Dangote Cement PLC, Africa’s largest producer of cement said its gross income for the third quarter of the year rose by 21% year on year.
The result showed that Dangote Cement recorded a NGN143 billion for the third quarter. Last year, same quarter, the company recorded gross income of NGN123 billion.
Cost of sales grew to NGN92.4 billion compared to NGN54 billion expended last year. The company has taken in more staff and administrative cost in the last one year. Administrative cost has increased to NGN10,8 billion compared to NGN5,3 billion for last year.
Dangote Cement has increased its borrowing to NGN373 billion compared NGN244 billion recorded as total borrowing last year.
To give depth to its borrowing programme, the company noted in its result that:
a) A subordinated loan of N55.4 billion was obtained by the Company from Dangote Industries Limited in 2010. N30 billion was long-term and the remaining balance was short term and is repayable on demand. The long-term loan is unsecured, with interest at 10% per annum and is repayable in 3 years after a moratorium period ending 30th September 2017. The interest on the long term portion was waived for 2011. Because of the favourable terms at which the Company secured the loan, an amount of N2.8 billion, which is the difference between the fair value of the loan on initial recognition and the amount received, has been accounted for as capital contribution.
(b) In 2011 and 2012, the Bank of Industry through Guaranty Trust Bank Plc and Access Bank Plc granted the Company the sum of N24.5 billion long-term loan repayable over 10 years at an all-in annual interest rate of 7% for part financing or refinancing the construction cost of the power plants at the Company’s factories under the Power and Aviation Intervention Fund. The loan has a moratorium of 12 months. Given the concessional terms at which the Company secured the loan, it is considered to have an element of government grant. Using prevailing market interest rates for an equivalent loan of 12.5%, the fair value of the loan is estimated at N20.7 billion. The difference of N3.8 billion between the gross proceeds and the fair value of the loan is the benefit derived from the low interest loan and is recognised as deferred revenue. The facility is secured by a debenture on all fixed and floating assets of the Company to be shared pad passu with existing lenders.
It would be recalled that Dangote Industries cut over 40 jobs earlier this week citing the scarcity of Forex, Naira devaluation and a weakening growth.
Earlier this year, Dangote Cement PLC announced through its Chairman, Aliko Dangote that it secured a USD2 billion loan from the ICBC of China for a very low interest rate.