Aradel Holdings reported profit before tax of N835.01 billion for 2025, up 163.60% from N316.77 billion in 2024, while profit after tax increased by 192.33% to N757.34 billion.
This is according to the audited 2025 financial year results recently released on the NGX.
However, a review of the audited financial statements shows that the headline profit growth was largely influenced by N610.29 billion; 73.1% of the reported pre-tax profit.
The N610.29 billion came from N217.10 billion gain on bargain purchase, and N393.19 billion from translation gain on business combination.
- The translation gain was a reclassification of foreign-currency differences previously recorded in other comprehensive income, while the bargain-purchase gain arose because the fair value of the acquired net assets exceeded the acquisition consideration.
Even after offsetting the N106.30 billion fair-value loss on the acquisition of ND Western, the net acquisition-related accounting uplift stood at N503.99 billion.
This net benefit accounted for about 60.36% of Aradel’s reported pre-tax profit.
- Excluding the three major acquisition-related accounting items, adjusted pre-tax profit would have been N331.02 billion, representing growth of just 4.50% compared with 2024.
The same adjustment at the operating-profit level produces an even less flattering result. Reported operating profit was N733.58 billion, but if you remove the bargain purchase and translation gains and add back the step-acquisition loss, adjusted operating profit would have been N229.60 billion. This is 21.21% below the N291.40 billion recorded in 2024.
The weaker underlying operating trend was also reflected in gross profit.
- Revenue rose by 20.35% to N699.43 billion, but cost of sales increased by 74.16% to N391.22 billion.
- Consequently, gross profit declined by 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 principal driver of this movement, although it was partly offset by N14.08 billion in crude-handling income, N931.69 million in fee income and N1.55 billion in unrealized exchange gains.
Cash generation also did not rise in line with reported profit. Net cash generated from operating activities declined by 42% to N179.70 billion from N311.88 billion, even as profit after tax nearly tripled.
This divergence reinforces the view that a substantial portion of the reported earnings was on paper rather than cash-backed.
However, the acquisitions may still create substantial long-term value for Aradel going forward.
The additional interest in ND Western and the resulting increase in its effective holding in Renaissance enlarged the Group’s reserves, production base, asset base and operating footprint.
The 2025 accounts capture the balance-sheet impact of the transactions, while the full earnings contribution of the acquired businesses is expected to be reflected from 2026.
This was also emphasized by Aradel’s Chief Executive Officer, Adegbite Falade, who said:
- “Our additional 40% investment in ND Western and the resultant increase in our total effective interest in Renaissance (53.3%) significantly expanded our reserves, production base and operational footprint, positioning Aradel to operate at materially greater scale from 2026 onwards.”
- Falade also noted that the consolidation of ND Western and Renaissance had “fundamentally reset the scale of the Company’s balance sheet,” providing the asset and reserve base required for future expansion.
According to him, Aradel’s 2026 priorities include integrating the expanded portfolio, improving operational efficiency, increasing production, and further diversifying the Group’s revenue base.
While the full earnings impact of the acquisitions is expected to be more visible from 2026, Aradel’s existing operations recorded improvements in production volumes and revenue across its major business segments in 2025.
- Crude oil and condensate production increased by 3% to 5.2 million barrels, while crude oil sales rose by 32% to 4.1 million barrels.
- Gas production increased by 59% to 18.8 Bcf, supported by new gas wells and enhanced recovery, with average daily production rising to 51.4 mmscf/day from 32.4 mmscf/day.
The downstream business also recorded higher activity as refined product output increased by 18% to 313.4 million litres, while sales volumes rose by 26% to 302.9 million litres. Refinery utilisation improved to 49% from 40% in the previous year.
Insight
The bigger test, however, begins in 2026, when the full earnings contribution of ND Western and Renaissance is expected to enter Aradel’s consolidated income statement.
The N610.29 billion recognised from the bargain-purchase and translation gains was non-recurring and is unlikely to provide the same support to profit in subsequent periods.
- The accounting gains also had a significant effect on the Group’s retained earnings. Retained earnings increased by N615.30 to N1.01 trillion in 2025 from N395.21 billion in 2024.
This means the non-recurring gains not only lift reported profit; they also materially strengthened the Group’s retained earnings.
- At the cash-flow level, Aradel generated N179.70 billion from operating activities in 2025, down 42% from N311.88 billion in 2024, reflecting the timing of cash settlements and working-capital movements during the year.
- The Board recommended a final dividend of N23 per share, amounting to N99.93 billion, after paying an interim dividend of N10 per share, or N43.45 billion.
This brings the total dividend for 2025 to N33 per share, amounting to N143.38 billion, compared with N30 per share and N130.35 billion in 2024.
The total 2025 dividend represents about 79.8% of operating cash flow, providing cash-flow cover of approximately 1.25 times.
With Aradel’s shares already up about 161% year-to-date, the key test for investor confidence is whether the enlarged business can replace 2025’s one-off paper gains with recurring, cash-backed earnings from 2026.
