Secure Electronic Technology Plc (SET Plc), formerly known as National Sports Lottery, is embarking on a significant restructuring exercise to address its financial performance. The company, which holds a 30-year exclusive license from the Federal Government to operate the National Lottery in Nigeria, has announced plans for a share reconstruction and recapitalization. This move comes on the heels of a reported net loss after tax of N121.03 million in 2024, although this represents a 35% improvement compared to the N187.52 million loss recorded in the previous year. The proposed restructuring is being spearheaded by Apex Alpha Acquisitions Limited, a Nigerian company, and requires shareholder approval at an Extraordinary General Meeting (EGM) scheduled for next Wednesday in Lagos.
The core of the restructuring involves a share reconstruction, where existing shareholders will see their holdings consolidated. Specifically, every four shares currently held will be converted into a single share. This reduction in the number of outstanding shares will not impact the overall value of shareholders’ investments. A crucial aspect of the plan is a proportional upward adjustment in the share price following the conversion. This adjustment ensures that the market value of one new share will be equivalent to the combined market value of the four pre-reconstruction shares. Essentially, the company is reducing the number of shares while simultaneously increasing the value of each individual share, maintaining the overall market capitalization.
The recapitalization aspect of the plan involves a private placement facilitated by Apex Alpha Acquisitions Limited, the details of which are outlined in a Definitive Agreement between the two entities. This private placement will inject new capital into SET Plc, strengthening its financial position and providing resources for future growth and development. The share capital reduction, from N2,815,770,000.00 represented by 5,631,540,000 ordinary shares of 50 kobo each to 1,407,885,000 ordinary shares of 50 kobo each, reflects the consolidation of shares and is subject to regulatory approvals from bodies including the Federal High Court and the Securities and Exchange Commission.
While the 2024 financial results show a net loss, there are positive indicators within the report. SET Plc witnessed a substantial 24% increase in revenue, rising from N3.49 billion in 2023 to N4.35 billion in 2024. This growth suggests a positive trajectory in the company’s core business operations. However, the company’s cash flow from operating activities experienced a significant decline, decreasing by 253% from N13.54 million in 2023 to a negative N34.21 million in 2024. This negative cash flow indicates a potential strain on the company’s liquidity and underscores the need for the proposed recapitalization.
The proposed share reconstruction and recapitalization represent a strategic move by SET Plc to address its financial challenges and position itself for future growth. The injection of new capital, combined with the streamlined share structure, is expected to provide the company with greater financial stability and flexibility. The success of this restructuring, however, hinges on securing shareholder approval at the upcoming EGM and obtaining the necessary regulatory clearances. The market’s reaction to the proposed restructuring will be closely watched, as it will signal investor confidence in the company’s future prospects.
The restructuring represents a crucial juncture for SET Plc, offering an opportunity to revitalize its operations and capitalize on the potential of the Nigerian lottery market. The company’s 30-year exclusive license provides a significant competitive advantage, and the injection of new capital could enable SET Plc to invest in technology upgrades, expand its product offerings, and enhance its marketing efforts. The improved financial position, combined with a more efficient capital structure, could pave the way for sustained profitability and long-term growth. The upcoming EGM will be a pivotal moment for the company, and the outcome will significantly influence its future trajectory.
