DN Meyer Nigeria Plc has launched a bid to raise about N218.62 million in new equity funds from existing shareholders in a move that will double the paid up share capital of the paint manufacturing company and raise total equity funds to above N900 million.
A regulatory fling obtained by The Nation at the weekend indicated that DN Meyer Nigeria plans a rights issue of 291.49 million ordinary shares of 50 kobo each to shareholders on the register of the company as at Thursday September 8, 2016 at a price of 75 kobo.
The provisional allotment will be done on the basis of one new ordinary share for one ordinary share held as at the close of register on September 8, 2016.
DN Meyer has already submitted application to the Nigerian Stock Exchange (NSE) for the approval and listing of the shares that will result from the rights issue.
The rights issue comes at a discount of about 18 per cent to the 91 kobo closing share price of DN Meyer Nigeria at the weekend.
The latest audited report and accounts of DN Meyer for the year ended December 31, 2015 showed a turnover of N1.19 billion in 2015 as against N1.34 billion in 2014. Gross profit dropped from N592.24 million in 2014 to N505.38 million. Operating profit however improved from N72.01 million to N151.01 million. The company returned to profit in 2015 with a pre-tax profit of N60.46 million as against pre-tax loss of N37.36 million recorded in 2014. After taxes, net profit stood at N52.86 million in 2015 as against net loss of N36.58 million in 2014. Shareholders’ funds closed 2015 at N685.28 million as against N632.03 million in 2014. DN Meyer currently has a paid up share capital of N145.75 million consisting of 291.5 million ordinary shares of 50 kobo each.
In the 2014 audited report, the external auditors to DN Meyer, Akintola Williams Deloitte, had expressed concerns about the going concern status of the chemical and paints company as recurring losses over the years and inability to inject additional equity funds built up huge deficit on the balance sheet.
A new external auditors, BDO Professional Services, signed on the audited report for 2015 without any material emphasis or doubt on going concern.
In the 2014 report, the external auditors noted that recurring losses and negative working capital plaguing the company “indicates existence of a material uncertainty that may cast significant doubt about the company’s ability to continue as a going concern”.
The auditors particularly drew attention to the fact that the DN Meyer group has sustained recurring losses over the years and recorded negative working capital. In the year ended December 31, 2014, the company posted a loss of N44.2 million while it also has a negative working capital of N161 million by the December 2014 year-end.
Audited accounts of DN Meyer Group had shown that the company suffered a reversal in 2014. Turnover dropped from N1.59 billion in 2013 to N1.34 billion in 2014. As against pre-tax profit of N51.9 million in 2013, the company recorded a pre-tax loss of N37.36 million. After taxes, net loss stood at N35.58 million in 2014 as against net profit of N47.07 million in 2013.
The board of the company however said the operations of the company have been improving and it will be in adequate position to generate needed cashflows in the years ahead.
Auditors at Akintola Williams Deloitte had earlier in an independent audit report dated August 2013, highlighted the possibility of the working capital deficiencies and negative cash flow impairing on the sustainable operations of the company. Negative working capital had risen by 11 per cent to N181 million in 2012 as against N163 million and N60 million in 2011 and 2010 respectively. Besides, the group recorded negative operating cash flows of N34 million in 2012. The board of the company blamed the legacy loans and the attendant financing charges for the continuing negative bottom-line of the company.
One of the legacy companies, DN Meyer has history of more than seven decades and was an iconic brand in its industry. Before its incorporation in 1960, it had operated for two decades. It converted to public limited liability and listed its shares on the Nigerian Stock Exchange (NSE) in 1979. In 1994, the then Dunlop Nigeria acquired majority equity stake of 68 per cent in the company and thus changed its name from Hagemeyer Nigerian Plc to DN Meyer Plc. In 2003, DN Meyer acquired the flooring and adhesives business of Dunlop Nigeria, thus extending its business operations from manufacturing and marketing of paints to adhesives and floor tiles.
Dunlop sold its stake in DN Meyer in 2004 to ACIMS Limited and the Nigerian public through a combination of management buyout (MBO), thereby making DN Meyer a wholly Nigerian company. ACIMS sold its total equity stake in DN Meyer to Citiprops Limited in February 2010.
DN Meyer is now owned by some 8,000 shareholders. Recent shareholding analysis showed that three shareholders held the largest stakes-Citiprops Limited held the largest 30 per cent equity stake, Bosworth Limited held 12.89 per cent while Mr Osa Osunde held 9.26 per cent. Nation Online