Poor Performance: UACN Winds Up Spring Water Subsidiary

UAC of Nigeria Plc has decided to close down one of its subsidiary, Warm Spring Waters Limited (WSWL) due to poor performance. The conglomerate owns 76 per cent equity in the company that is based in Ikogosi-Ekiti State.

In a filing to the Nigerian Stock Exchange (NSE), UACN said the company was promoted in 2002 with Ekiti State Government, Ikogosi- Ekiti Community and some private investors to produce premium quality spring water under Gossy label.

UACN explained that since WSWL commenced commercial production in 2013, it has been delivering weak operational performance due to problems associated with the rural location of the plant at the source of the spring.

“There were also associated logistics challenges, 100 per cent reliance on company generated power and difficult operating environment. The shareholders of the company, at a meeting held on February 6, 2018, resolved to appoint a liquidator to wind up the affairs of the company distribute its assets,” it said.

According to the company, the liquation of the WSWL will not have any negative impact since its contribution to the group’s results is less than one per cent.

“The contribution to the Group’s result is less than one per cent and as it delivered a turnover of N369 million and a loss before tax of N78 million in nine months,” UACN said.

As part of efforts to boost its operations, UACN recently N15.37 billion fresh capital from existing shareholders.

The company had said the proceeds of the rights issue would provide the company with the requisite financial capability to address the capital needs of its agrofacing subsidiaries in 2018 among others.

UACN had reported a revenue growth of 21 per cent to N68.7 billion for the nine months ended September 30, 2017, from N56.8 billion in the corresponding period of 2016.

However, profit after tax fell by 55 per cent from N4.8 billion to N2.2 billion, partly due to high interest charges and cost of inputs.

“We have made progress in reducing finance costs through focused execution of UACN Property Development Company Plc’s Cash Generation Plan, the depletion of high-priced inventory and the equity raise of Portland Paints, Livestock Feeds and UPDC. We are have launched our N15.4 billion Rights Issue. This will provide us with the requisite financial capability to address the capital needs of our agro-facing subsidiaries in 2018,” the company said.