HAVING taken bold new steps aimed at achieving a world class status, Neimeth International Pharmaceuticals Plc is expanding its opportunities for a targeted growth.
A continuous improvement in profitability over the past four years enabled it to increase dividend payout for the 2021 business year, with an expansive plan that promises to give the company a quantum leap forward, it grabs opportunity to raise funds from the Nigerian Capital market from its existing shareholders.
According to the audited report and accounts of Neimeth for the year ended September 30, 2021 gross turnover hit a high of N3.05 billion in 2021 as against N2.84 billion in 2020. Top-line analysis showed that the company’s human pharmaceutical manufacturing business grew by 13 per cent from N2.5 billion in 2020 to N2.8 billion in 2021. Operating profit rose from N510.15 million to N553.5 million in 2021.
With increasingly effective cost management, profit before tax of the pharmaceutical company, rose by 23 per cent from N297.39 million in 2020 to N365.29 million in 2021. After taxes, net profit grew by 27 per cent from N212.48 million in 2020 to N270.58 million in 2021. With this, earnings per share rose correspondingly with growth of 27 per cent from 11 kobo in 2020 to 14 kobo in 2021.
A six-year, medium-term, periodic analysis between 2016 and 2021 showed a steady growth trajectory with consistent year-on-year growth in sales and profitability. Over the period, turnover has grown by 52 per cent and Pre-tax profit has grown by 284 per cent. Profit after tax also rose by 317 per cent.
One of the major factors contributing to enhanced profitability over the past few years is management’s consistent focus on absorption of plant operations overhead. The 2021 report indicated the highest overhead absorption of N378 million, which was 24 per cent better than the overhead absorption for 2020 financial year at N305 million. The 2021 overhead absorption was also the highest absorption in five years when compared with the other years ranging from N164 million to N289 million.
With sustained dividend-paying culture, Neimeth’s shareholders, over the years, have enjoyed shareholding benefits. The company increased dividend payout by eight per cent to 7.0 kobo per share for the 2021 business year, sustaining the trend started in 2020 when the company paid a dividend per share of 6.5 Kobo; after it had earlier successfully used its profit to restructure its balance sheet and counterbalanced earlier losses.
Beyond cash dividend payouts; shareholders of Neimeth have seen significant capital gains as the investing public continued to react positively to the improvements in the company’s fundamentals. The share price of Neimeth increased from 40 kobo as at September 30, 2019 to N1.75 by the year ended September 30, 2021, representing a 338 per cent gain, more than an average of 100 per cent gain per annum. This implies that a shareholder who had N1 million worth of shares on September 30, 2019 has seen his value risen to N4.38 million.
To support its expansion drive, shareholders of Neimeth have approved the plan by the company to raise N5 billion through a hybrid offer of rights to existing shareholders and private placement. The company will raise N3.67 billion through rights issue at N1.55 per share and N1.32 billion through private placement at N2.10 per share.
Chairman, Neimeth, DrAmbrosieOrjiako said the money is being raised for two key reasons. First, is the construction of a World class factory compliant to World Health Organisation (WHO) current Standards of Good Manufacturing Practice (cGMP) at Amawbia in Anambra State. Second is to support the company`s strategic plan of maintaining a sustainable capital structure , leverage the company`s balance sheet , reduce cost of borrowing and fund working capital.
Pharm Matthew Azoji, Managing Director of Neimeth said the capital market is the most viable and cheaper option to source long term funds because of the high cost of funds through other sources. “We cannot finance long term projects with short term funds from banks. That will not be expedient and cost effective. It will also not serve the best interest of shareholders” He explained that the company considered prevailing economic situation in the country that also affect shareholders before deciding to add the private placement equity. “We did not want to put the entire burden of N5 billion on shareholders, that is why we have decided to add private placement to the fund raise,” he said.
Neimeth’s strong shareholder value creation has not gone unnoticed.
In 2021,Neimeth won the 2021 Nigerian Investor Value Awards (NIVA 2021) organized by the Business Day Media Ltd in conjunction with the Nigerian Exchange (NGX) for the category of “Best Performing Stock (Healthcare)”. It was also nominated as “Listed Company of the Year” along with FBN Holdings Plc and Airtel Africa Plc, ranking among the top three companies that created the most value for their shareholders out of about 160 listed companies on the Exchange.
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