In a notice to the Nigerian Stock Exchange (NSE) today, UAC has announced the liquidation of one of its associate companies Warm Spring Waters Limited. The shareholders of the company at a meeting held on the 6th of February 2018, resolved to appoint a liquidator to wind up the affairs of the company and distribute its assets.
The company located in Ekiti State produced spring water from the Ikogosi warm springs. It was established in 2002. UACN owned 76% of the company, while the Ekiti State government and other investors held the rest.
Reasons for the action
In the notice, UACN declared that the action was due to the difficult operating environment. The company had to rely solely on its own power and had logistics challenges associated with its rural location.
The liquidation will not have a significant effect on UACN as its contribution to UACN’s turnover is less than 1%. The company had a turnover of ₦369 million and a loss before tax of ₦78 million for the 9 months ended September 2017.
UACN’s shares closed at ₦17 in today’s trading session on the NSE. Year to date, the shares are up 0.59%, underperforming the NSE All-Share Index which is up 11.40% year to date.
For the 9 months ended September 2017, revenue increased from ₦56.7 billion in 2016 to ₦68.7 billion in 2017. Profit before tax, however, fell sharply from ₦6.7 billion in 2016 to ₦3.0 billion in 2017.
One of Nigeria’s oldest conglomerates, UACN Plc has been weighed down by the poor performance of some of its subsidiaries thus necessitating a ₦15 billion rights issue in November last year.
₦5 billion will be injected into Grand Cereals Limited as equity, in addition to a ₦3.5 billion company loan. UACN also intends to allocate ₦4 billion as working capital support to both Livestock Feeds Plc and Grand Cereals Plc. ₦2.5 billion from the rights issue will be reserved for new business development.