A – Scott Gordon: Our first question asked. Congratulations on another strong quarter for the company and the initiation of a dividend program, which I am delighted to see. You mentioned that you would expect a significant increase in the level of dividend payment in the third quarter, which is also great to hear. Can you explain more on this?
Darren Mercer: Yes, sure. As explained in our results, our CapEx and investment into inventory in Q2 was just under a $1 billion and of course added to which during the course. So, we also paid out our annual tax on Tingo Mobile, of another circa $170 million. But having made all these investments in outlay last quarter, we can now expect the inventory we purchased to be converted back into cash and our export business to fund itself. So, in addition, the 6 million mobile phones we also bought will begin to generate significant revenues and earnings. So, when you take all of that into account and the growth that we expect to deliver in our export business. We expect to be able to significantly increase our dividend payments at Q3 and then again at Q4, and hopefully with increases in each quarter thereafter.
It should be remembered that with the new significant number of handsets being deployed from as early as next month, those phones will in turn generate very significant revenues and additional contributions to group profits almost immediately. So, in short, yes, we expect a significant increase in dividends from Q3 onwards. And yes, it’s the aim of the company to deliver quarter-on-quarter dividend increases.
Scott Gordon: Thank you, team. The next question asked. While the results are once again very impressive indeed, clearly the floating of the Naira and its devaluation has had a material impact on the results when converted into U.S. dollars. What long-term impact, if any, do you foresee on the company as a result of the new exchange rate going forward?
Darren Mercer: Yes, it’s very good question. I think the first thing to point out is that the Nigerian government’s new foreign exchange policy now means that the Naira of earnings that we have or now much more readily exchangeable into U.S. dollars. And this means from this moment forward, our company can now value its Naira cash balance as a liquid U.S. dollar equivalent asset. And furthermore, any valuation discount that was previously applied against our Naira earnings can now be removed. Look, whilst the current devaluation has some negative impacts on the existing Tingo Mobile revenues. The benefits of a freely exchangeable currency is something that we strongly believe outweighed the negatives. And as for those negatives, well they may be short-term in nature anyway, particularly given the new economic policies of Nigeria’s government.
There’s much talk about the recovering large parts of lost ground in valuation terms over the coming months ahead. Furthermore, if I turn to other parts of the business, there are some notable immediate benefits that the devaluation of the Naira brings. I mean, in particular in connection with our export business, where the price of the produce we purchased from Nigeria is significantly reduced, and as such, our produce now has a key price and competitive advantage over produce from other parts of the world. And we’re already now seeing the benefits of this. And I’m sure that in the future, as we go forward and as we report future quarters numbers, we very much believe that we will see noticeable increases in our margin of export produce.
Scott Gordon: Thank you, team. The next question asked. I believe it was a major development for Tango’s prospects and valuation when Nigeria’s new president and its central bank removed certain foreign exchange restrictions on the Naira. Especially bearing in mind that these longstanding restrictions had detrimentally affected the country’s economy and investment appeal for so long. Can you comment further on what the lifting of the restrictions means for the company and us as shareholders?
Darren Mercer: Yes. Look, I think I’ve covered much of that in the previous answer. But again, I think for the benefit of all of our shareholders, we should recognize that for the first time since we acquired Tingo Mobile and Tingo Foods, for the first time we are now able to readily apply to convert our Naira cash balances and earnings into U.S. dollars. Naturally, we need to achieve the right balance of reinvesting a portion of our earnings into further growth and acceleration of the business, just as you’ve seen us do in Q2, but, we can now also commence to distribute a meaningful portion of our earnings to shareholders as dividends. And I think we’ve demonstrated that with the initiation of our dividend program today.
Scott Gordon: Thank you, team. The next question asked. The press release statement talks about the purchase of 6 million new phones for AFAN’s farmers. I’m interested to know if AFAN already has the demand for these phones, or will it take time to deploy them and start to generate the related earnings? Also, what level of earnings and profitability can we expect from the falls?
Darren Mercer: Quite a lot to answer that. Does that firm have demand for 6 million new phones? Yes, absolutely. In fact, they have considerable pen up demand, which means that, as soon as we can source more handsets, they can be distributed almost immediately. And it’s not just we have demand through AFAN in Nigeria, but also through the Ashanti Investment Trust in Ghana. We also have considerable demand too. As to when they’ll be deployed. Well, I mentioned it earlier, AFAN, and Tingo will start the process as soon as the phones are delivered. And the great thing is that as soon as those phones are delivered to the customer, they start to generate revenue, not just from the lease payments, but also through the value-added services that we offer on the USSD platform.
Of course, with [indiscernible], we earn commissions are, or fees straight away on the transactions that customers make over the platform, and that includes anything from their airtime top-up through the commissions on arranging loans and insurance and even commissions on the agricultural sales and farming inputs. Yes, and enough to the revenues on those phones? Well, at the current exchange rate, the typical average revenue per user or ARPU or per farmer is between $6 and $6.50 a month, of which typically three comes or circa three comes from the lease elements and the balance comes from the NWASSA platform. Now, to give you an idea of what the margin is on those sales on the $3 of lease payments, we are looking at around a 30% margin. And on the $3.50 or thereabouts, so then was the contributions, we’re looking at a 98% margin.
And so, we’re looking at revenues per handset of an excessive $6 and over $4 of what would be gross profit on each of those handsets per month. So not only are these handsets very profitable in their own right, they also connect us to more farmers. And as we look to achieve significant farmers in our platform again through AFAN and Ashanti and whoever and we look to grow that number towards the $30 million by the year-end. We’ll now also gain access to considerably more produce. And that produce in turn will support our export business as well as Tingo Foods. I have to say we’re really proud of this business model.
Scott Gordon: Thank you, team. The next question asks through today’s announcement of the purchase of a further 6 million phones, am I correct in thinking that will take your total number of phones to around 15 million and that you then have another 3 million or so farmers on the NWASSA platform that use their phones? And are there any further plans to increase the number of farmers on your platform beyond the 18 million?