Fidson Healthcare Plc on Wednesday at the Nigerian Stock exchange (NSE) said plans are in top gear to raise N3 billion new equity funds through a rights issue of 750 million ordinary shares of 50 kobo each at N4 per share.
During its Fact-Behind-the-Figures, at the NSE, Fidson’s Head, Finance and Accounts, Imokha Ayebae said the company is projected to earn N20 billion in sales revenue this year, with profit before tax to hit N3.4 billion, soaring by 2020 to N23 billion and N3.92 billion respectively.
Ayebae said with Fidson’s state-of-the-art factory in Ogun State and increased capacity utilization, the company carried out a number of cost cutting measures to help achieve its target, such as lowering finance cost with fresh capital and increase in product prices, adding that plans are in top gear to reduce energy cost from the current 40 percent of total by moving from diesel to gas fired power generators, introducing new products and cutting out middlemen.
He blamed the drop in revenue and profit in 2018 to an increase costs due to scarcity and cost of imported raw materials, Nigeria’s port congestion and Naira devaluation, all of which, he said impacted on operating costs that could not be passed to consumers.
He said a long-term contracts and direct importation of raw materials to reduce costs by about 30 percent is in the pipeline.
He told stockbrokers that the company got N2 billion loan from the Bank of Industries (BoI) to inject into working capital, thereby reducing its financing cost from 18 to 13 percent. “With these cost-cutting measures an estimated N1billion is expected to trickle into the bottomline,” he said.
He said despite the drop in 2018 profit, Management decided to maintain a clean record of dividend payout which it started since becoming a listed company. “Fidson has paid out N1.8 billlion as dividend to shareholders in the last 10 years. Our dividend payout policy will be about 30 percent going forward.
Our new factory, which will soon be of World Health Organisation (WHO) standard will be key driver of revenue in the years ahead. Plans are on to engage in contract manufacturing for international brands and technical collaborations. The company also hopes to manufacture products for the export market, thereby earning foreign exchange,” he said.
Fidson’s Founder, Managing Director and Chief Executive Officer (CEO), Fidelis Ayebae said it was natural for investors to feel disappointed and depressed by poor result, stressing that all hiccups in 2018 have now been corrected, with the result reflecting in the first quarter of 2019.
“With Fidson three-year tax holiday, renewable for another two year, which it has not enjoyed yet, we have enough period to retain a lot of capital. We thank the government for its patronage and the regulators for encouraging local manufacturers like Fidson,” he said.
With less than a week to the close the rights issue, stakeholders had earlier indicated their willingness to support the company’s plan to raise new equity funds. They commended Fidson’s performance, noting that recapitalisation would create better opportunities for the company, adding that Fidson has crafted the pharmaceutical architecture of the industry over the years of its existence, playing very defining roles in the emergence of the new generation of industry players.