July 13, 2024

Deals behind scenes spark curious looks at Ardova Plc

Adeola Oredola

The gradual transition of African Petroleum, a former Shell Petroleum asset, to Ardova Plc after a series of transitions, is again receiving public attention but for a different reason.

Recall that African Petroleum (AP) was a successful Shell Petroleum asset that was nationalized by the Nigerian Government in 1976 as a pressure weapon to secure the political independence of South Africa. The move paid off and AP became an icon until it was privatized years later

This time, Zenon Oil and Gas, a successor company of the former African Petroleum Plc, is asking for a judicial verdict to wind up the company over the failure of Prudent Energy, which had purchased the asset from it, to meet up on payment obligations.

Information made available to EnergyDay indicates that Prudent Energy is the parent company of Ignite Investments and Commodities Limited (Ignite I&C Ltd) which in turn is the owner of Ardova Plc having acquired 75% of equity interests.

In a legal suit filed by Zenon Oil and Gas, the company is said to be claiming the sum of $6 million representing the value of shares acquired by Prudent Energy in the ownership take-over agreement between Zenon and Prudent Energy.

In a swift reaction and in response to public concerns over the future of Ardova Plc, which is located on the Nigerian Stock Exchange Market, the company said ” We are not directly affected in the dispute between the old and the new owners of our operations .”

EnergyDay conducted a peep into the affairs of Ardova through the stock exchange market and discovered that the company seems to retain investors’ confidence as its market value remains stable.

Ardova Plc, which operates in the downstream segment of the petroleum value chain has its forecourts across the country, continuing in the tradition of AP, the predecessor company. The company announced first quarter (Q1) ended on March 31, 2022, with unaudited results and accounts which showed significant financial performance in revenue, sales volume, and profits, from investments made in 2021.

Ardova recorded a significant increase in turnover cost to N2.18billion in the first half (H1) of 2022 from N489 million reported in H1 2021. It however announced unaudited results and accounts for a loss before tax of N1.15billion in H1 2022 from N2.6billion loss before tax reported in H1 2021.

Out of all the companies that have submitted H1 2022 unaudited results to Nigerian Exchange Limited (NGX), Ardova’s reported the highest loss before tax.

EnergyDay gathered that major contributions to the loss before tax for Ardova are  N1.45billion interest on the long-term bond and N694.27million interest expense on bank loans and overdrafts for H1, 2022.

Ardova had announced N192.47billion revenue in its full-year result and accounts ended December 31, 2021, representing an increase of nearly 6% from N181.66billion in December 2020. The company closed the 2021 financial year with N1.54billion profit compared with N2.06billion disclosed in the 2020 accounts.

EnergyDay investigations revealed that the dispute has raised eyebrows and public curiosity about the interlocking structures of companies quoted on the stock exchange market. ‘

EnergyDay’s correspondents who checked at Ardova Plc filling stations in select areas in Lagos reported that “Consumers are not aware or perturbed by the legal actions of Zenon Oil & Gas against Ardova Plc, the standard of service is still the same.

Public concerns, therefore, are limited to shareholders whose stakes could be affected by judicial actions asking for the winding up of Ardova Plc but such investors have not shown signs of apprehensions as share prices have remained stable.

At the time of filing this report, the Stock Exchange Regulatory Authority is yet to issue directives or opinions to safeguard the interest of the investment public.

Mr. Emeka Okafor, investment analyst opined that  ” it is an indication that the legal actions may not have a material impact on investors’ interest.

“Investors are required to be diligent and thorough when they make purchases on the stock market and be aware of the beneficial owners of corporate entities in which they’re investing,” he said.