Airports Company eyes capital market

The Ghana Airports Company (GACL) says it has its eyes on the capital market as a future source of long-term funds to modernise aviation infrastructure.

The airports operator has adopted the International Financial Reporting Standards (IFRS) in anticipation of a future foray into the capital market to raise long-term finance.

Speaking to the B&FT at the company’s annual general meeting in Accra, Charles Asare, Managing Director, said: “When you are going to the capital market you need to prepare yourself financially. Banks are looking to read the financials in a certain format, so we have had to adopt the IFRS. We have also adopted certain internal reporting procedures consistent with the expectations of the capital market.”

The GACL has already announced plans to borrow US$600million from a syndicate of banks led by Ecobank over a three-year period to enhance and expand airport infrastructure and services.

Mr. Asare believes this initial step will put the company in good stead when it decides to go to the capital market. “Right now we are quite attractive, but the US$600million will enhance our infrastructure and make us the gateway to Africa that we want to become.”

GACL, with an asset base of about GH¢1.3billion, is one of the few state-owned enterprises (SOEs) that has declared profit for the 2013 financial year. It made a profit of GH¢19.1million, compared to a net loss of GH¢84.2 million in 2012.

The Securities and Exchange Commission (SEC) has in recent times encouraged SOEs, especially the utilities, to explore the possibility of raising funds from the capital market to expand their operations.

The Volta River Authority has reacted to the call and is adopting the IFRS for an eventual issue of bonds to boost energy infrastructure.

In 2013, GACL saw a revenue-boost from the growth in the domestic aviation market, as increasing numbers of Ghanaians opt to travel by air from Accra to cities like Kumasi and Tamale for business and leisure.

The new-found penchant for flying is due to the poor road network in the country, the relatively cheap cost of domestic tickets, and availability of flights all week round.

The number of people who flew with domestic airlines in the first quarter of 2014 stood at 185,000, an increase of 24.7 percent over the first quarter 2013 figure of 148,661. There are currently three airlines – Antrak, Africa World and Starbow – flying on domestic routes.

Operators have called for more governmental support for the industry, including tax exemptions on the importation of spare parts for aircraft.

A recent extension of the 17.5 percent Value Added Tax (VAT) to domestic travel has been resisted by operators, who contend it will derail the gains made so far.