PZ Cussons Nigeria Plc has convened an extraordinary general meeting of shareholders following a N73.8 billion loss that reduced the value of its net assets.
The meeting will discuss the unaudited financial statement for the period ending November 30, 2023, as well as steps to rectify the company’s negative net assets value, according to a notice of the EGM filed with the Nigerian Exchange Limited on Tuesday.
In September, PZ Cussons declared its intention to delist from the Nigerian exchange and acquire the minority investors’ 26.73 per cent of the shares at a price of N21 per share.
Since then, the buyout price has risen to N23 per share.
The company’s unaudited interim financial accounts for the second quarter of 2023–2024 revealed that it had a negative net asset position, according to the explanatory note that accompanied the notification of the EGM.
For the six months that concluded on November 30, 2023, the company announced a 19% increase in sales to N68.09 billion.
But instead of a profit of N7.67 billion in the prior period, it reported a pre-tax loss of N73.79 billion and a post-tax loss of N74.14 billion, a 1,067 percent decline.
An operating loss of N73.8 billion was incurred for the first half of the 2023–2024 financial year due to the continued depreciation of the naira and a “decrease in volumes of approximately six per cent overall,” according to the explanatory letter signed by the company secretary, Olubukola Olonade–Agaga.
Furthermore, the business suffered a N87 billion foreign exchange loss on its trade obligations denominated in foreign currencies, which had a detrimental effect on our operating performance.
As of November 30, 2023, the company’s negative total equity position of N23.2 billion was mostly caused by the operating loss mentioned above. The group’s total assets were N154.8 billion as of that day, but its financial liabilities, the majority of which are expressed in foreign currencies, were N178 billion.
The business predicted more losses, stating that considerable foreign exchange losses pertaining to liabilities denominated in foreign currencies will result from the naira’s continued decline after November 2023.
It disclosed that the Securities and Exchange Commission had not yet granted regulatory approval for the proposed share repurchase program, and it listed a few contingency plans it would take into consideration.
“The company will be required to investigate with its creditors, who are primarily members of the PZ Cussons group, ways to address the company’s negative net asset position and repay or settle outstanding amounts owing to its creditors if the company is unable to obtain the necessary regulatory and shareholder approvals to proceed with the proposed scheme.
This could involve actions like asset sales, rights issues, debt for equity conversion, stock issuance, or something similar. The company stated that such actions might drastically reduce the value of current stockholders or have other effects.
