Rating Release

Agusto & Co. hereby affirms the “A-“ rating assigned to Axxela Limited with a stable outlook

The rating expires on 30-06-23

Agusto & Co. hereby affirms the “A-“ rating assigned to Axxela Limited (‘Axxela’ or ‘the Company’). The rating reflects the Company’s good financial condition evidenced by i) good profitability buoyed by the ongoing diversification of gas distribution and sales to clients in West Africa and sustained cost discipline despite higher inflationary pressures, ii) satisfactory cash flow position upheld by favourable terms of trade with gas suppliers and industrial customers on account of the long term take or pay gas contracts, iii) satisfactory leverage metrics owing to good funding mix bolstered by the introduction of long term bonds and Federal Government of Nigeria Concessionary Intervention Funds, iv) adequate working capital upheld by short term financing surpluses over the last five years, v) stable and experienced management team and vi) strong shareholders’ support from Helios Investment Partners and Sojitz Corporation at the holding company level. However, the Company’s performance is tempered by supplier risk owing to the significant reliance on gas supply from the Escravos-Lagos pipeline which is prone to vandalism leading to gas supply constraints as well as the lingering impact of the pandemic on business operations.

Axxela Limited (along with its subsidiaries ) is a leading player in the natural gas processing, marketing, and distribution value chain in Nigeria, providing gas to top-tier industrial consumers in Lagos, Port Harcourt and Sagamu-Benin axis, as well as exporting natural gas to the Togolese National Electric Power Company through the West African gas pipeline network. The Company has developed over 300 kilometres (km) of gas pipeline infrastructure with capacity to deliver circa 236 million meters of standard cubic feet per day (mmscf/d) of gas and currently serves over 180 industrial and commercial customers in Nigeria and West Africa.

The opinions expressed in this rating release do not represent investment or other advice and should therefore not be construed as such. Visit www.agusto.com for further information.