Union Dicon Salt (UDS), a company that processes crude salt for wholesale in Nigeria, despite being in a state of moribund, recorded impressive bottom line performance as shown in its Full year 2013 financial results.
It revenues, however, were in vacuum, which analysts attribute to comatose production, especially in its Lagos factory. UDS Port-Harcourt factory is however expected to start work at full capacity.
For the year ended December 2013, the company posted pretax profits of N12.10 million. This compared with 23.50 million losses recorded in 2012.
Other operating income in the review period was up 26.39 percent to N87.75 million in 2013 from N9.48 million in 2012.
It should be noted that the pretax profits figure was as a result of other operating income of N87.5 million recorded in 2013; this represents a 26.39 percent increase from N69.48 million in 2012.
Some analysts interviewed by BusinessDay attributed the spike in operating income to proceeds from investments other than the company’s core business, which is yielding interest.
The recent acquisition of a majority stake of UDS by CBO capital, a Lagos based private equity firm places the salt company on the right trajectory of growth given the experience and capital injection of the acquirer.
In the last quarter of 2013, CBO Capital Partners became a significant shareholder in Union Dicon Salt after it acquired 15 per cent of the firm.
It consummated the deal by acquiring 41 million ordinary shares of UDS and also had an option to purchase a further 240,000,000 ordinary shares for a consideration of N3.36billion.
CBO capital partner will be announcing a series of major restructuring and major development in Q1 2014 with a view to achieve the desired transformational growth.
Operating expenses were down 16.83 percent to N52.65 million in 2013 compared with N63.31 million in 2012.
Furthermore, operating expenses to income ratio declined to 60 percent in 2013 from 91.12 in 2012- thanks to aggressive cost reduction management.
The company has incurred a total liability of N1.082 billion and a debit balance of N1.45 billion in its retained earnings account.
Analysts are suggesting a capital reduction and reorganization scheme that will enable the firm write off the debit balance in the revenue reserve and also solidify its capital structure.
Union Dicon Salt Plc established in 1984, produces the finest quality iodized salt, edible salt, and the processing of crude salt for wholesale. The company also manufactures industrial salt for detergent production, animal feeds, leather tanning, for oil wells, and other drilling related operations.
Union Dicon’s share price closed at N12.46 on the floor of the exchange while market capitalization stood at N3.40 billion.
BALA AUGIE
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