Newrest ASL: Trials spur delisting from NSE

Inclement operating environment has compelled Newrest ASL Nigeria Plc. (formerly Airline Services and Logistics Plc) to plot its exit from the local bourse. CHRIS UGWU writes

Despite of the improvement and innovation accompanying the deregulation and privatization of airline services in Nigeria, there are some challenges still prevalent in the system. These include inadequate stand for airline users, flight information and public address systems echoes, poor customer relations, flight delay, missing luggage and personal items as well as security issues, among others.

These challenges and more others have indeed hampered the activities of some airline services in the country. While some companies were able to successfully weather the storm notwithstanding the difficulty in business environment, others were not.

Newrest ASL Nigeria Plc (formerly Airline Services and Logistics Plc. got its fair share from the stiff competition faced by the sector leading to fluctuations in its financial performances in recent times.

From the good numbers it showed in 2012, it reported a huge drop in profit during the full year 2013 and also witnessed profit crash during the first, second and third quarters of 2014, as the company remained under attack from both declining revenue and rising cost, which market watchers believe was induced by harsh competitive environment.

Market analysts had predicted that the company’s profit and revenue were likely to decline further in full year 2014 following a disappointing start for the year but contrary to expectations the company made a reversal and returned to profit during the full year ended 2014, as the company began to tap from the benefits of deregulation and globalisation.

Despite that the year 2016 presented a lot of challenges, as the Nigerian economy officially plunged into recession after the Gross Domestic Product (GDP) contracted in three consecutive quarters, the company managed to come out from loss position in 2015, recording a profit of N1.150 billion for the full year ended December 31, 2016.

However, 2017 was not the best of time for the company, as it saw consistent decline in bottom line for last four quarters of the year. But 2018 financials were upbeat, as the group’s bottom line remained positive during the year in spite the company’s move to voluntarily delist from the Exchange over its inability to meet up with the 20 per cent free float requirement of the Exchange and other operational challenges. In Nigeria, over 80 companies have been delisted from the NSE in the last 10 years either voluntarily or involuntarily and this has become a source of worry to both the regulators and shareholders.

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But following increase in investors’ confidence, market sentiments for the shares of the company has recorded significant growth. At the close of work last Friday, the share price if the company, which closed at N4.90 per share in March 31, 2018 had inched up to N6.45 accounting for 31.63 per cent increase.

Financials

Newrest ASL group ended the year 2017 unimpressive, as it grossed N3.9 billion in 2017 as against N5.07 billion in 2016, accounting for a drop of 23 per cent, while the company grossed N3.69 billion compared to N3.68 billion in 2016 respectively. It made a profit after tax of N386.6 million in 2017 as group against N1.1 billion in 2016 as group, representing a drop of 66 per cent. And as company,it made N317.9 million as against N1.1 billion of the previous year.

It’s profit from discontinued operation for the group was N207.4 million. bringing its profit for the year to N428.3 million. It however, began 2018 financial year with a significant growth of 75 per cent to N229.234 million for the first quarter ended March 31, 2018 from N131.004 million posted in 2017.

Revenue however, declined by 13 per cent to N1.162 billion in 2018 to N1.342 billion a year earlier. For the half year ended June 2018, the group recorded a drop of 8.25 per cent in revenue to N2.561 billion as against N2.792 billion posted in 2017. Profit after tax grew by 218.84 per cent to N631.068 million in 2018 from N197.928 million recorded a year earlier, according report obtained from the NSE. The group’s profit sustained bullish rally during the third quarter, as profit after tax for the nine months ended September 2018 grew by 296.01 per cent to N1.095 billion from N276.752 million in 2017.

Revenue equally grew by 42.30 per cent from N2.832 billion in 2017 to N4.031 billion recorded in 2018. The group however, ended the year on a positive note, as the profit after tax for the year ended December 31, 2018 grew by 285 per cent from N386.676 million in 2017 to N1.487 billion in 2018. Profit before tax equally rose by 285 per cent to N1.509 billion as against N392.013 million in 2017, while revenue moved up by 38 per cent from N3.920 billion to N5.425 billion in 2018.

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Minimum free float

Companies listed on the Exchange are required to maintain a minimum free float for the set standards under, which they are listed in order to ensure that there is an orderly and liquid market for their securities.

The free float requirement for companies on the ASEM Board is a minimum of 15 per cent of issued and fully paid up shares, while that of the Main Board is a minimum of 20 per cent of the issued and fully paid up shares.

Companies listed on the Premium Board are also required to have a free float of a minimum of 20 per cent of issued and fully paid up shares or the value of its free float is equal to or above N40 billion on the date the Exchange receives the Issuer’s application to list.

Application for voluntary delisting

Following operational challenges, Newrest ASL Nigeria last week applied for voluntary delisting from the Daily Official List of NSE. In a statement obtained from the NSE dealing members were notified that Newrest ASL Nigeria Plc had through its Stockbroker, Helix Securities Limited, submitted an application to the Exchange for voluntary delisting of the entire 634,000,000 ordinary shares of the Company from the Daily Official List of the Exchange as a result of its inability to meet up with the 20 per cent free float requirement of the Exchange.

The statement by Godstime Iwenekhai, Head, Listings Regulation, noted that in line with the provisions of Rule 1.10 of the Rules for Delisting of Equity Securities from the Daily Official List of the Exchange, which states: “The Issuer shall set aside funds sufficient to purchase the interest of all shareholders who expressed their dissent to the resolution to de-list the Issuer; and the Funds shall be domiciled with a Registrar or a Custodian duly registered by and in good standing with the Securities and Exchange Commission”, the Company’s stockbroker has informed the Exchange that it has opened and deposited sufficient funds to settle minority shareholders in an Escrow Account with Zenith Bank Plc to be managed by Meristem Registrars Limited. Newrest recently said that the company’s Board of Directors had resolved by a written resolution dated 18th December 2018 to recommend to the company’s shareholders at an Extraordinary General Meeting (EGM) to be held on January 29, 2019, the voluntary delisting of all outstanding shares of the company on the NSE. The company in a notice to the NSE signed by the Company Secretary said Richard Akerele (Chairman) and Jonathan Stent-Torriani are authorized to take effective steps for voluntary delisting of the company’s shares from the NSE and accept any reasonable terms and conditions as may be imposed by the NSE, or any regulating authorities and settle all the questions and matters arising out of and incidental to the proposed voluntary delisting of the equity shares of the company from the NSE and execute documents or any other writings, which they may in their absolute discretion consider necessary, proper or expedient for giving effect to the resolution.

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Shareholders’ stance

Shareholders have continued to express concerns over rising wave of delisting of quoted companies by the regulatory authorities, saying it does not augur well for average investors and the nation’s capital market. Mr. Adeleke Adebayo of the Independent Shareholders Association of Nigeria (ISAN), urged capital market regulators to allow those listed companies that are not meeting the post-listing requirements to remain a ‘public focus.’ He argued that institutional investors may develop interest in such companies and decide to invest in them. “We are losing a lot of money in the market,” he said. “Nobody is thinking of giving forbearance to investors. We need to make some price adjustments not to continue to delist companies because it is not good for average investors. Let it remain a public focus. Some investors can develop interest and invest in these companies.”

Last line

Though high cost of operations have remarkably weighed down on the airline services sector, while market regulators are of the view that delisting by quoted companies especially multinationals pose a threat to the development and growth of the capital market, shareholders decried that the actions have not given investors desired benefits, as it lacks protection of shareholders’ funds.

Wole Shadare