Neimeth International Pharmaceuticals Plc has taken bold new steps to achieve world-class status and is expanding its capabilities for targeted growth.

A continued improvement in profitability over the past four years has enabled it to increase its dividend payout for fiscal 2021, with a comprehensive plan promising to give the company a huge leap forward, seizing the opportunity to raise funds on the Nigerian capital market from its existing shareholders.

According to Neimeth’s audited report and accounts for the year ended September 30, 2021, gross sales peaked at N3.05 billion in 2021 from N2.84 billion in 2020. Top-line analysis showed that the human pharmaceutical manufacturing business of the company grew 13 percent from N2.5 billion in 2020 to N2.8 billion in 2021. Operating profit increased from N510.15 million to N553.5 million in 2021.

With increasingly effective cost management, the pharmaceutical company’s pre-tax profit grew 23 percent from N297.39 million in 2020 to N365.29 million in 2021. After tax, net profit grew 27 percent from N212.48 million in 2020 to N270, 58 million in 2021. As a result, earnings per share rose accordingly with a growth of 27 percent from 11 kobo in 2020 to 14 kobo in 2021.

A six-year periodic medium-term analysis between 2016 and 2021 showed a steady growth trajectory with consistent year-over-year growth in revenue and profitability. Over the period, sales grew by 52 percent and profit before tax by 284%. Profit after tax also increased by 317%.

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One of the key factors that has contributed to increased profitability in recent years has been management’s consistent focus on absorbing plant overheads. The 2021 report indicated the highest overhead absorption of N378 million, which was 24 percent better than the fiscal year 2020 overhead absorption of N305 million. The overhead absorption in 2021 was also the highest absorption in five years compared to the other years, ranging from N164 million to N289 million.

With a lingering culture of dividend payments, Neimeth’s shareholders have enjoyed shareholder benefits over the years. The company increased its dividend payout by eight percent to 7.0 kobo per share for fiscal 2021, continuing the trend started in 2020 when the company paid a 6.5 kobo dividend per share; having previously successfully used its profits to restructure its balance sheet and offset previous losses.

In addition to cash dividend payments; Neimeth shareholders have seen significant capital gains as the investing public continued to respond positively to improvements in the company’s fundamentals. Neimeth’s stock price rose from 40 kobo on September 30, 2019 to N1.75 by the year ended September 30, 2021, representing a gain of 338 percent, more than an average of 100 percent gain per year. This means that a shareholder who held N1 million in shares on September 30, 2019 has seen its value increase to N4.38 million.

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Neimeth is pursuing a multi-track strategy to strengthen its position as a leading Nigerian pharmaceutical company and to develop a competitive global capability that enables it to tap emerging continental opportunities. As part of its expansion plans, the company is building a new multi-product manufacturing facility in Amawbia, Anambra State, which will meet current World Health Organization (WHO) Good Manufacturing Practice (cGMP) standards.

To support its expansion drive, Neimeth shareholders have approved the company’s plan to raise N5 billion through a hybrid rights offering to existing shareholders and private placement. The company will raise N3.67 billion through rights offering 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 main reasons. First, is for the construction of a world-class factory that meets the current World Health Organization (WHO) Standards of Good Manufacturing Practice (cGMP) in Amawbia in Anambra State? Second, the company’s strategic plan must be supported to maintain a sustainable capital structure, leverage the company’s balance sheet, reduce borrowing costs and finance working capital.

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Pharm Matthew Azoji, chief executive of Neimeth, said the capital market is the most viable and cheaper option for acquiring long-term funds due to the high cost of funds through other sources. “We cannot finance long-term projects with short-term bank funds. That will not be convenient and cost effective. Nor will it serve the interests of shareholders.”

He explained that the company took into account the prevailing economic situation in the country which also affects shareholders before deciding to add equity.

“We didn’t want to put the entire burden of N5 billion on shareholders, so we decided to add a private placement to the fundraising,” he said.

Neimeth’s strong shareholder value creation has not gone unnoticed. In 2021, Neimeth won the Nigerian Investor Value Awards 2021 (NIVA 2021), organized by Business Day Media Ltd in partnership with the Nigerian Exchange (NGX) for the Best Performing Stock (Healthcare) category.

It was also nominated as “Listed Company of the Year”, along with FBN Holdings Plc and Airtel Africa Plc, and is among the top three companies that created the most value for their shareholders out of approximately 160 listed companies on the Exchange.

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