Court orders meeting of Flour Mills shareholders ahead of crucial restructuring

Flour Mills of Nigeria, one of the market’s leading manufacturers of food and agro-allied products, has notified the Nigerian Stock Exchange ahead of its meeting with the ordinary shareholders to approve its restructuring plans.

In a notice filed on the Exchange, Thursday, the Food and Agro-allied giant stated that the Federal High Court, sitting in Lagos, has ordered a meeting of shareholders for the purpose of considering and if thought fit, approving a Scheme of External Restructuring between Flour Mills and Golden Fertilizer Company Limited.

Flour Mills had earlier in January notified investing public on filing a scheme of arrangement with the Securities and Exchange Commission (SEC), to transfer its existing assets in Golden Penny Fertilizers division, to its wholly owned agro-allied company, Golden Fertilizer Company Limited.

According to the company secretary and director of legal services, Umolu Joseph, the restructuring ‘’which is part of a well-thought-out, and on-going restructuring process within the FMN Group, is expected to improve synergy, increase efficiency , and ultimately position FMN for greater operational and financial flexibility to ensure continued business growth.”

However, regulatory guidelines require that shareholders consent to the scheme of restructuring.

To that end, the shareholders of Flour Mills would be convening at Latana Hall, Eko Hotels & Suites, Ademola Adetokunbo Street, Victoria Island, Lagos on Wednesday, 6 March 2019 at 10.00am.

Following the successful outcome of the meeting, Golden Fertilizer Company would be made a wholly owned subsidiary and holding for Flour Mills agro-allied businesses.
Golden Fertilizer Company Limited was established as a wholly owned subsidiary of Flour Mills of Nigeria in 1997 with fertilizer blending, distribution, and supply as its core business.

In 2006, Golden Fertilizer Company Limited became a division of FMN, thus an internal segment of Flour Mills.
For Nine months to 31 December 2018, Flour Mills recorded a 6.28 percent decline in revenue.

Even though cost of sales declined in the nine month period, revenue challenges weighed on gross profit as it dipped some 16.85 percent to N46.59 billion.

Consequently, gross margin stood at 11.63 percent in the period, down from 13.11 recorded in nine months 2017.

Finance costs reduced significantly as the settlement of overdraft facilities and replacement of high interest yielding loans with more favourable loans saw cost of lending fall 34 percent to N16.5 billion.

Bottom line of flour mills was weak in the nine months 2018 period as Pre-tax income slumped some 42 percent to N11.28 billion.

Although tax expense in the 2018 period declined by 46 percent, Profit after Tax at N7.9 billion, was 40 percent lower than was recorded in corresponding period of 2017.

 

SEGUN ADAMS