Background
May & Baker Nigeria Plc was founded on September 4, 1944 as Nigeria’s first pharmaceutical company.
It has its origin in England, the United Kingdom in 1834 where three chemists founded Grimwade, May & Pickett, a firm for manufacturing chemicals for pharmaceutical products.
In 1839, Grimwade, May & Pickett transformed into May& Baker United Kingdom Limited following some changes in the ownership.
May & Baker UK Limited later transformed into a mega European conglomerate through a web of mergers and acquisitions over years. Consequently the name of the company has changed at different times and today, only the Nigerian offshoot is known by the original name.
In Nigeria the company started as May & Baker (West Africa) Limited at 17A Tinubu Street, Lagos in 1944, a trading outpost to serve the West Coast of Africa.
In 1979, following the indigenization decree which required that foreign interest in companies operating in Nigeria be of a minority nature, May & Baker, United Kingdom relinquished 60 per cent of its equity holding in May & Baker Nigeria to Nigerians while retaining 40 percent.
May & Baker Nigeria Limited became a publicly quoted company following its listing by introduction in the Nigeria Stock Exchange on November 10, 1994 and became May & Baker Nigeria Plc.
In 2002 the company became 100 percent owned by Nigerians with the complete buyout of the foreign partners.
The company has 980 million shares outstanding with N3.02 billion shareholders fund as at December 31 2014.
Financial performance for 2013
May and Baker of Nigeria Plc, the nation’s second biggest maker of Pharmaceuticals by market value, for the year ended December 2013 grew revenue by 12 percent y/y to N6.36 billion from N5.66 billion corresponding period of 2012.
Of the N6.36 billion revenue, the pharmaceutical segment contributed 75.4 percent, Beverage 1.2 percent, while the Foods segments contributed 23.4 percent to total revenue.
In addition, of the total revenue of N6.36 billion from external customers, the Eastern Region of the country had the highest contribution to revenue with N2.16 billion (33.39 percent); West,1.59 billion(25 percent); Lagos, N1.4 billion; (22 percent) and North, N1.2 billion (19.61 percent).
The company in the review period posted loss before tax of N11.37 million, this represents a 125.23 percent decline from N44.52 million profits same period of prior year (FY12), while net margin remained flat at 1.62 percent.
The cost of sales were up by 17.94 percent y/y to N4.10 billion in FY13 from N 3.4 billion as at FY12 which explains the operating loss recorded in the period.
Moreso, cost of sales remained stable at 63 percent.
May and Bakers gross profit in the review period increased by 12.56 percent to year on year to N2.26 billion as against N2.0 billion in 12M12, while gross profit margin remained flat at 35.5 percent.
Operating expenses for the year ended December 2013 remained stable at N1.84 billion while operating expense ratio slid to 28.91 percent in FY13 from 32.60 percent in FY12.
Finance cost in the review period rose by 34.3 percent to N630.71 million compared to N469.63 million in FY12, while total borrowings declined slightly to N3.52 billion in 2M13 as against N3.68 billion in 12M12.
Despite the slight reduction in total borrowings, the company is still levered as its debt to equity ratio was as high as 116 percent.
Bank of Industry granted the company a medium term facility of N1.25 billion on 18 June 2013 with initial drawdown on 27 December.
The loan facility is for 6 years period (inclusive of one year moratorium) at interest rate of 10% per annum payable monthly in arrears. The loan is repayable in 60 equal and consecutive installments commencing from 1 January 2015. This explains one of the reasons behind the company’s high gearing ratio.
Return on Average Equity (ROAE) shrank to (3.44) in 12M13 from 24.13 percent in 12M12, while Return on Average Assets (ROAA) slid to (1.2) in FY13 as against 9 percent as at FY12.
May and Baker’s total assets were up by grew slightly by 1.25 percent y/y to N8.1 billion compared to N8 billion in 2012.
Current ratio was 1.03x, which is lower than the industry average of 2.1x and it also explains the 30.77 percent surge in trade and other payables to N1.263 billion in 12M13 from N965.81million in 12M12.
The company also acquired the trademark of Thalazole, Sulphatriad and Thiazamide products from May and Baker limited.
Earnings per share (EPS) reduced by 237.5 percent to (11k) in FY13 as against 8k as at FY12.
Share Performance and Outlook
Shares of the company closed at N1.81 on April 10 2014 at the floor of the Nigeria Stock Exchange.
Total market capitalization on the same day was N980.0 million.
Price to book ratio of the company was 0.56 percent, while price to sales ratio stood at 0.31x according to Bloomberg data.
BALA AUGIE
