By Gbenga Agbana

Thursday, 21 Oct 2010

Flour Mills of Nigeria Plc has postponed half of its corporate bond recently approved, by way of shelf registration, in order to have access to a cheaper source of finance through the capital market.

The Chairman of the company, Mr. George Coumantaros, said this while addressing shareholders at the company‘s Annual General Meeting held in Lagos on Wednesday.

He explained that though the company had obtained the approval of the regulatory authorities for the establishment of a debt issuance programme by way of shelf registration for up to N70bn, the company‘s board decided to offer N35bn and keep the balance of N35bn as shelf registration.

According to him, ”This will give us the agility and flexibility to readily access the capital market in case of need, without necessarily repeating the process of filing applications with the regulatory authorities. The goal is to access a cheaper source of finance and take advantage of interest rates, which have been on a downward slide for some months.”

The company‘s shareholders also approved a dividend payout of N3.4 bn or N2.00 per share and a bonus of one new ordinary share for every ten ordinary shares already held by existing shareholders, as proposed by the company‘s board.

According to the board, the move to keep a balance of N35bn as a shelf registration will enable the company to reduce the effects of the harsh economic environment witnessed in the March 31, 2010 financial year, especially in terms of power generation and also to aid its future expansion projects.

Coumantaros explained that the company hoped to refinance its existing term loans, provide funds for its future investments in capital projects aimed at enhancing its existing milling capacity over the next two years and undertake new investments in the food and/ or cement sectors.

On the company‘s financial result for the March 31, 2010 financial year, Coumantaros said that the company was able to record the result in the year, despite the challenging economic environment witnessed in the year.

According to him, ”we ended the year on a happy note, with strong financial position, giving us the ability to respond to challenges and take advantage of emerging growth opportunities. The impressive result was largely driven by organic growth in our core business of flour milling, coupled with significant production efficiencies. The relative stability of exchange rates was a big plus”.

Commenting on the company‘s performance in the financial year under review, the National Coordinator, Independent Shareholders Solidarity Association, Chief Sunny Nwosu, commended the company‘s efforts in enhancing shareholders‘ return on investment by increasing the company‘s profitability.

He, however, urged the company‘s board to harness the opportunities provided by the nation‘s capital market and also increase the dividend payable to shareholders in the years to come as well as the bonus issues.

On his part, the President, Nigeria Shareholders Solidarity Association , Chief Timothy Adesiyan called on the company‘s board to make provisions for minority representation on the board and also utilise its general reserve.

Source: Punch