Here’s what to know as Valency issues N2bn Series-6 Commercial Paper – Businessday

The Valency Agro Nigeria Limited’s up to N2billion Series-6 Commercial Paper (CP) closes on Wednesday February 9, 2022. The Series-6 CP is under its N20billion Commercial Paper Issuance Programme. The proceeds from the Commercial Paper offer of 12.5percent yield on 180-days tenor will be used by the company for short term working capital requirements.
Valency Agro Nigeria Limited, a limited liability company incorporated in Nigeria, established a N20billion Commercial Paper Issuance Programme (the CP Programme) on January 8, 2021, under which Valency may from time to time issue Commercial Paper notes (CP Notes) denominated in Nigerian Naira or in such other currencies as may be agreed between the Issuer and the Dealer and/or the Arrangers. The Notes issued under this Programme are being issued in dematerialised form, registered, quoted and traded via the FMDQ Securities Exchange.
The Issuer’s short term rating of A2 by DataPro indicates Fair Credit Quality and adequate capacity for timely payment of Financial Commitments. Its Long-term Rating of BBB+ indicates Slight Risk. It shows fair financial strength, operating performance and business profile when compared to the standard established by DataPro.
Valency in the opinion of the rating agency has the ability to meet its ongoing obligations, but its financial strength is vulnerable to adverse changes in economic conditions. The rating of the company is supported by its strong earning
profile, very good profitability and experienced management team. However, the rating is constrained by its high External Funding. Consequently, it was assigned a rating of “BBB+ by DataPro.
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About Valency
Velency Agro Nigeria Limited previously known as Valency Cashew Processing Limited was incorporated on December 11, 2013 and it began operations in April 2015. The Company changed its name to Valency Agro Nigeria Limited on May 20, 2019. The principal activities of the Company include: the processing of Raw Cashew Nuts, Cocoa Beans, Sesame, Ginger, Black Eye Beans, Pigeons Peas, Soybean and Sheanut. Its Nutrinutz brand of edible cashew nut comes in three (3) variants. The products are Nutrinutz Chilli Pepper, Nutrinutz Roasted and Salted and Nutrinutz Honey coated.
The Company has a trade and supply chain across Africa and Asia. Through an already established extensive global reach, it developed sourcing networks directly with farm gate suppliers and manufacturing processors. Through these networks, the Company engages in export of Potatoes, Rubber, Groundnut, Rice, Pepper, Kapok, Sage, Cotton coal, Mango, Vegetables, Palm, Agriculture and Mineral resource.
The Company has also expanded its presence across the value chain with operations in logistics, warehousing and through its own processing facilities.
Presently, the Company has production and processing facilities in Lagos State, Ogun State, Ogbomosho in Oyo State, Kano State, Keffi in Nasarawa State, Ankpa and Anyigba in Kogi State.
Valency Agro Nigeria Limited, previously known as Valency Cashew Processing Nigeria Limited is located along Unity Estate Road, Off Lagos-Ibadan Expressway, Ibafo, Ogun State, Nigeria.
2021 Corporate rating by DataPro
This shows that Valency has existing short-term facilities with Commercial Banks in Nigeria. The value of its existing loan obligation as at March 2021 was N19.6billion. These are various Bank Loans used for the financing of the Working Capital of the Company.
Zenith Bank (Short Import Finance) N3.953billion; Coronation Bank (Import and Export Finance) N3billion; Fidelity Bank (LC Confirmation Line) N1.265billion; NEXIM Bank (Working Capital Finance) N2billion; Wema Bank (Import and Stock Finance) N2.706billion; Globus (N1.5billion); United Bank for Africa (N139,000); and Unsecured Loan (N5.124billion).
Future Outlook
The Company’s projections over a three (3) year period beginning from the year 2020 involve: Projects relating to Local Starch Based Custard Manufacturing Unit, Oil Seed Crushing Complex, Sesame Sortexting and Hulling Plant and Rice Milling. These projections are expected to increase the Company’s sales value in the next four (4) years to N341.9billion and Profit Before Tax to N11.5billion.
Velency Agro Nigeria Limited continued to grow its revenue consistently on an annual basis. Revenue grew by 79percent and 44percent in the year 2020 and 2021 respectively. This was due to the Company’s ability to grow its Local Sales. During the year, Aggregate Revenue went up from N31.9billion (year 2020) to N45.9billion (year 2021). The Operating Expense grew by 26percent from N1.3billion (year 2020) to N1.6billion (year 2021).
Operating Profit improved by a very significant margin from N108million (year 2020) to N3.4billion (year 2021). Increase in other income partly contributed to the improvement during the year. Other income including earnings from other activities other than the Company’s principal activities amounted to N953million (year 2021).
This represented an increase of 464percent compared with N169million recorded in the year 2020. However, the Company incurred a Foreign Exchange (FX) loss of N480million in the year 2021 as against gain of N905million (year 2020). Also, finance costs increased significantly from N113million in 2020 to N1.4billion in 2021).
The rise in Operating Profit moderated the brunt of increase in Finance Cost and Exchange Losses incurred during the year under review. Consequently, Pre-tax Profit went up by 75percent from N900million (year 2020) to N1.6billion (year 2021).
The rise in Pre-Tax Profit impacted the profitability of the Company in the year 2021. Consequently, Net Profit margin and Return on Shareholders’ Funds stood at 3percent and 21percent respectively.
The Company increased its Share Capital as well as its Revaluation Reserve during the year under review. This is in addition to huge profit retention which led to significant growth in Revenue reserves from N1.5billion (year 2020) to N3.1billion (year 2021).
Therefore, shareholders’ funds grew significantly during the year under review. It increased by 59percent, from N4.8billion (year 2020) to N7.7billion (year 2021). Total Assets amounted to N39billion in the year 2021. It grew by 30percent compared to the previous year’s balance of N30billion (year 2020).
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