JIB Projects Better Dividend for Shareholders
By Uche Obike
The projections of Jos International Breweries Plc (JIB) based on its on-going Offer for Subscription of 393.5 million ordinary shares of 50 kobo each at N2.50 per share reveals a brighter future for the shareholders.
The company's Offer prospectus shows that it planned to lift its turnover into the billion Naira mark and grow steadily by 30 per cent thereafter.
Speaking recently, a representative of the Issuing House, Afribank International Limited (Merchant Bankers), and Head, Capital Market Division, Mr. Robert Orya noted that the projections of JIB were achievable judging by its market expansion strategy into the southern market.
"The social celebration culture of Nigerians and the fact that beer consumption moves with a rapidly expanding population dominated by the youth, with the low-income group consuming more would translate into earnings per share of 14 kobo in 2004 and grow strongly to 34 kobo in 2006," he said.
He added that "these returns make the shares of JIB attractive to prospective investors and yet are affordable. The current market price of the company's shares is N3.80 each, but it is being offered for N2.50 per share which translates to an inbuilt premium of N1.30 per share, with headroom for growth."
He declared that investing in the shares of JIB would be a strategic diversification and a value-adding investment for any shareholders.
THISDAY checks revealed that JIB's objective for going to the capital market was to enable it re-position the company for improved profitability.
THISDAY checks revealed that the company had struggled in the past to maintain its position in the market with lean capital base. Therefore, its decision to access the capital market was to enable it to exploit its strategic location to maximise its potentials.
As a leading indigenous brewer with enormous potentials, Orya believed that JIB was capable of surpassing its present enviable position in the breweries subsector.
According to him, the company is the third largest brewery in Nigeria with an installed capacity of 260,000 hectolitres of beer per annum.
Proceeds from the Offer is expected to be channeled towards the refurbishing of the company's plant, expand the market, improve human resources development and update information technology and facilities.
The resolution to recapitalise the company was unanimously passed recently at the extra-ordinary General Meeting where shareholders and members of the board who resolved to increase the company's share capital from N88.2 million to N800 million by creation of 1.423 billion additional shares of 50 kobo each.
The public offer is one of the companies strategies to raise long term capital to finance its programmes to improve its industry rating and competitiveness.
In 2002, the company commenced consolidation of its business success made in the past eight years by the injection of over N100 million for the turn-around maintenance of its plant and machinery.
The company wholly owns two viable and successful subsidiaries including Pioneer Milling Company (PMC) Limited and Dutse Estate Management Company (DEMCO) Limited.
The company was incorporated in Nigeria as a private limited liability company on July 26, 1975. In 1977, the government of Plateau State of Nigeria entered into an investment agreement with the Danish Firm of A\S Cerekenm International Limited (which specialises on design construction and management of brewing), a company owned by the second largest brewery organisation in Denmark and the Industrialisation Fund for Development Countries (IFU), a foreign investment institution of the Danish government, set up to promote economic activities in developing countries, with the objective of establishing a brewery to produce and market high quality lager beer.
The company commenced production in 1979 with an installed capacity of 260,000 hectoliters (hl) of larger beer per annum. It later embarked on process of capacity building due to the process of its first beer brand, Rock Lager.
The capacity was then increased to 500,000 hl per annum within the first three years and by 1985, this was doubled to 1. 0 million hl per annum. The company introduced the Class Larger Beer and the Malt Royale in 1987 and 1993 respectively in Nigeria.
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