Flour Mills merges five subsidiaries with holding company

Flour Mills of Nigeria (FMN) has announced plans to conduct a restructuring by merging five of its subsidiaries with its holding company under a Scheme of External Restructuring.

A statement obtained from the Nigerian Stock Exchange’s (NSE) website, quoted the Group Managing Director, Mr. Paul Miyonmide Gbededo, as saying that the company has obtained the approval-in-principle of the Securities and Exchange (SEC) to merge five of its wholly owned subsidiaries. The holdings are Golden Noodles Nigeria Limited, Golden Transport  Company Limited, FMN Cement Industries Limited, New Horizon Flour Mills Limited and Quilvest Properties Limited with Flour Mills of Nigeria Plc.

He said the principle reason for the restructuring stemmed from the need to streamline operations, reduce administrative costs, improve operating efficiency and derive full benefits of synergy in line with the company’s long-term strategic thrust.

“The enlarged FMN, upon completion of the restructuring would be able to eliminate transfer costs of material and operate at a higher level of efficiency, which will drive down cost, make product pricing more competitive, improve profitability and enhance the bottom line for the benefit of all stakeholders,” Gbededo said.

Also commenting on the project, the Company Secretary, Alhaji Olalekan Saliu, stated that the management of the various companies had jointly obtained an order of the Federal High Court directing that Court Ordered Meetings of their respective shareholders be held on Wednesday 9th September, 2015 for the purpose of approving the restructuring.

Flour Mills is also seeking approval from the stock exchange to list N30.06 billion shares from a rights issue. The food manufacturer issued 1.09 billion ordinary shares at N27.50 each on the basis of five new shares for every 12 held, it said in its application to the Nigerian Stock Exchange.

The company reported a 6 per cent decline in pre-tax profit for the full year ended March 31, 2015.

The company in a filing to the Nigerian Stock Exchange that said its full-year pretax profit to N 7.72 billion from N8.22 billion the previous year, accounting for a drop of 6 per cent. Gross earnings fell to N308.75 billion during the period under review compared with N325.79 billion recorded a year earlier.

Analysts at FBN Capital reacting to the results said PBT improved markedly to N4.0 billion (vs. –N624 million Q4 2014) due to a one-off gain of N14.2 billion on disposal of investments (basically divestments of FMN’s 15 per cent shares in UNICEM).

They said: “Excluding this gain, FMN would have reported a pretax loss of -N10.2 billion. Thanks to a tax credit of N1.1 billion and a positive contribution of N1.2 billion on the minority interest line, PAT grew 59 per cent y/y to N6.7 billion.

Again if we strip out the extraordinary gain of N14.2 billion from the sale of investments, the company would have reported an after-tax loss of -N7.5 billion for the quarter (vs. -N10.0 billion in Q4 2014).”