Studio Press to exit Nigeria’s stock market amid N237.95m loss

Studio Press Nigeria shareholders have unanimously resolved to delist the company from the Nigerian Stock Exchange (NSE) amid low investor interest in the firm’s stocks and declining profits.

The manufacturer of cartons and light packaging products wants to exit the bourse Daily Official List and the main board as it plans to re-register as a private company with limited liability.

The development followed the corporate disclosure made after the Board of Directors met on December 14, 2020, to inform the public of its intention to become a private company.

What you need to know: A substantial investor increasing its control

The shareholders agreed to the directors’ proposal at a court-ordered meeting held on October 15 but announced in a statement released on Wednesday.

It was understood that part of the delisting activities includes the transfer of the company’s ordinary shares by minority holders to one of the substantial shareholders, Federated Resources Nigeria.

Ripples Nigeria gathered that Federated Resources Nigeria owns 162.70 million shares or 27.35 percent of the company’s total investment.

Studio Press has 119,036,182 shares or 20.01 percent of the investment while the other majority shareholder, Rommac Agencies Limited accounts for 313.14 million shares (52.64 percent).

Federated Resources will purchase the ordinary shares at NI.99kobo per share, and this will increase its control to 47.36 percent.

However, it is unknown if Rommac will also disburse its shares.

Privatisation amid low investor interest

The buyout offer of N1.99kobo per share by Federated Resources is 11.7 percent and N0.21kobo higher than the current share price (N1.78kobo) of Studio Press.

The exit offer is the highest deal got by the company’s shareholders this year as its share price has been depreciating since 2020.

Shareholders’ investment crashed by 25.6 percent last year, losing N333.13 million as total investment dwindled from N1.29 billion on January 10, 2020, to N963.71 million on January 11, 2021.

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The stock value depreciated from N2.18kobo to N1.62kobo during the same period.

Since the first month of this year, there has been little or no value to stakeholders’ investment as Ripples Nigeria analysis showed that shareholders’ investment has been largely static, hovering between N1.79kobo and N1.78kobo as of October 12, the last time trading was recorded on its stocks.

This means holders of Studio Press shares had lost N237.95 million since January 2020 as investors distance themselves from the firm’s stock due to low confidence and massive sell-off.

Much of this was noted in a Notice of Court Ordered meeting dated September 14, 2021, which stated that “the company’s stocks rarely trade.”

Declining profit amid depreciating investment

A look at the company’s financial reports of last year and the first six months of this year revealed that profit before and after tax had been on a downward slide.

The gross profit full year for 2020 was N1.46 billion, against the N1.93 billion reported in 2019 while PAT was put at N37.55 million.

This was 86.8 percent lower than the N285.35 million recorded in 2019.

In the first half of this year, profit after tax was put at N61.61 million. This was a 43.8 percent difference from the N109.71 million reported between January and June 2020.

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