rated it a HOLD.

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