By Michael Eboh
Flour Mills of Nigeria Plc has announced plans to further increase its investment in strategic areas of its operations to boost its production capacity and ensure improved returns on investments for stakeholders in the years ahead.
Speaking at a forum, heralding its annual general meeting in Lagos, Managing Director of the company, Dr. Emmanuel Ukpabi disclosed that the company will continue to explore opportunities to grow its core business of flour milling and also in the food sector.
According to him, the company will make strategic investments in the construction sector, packaging, agro-allied, fertilizer, port terminal operations, infrastructure and logistics.
Ukpabi explained that the decision by the company to raise N70 billion from the capital market through a bond issuance programme, was borne out of the need to increase its investment activities and provide the much needed financing to expand its operations and activities.
On the modalities for raising the bond, he said, “Although we obtained approval for the establishment of a debt issuance programme by way of shelf registration for up to N70 billion. It is our intention to initially offer a corporate bond of up to N35 billion and keep the balance of N35 billion as a shelf registration.
“This will give us the agility and flexibility to readily access the capital market in case of need without necessarily repeating the processes of filing applications with the regulatory authorities.”
The bond issue, according to him, will enable the company gain access to cheaper source of finance and take advantage of interest rates which have been on a downward slide for a couple of months following tensions in the financial sector.
“We intend to apply the proceeds of the bond issue,” Ukpabi said, “to refinance our existing term loans, provide funds for our future investments in capital projects aimed at enhancing our existing milling capacity over the next two years; undertake new investments in the food and/or cement sectors and augment our working capital.”
Meanwhile, the company is proposing a total dividend of N3.416 billion for its shareholders, in its 2010 financial year, representing a dividend per share of N2. This represent an appreciation of 300 per cent from a dividend of N854.187 million declared in its 2009 financial year.
The dividend was occasioned by a significant improvement in its profit in the period under review. It recorded a profit after tax of N16.947 billion in its 2010 financials, rising by 335 per cent from a profit after tax of N3.891 billion recorded in 2009.
Its turnover also rose slightly by 15 per cent to N206.608 billion from N180.068 billion recorded in 2009, while its profit before tax stood at N24.439 billion, appreciating by 347 per cent from N5.470 billion recorded in 2009.
According to Ukpabi, in spite of the difficult economic environment, Flour Mills had an excellent year with a ground-breaking performance, ending the year with strong business fundamentals and a healthy financial position, giving it the opportunity to respond to challenges and take advantage of emerging growth opportunities.
“Our significant capital investment over the last six years,” he said, to refurbish, replace and modernise our mills has started to pay off. We have been able to deploy cutting edge technology in the process of flour production.”