PZ Cussons Nigeria Plc Fixes EGM Following the Company’s N73.8 Billion Loss

The board of PZ Cussons Nigeria Plc has called for an extraordinary general meeting (EGM) of its shareholders following the company's N73.8 billion loss that brought the firm's net assets to a critical state.

The company announced this in the notice it filed with the Nigerian Exchange Limited on Tuesday. The EGM, scheduled to be held soon, will have shareholders deliberating over the unaudited financial statement for the period ending November 30, 2023, and looking for measures to discuss the company's negative net asset value.

In September 2023, PZ Cussons announced plans to buy the 26.73% of shares held by minority investors at N21 per unit and move to delist the company from the Nigerian Stock Exchange (NGX). However, the company buyout price has since been increased to N23 per share.

The explanatory note that came alongside the notice of the EGM said that the company's unaudited interim financial statements for Q2 2023/2024 showed that it had fallen into a negative net asset position, as reported by the PUNCH.

In PZ Cusson's half-year period ending November 30, 2023, the firm reported a 19% hike in its revenue to N68.09bn.

PZ Cussons recorded a pre-tax loss of N73.79bn and a post-tax loss of N74.14bn, a 1,067% plunge from a profit of N7.67bn in the previous period.

The explanatory note signed by its company secretary, Olubukola Olonade-Agaga, said the ongoing depreciation of the naira had led PZ Cussons to miss out on better revenue.

It reads,

• A volume decrease of approximately 6% overall resulted in an operating loss of N73.8bn for the first six months of the 2023–2024 financial year.

• The company had a foreign exchange loss of N87 billion on our foreign currency-denominated trade obligations, negatively impacting our operating results.

• The above operating loss is the key driver of the company's negative total equity position of N23.2bn as of November 30, 2023. As of that day, the group's financial liabilities, denominated in foreign currencies, were N178bn, while the Total Assets were N154.8bn.

• These will be reflected in future results and will likely worsen the negative net asset position. Our payables in foreign currencies have increased significantly in recent years, primarily due to our inability to source foreign currency to repay our suppliers and other credit providers.

• We have benefited from extended payment terms and other support from our affiliated companies. As a result, most of our trade payables are owed to other members of the PZ Cussons group.

• The board continues to recommend the offer from the company's core shareholder, PZ Cussons (Holdings) Limited, to buy out minority shareholders and delist the company. The offer was increased from N21 per share to N23, as announced on November 9, 2023.

• The proposed scheme is intended to enable the core shareholder to significantly simplify and strengthen the Company's operations to allow it to return to longer-term growth.

• Suppose the company cannot obtain the requisite regulatory and shareholder approvals to proceed with the proposed scheme. In that case, the company will be required to explore ways to address its negative net asset position with its creditors, primarily members of the PZ Cussons group, and repay or settle outstanding amounts owed to its creditors.

• This could include equity issuance, debt for equity conversion, rights issues, asset sales, etc. Such measures may significantly dilute or otherwise impact existing shareholders.

READ ALSO: PZ Cussons Company Profile, Culture and General Overview

Back Story
In December last year, it was reported that PZ Cussons Nigeria Plc shareholders announced the cancellation of the resolutions they agreed upon during the 74th Annual General Meeting, where they all decided on a cut in the company’s share capital.

The decision by the shareholders was passed at the 75th Annual General Meeting (AGM) held in Abuja, according to a statement filed with the Nigerian Exchange Limited.

The cancellation of the resolutions came months after PZ Cussons Nigeria published that its majority shareholder, PZ Cussons Holdings Limited, offered to acquire shares held by other shareholders.

The company initially proposed to pay minority shareholders the sum of N21 per unit. However, an upward review was announced in November, and minority shareholders are expected to be paid N23 per unit of share.