Authorities at the Nigerian Stock Exchange (NSE) have approved the plan by Fidson Healthcare Plc to raise N4.5 billion new equity capital through rights issue to existing shareholders of the healthcare company.
A regulatory filing at the Exchange at the weekend indicated that the Quotation Committee of the NSE approved the issuance of 900 million ordinary shares of 50 kobo each to existing shareholders of Fidson Healthcare at N5 per share.
The rights issue will be pre-allotted on the basis of three new ordinary shares for every five ordinary shares held as at the close of business on July 5, 2018.
Shareholders of Fidson Healthcare had in 2017 approved a plan by the company to raise N6 billion in new capital to boost its working capital and support its expansion plan. At the annual general meeting in 2017, shareholders had authorised the board of directors of Fidson Healthcare to “raise further capital of up to N6 billion through an offer whether by way of public offering, rights issue, private and special placement of shares”.
The meeting also authorised the directors to absorb oversubscription and to convert existing loans due to any person from the company towards payment for any rights or shares subscribed for. Shareholders also increased the authorised share capital of the company from N1.2 billion to N1.5 billion by the creation of additional 600 million shares of 50 kobo each.
Chairman, Fidson Healthcare Plc, Mr. Felix Ohiwerei, said the new capital would be used to boost working capital that had been negatively impacted by the depreciation of Naira.
He noted that the company’s new factory had come on stream at the tail end of 2016 and the company needs additional capital to realise the full potential and utilise the new factory to full capacity.
Key extracts of the audited report and accounts of Fidson Healthcare for the year ended December 31, 2017 showed that turnover grew by 84 per cent N7.6 billion in 2016 to N14 billion in 2017. Cost of sales increased by 91 per cent from N3.6 billion in 2016 to N6.9 billion in 2017. Pfelix-chairmanbefore tax rose from N443 million in 2016 to N1.57 billion in 2017. With this, earnings per share increased from 21 kobo in 2016 to 71 kobo in 2017.
The financial reports showed a 53 per cent increase in total overhead including administrative and selling and distribution expenses, from N3.1 billion in 2016 to N4.7 billion in 2017, which was due to an increase in the marketing and distribution expenses. Finance cost also increased by 45 per cent from N690 million in 2016 to N1 billion in 2017. The increase in finance cost was mainly due to increased working capital to drive growth and a hike in interest rates from financial institutions. Despite the increase in total cost, the company recorded a 127 per cent increase in operating profit which grew from N1.1 billion in 2016 to N2.5 billion in 2017.
The board of directors of Fidson Healthcare however approved a 300 per cent increase in dividend payout for the 2017 business year. Shareholders will receive a dividend per share of 20 kobo for the 2017 business year, representing an increase of 300 per cent on 5.0 kobo dividend per share paid for the 2016 business year. The company had distributed N75 million as cash dividends to shareholders for the 2016 business year.