Aradel profit triples but most gains are paper entries not cash
By Aboki Forex —
Aradel Holdings reported profit before tax of N835.01 billion for 2025, up 163.60% from N316.77 billion in 2024. Profit after tax jumped 192.33% to N757.34 billion. The audited results were released on the NGX.
But a closer look shows the headline growth was driven by accounting entries, not operations. A total of N610.29 billion, or 73.1% of pre-tax profit, came from two items: N217.10 billion gain on bargain purchase and N393.19 billion translation gain on business combination.
The translation gain was a reclassification of foreign currency differences previously held in other comprehensive income. The bargain purchase gain arose because the fair value of acquired net assets exceeded the acquisition price.
After offsetting a N106.30 billion fair value loss on the acquisition of ND Western, the net accounting uplift stood at N503.99 billion. That accounted for about 60.36% of reported pre-tax profit.
Excluding these three acquisition related items, adjusted pre-tax profit would have been N331.02 billion. That is growth of just 4.50% compared with 2024.
The picture is worse at the operating level. Reported operating profit was N733.58 billion. Remove the bargain purchase and translation gains and add back the step acquisition loss, and adjusted operating profit falls to N229.60 billion. That is 21.21% below the N291.40 billion recorded in 2024.
Revenue rose 20.35% to N699.43 billion. But cost of sales jumped 74.16% to N391.22 billion. Gross profit fell 13.55% to N308.21 billion.
Aradel recorded a net other loss of N89.66 billion, compared with N9.02 billion in 2024. The N106.30 billion step acquisition loss was the main driver, partly offset by N14.08 billion in crude handling income, N931.69 million in fee income and N1.55 billion in unrealised exchange gains.
Cash generation did not keep pace with reported profit. Net cash from operating activities declined.