AMCON Announces 2016 results
AMCON is the graveyard of the financially insolvent. Bank assets of customers who could not be salvaged were sold to it at steep discounts.
AMCON’s profitability is a function of the economic recovery of the country. In a recession, more companies are pushed to the wall and the stock market sinks. However, its social profitability is reflected in corporate restructuring, jobs saved and strategic interventions.
Against this background, AMCON is facing a mild improvement in its financial performance and making a positive impact in its social contribution. On balance, AMCON seems to have justified its existence.
2016- Nigeria in a Perfect Storm
Financial Highlights
Swimming against the tide
- In spite of macro-economic headwinds, AMCON withstands shocks
- Operating loss reduces 13.2% to N203.4 billion
- Total footing shrinks marginally to N1.13 trillion
- Owing to asset value diminution of 8%
Analysis & trend
- Stock market capitalization fell 6.17%
- Sinking fund amortization not recognised in P & L
- Sinking fund is part of free cash flow
- Operating expense growth in 2016 of 23.5%, 5% higher than headline inflation
Revenue trend
Key Takeaways
Good News – Social benefits
- 100,000 jobs saved
- Extended families protected
- Social unrest averted
- Salvaged critical aviation sector
Bad News
- Monumental financial loss
- Rate of financial loss reducing
- Profit impossible in a recession Cocoa
Outlook
- Review of asset purchase freeze
- Recovery means asset sales
- Sunset clause may not be cast in stone