Vitafoam Nigeria Plc has shown an impressive performance in its last financial year, a development that suggests that the company has in spite of daunting economic environment can weather the storm. But the company may have to explore every possible means to sustain the growth level or else lose the confidence of its shareholders, writes Akinola Ajibade.

Describing the developments in the Nigeria’s real sector in the last two or three years as bad and not encouraging is simply saying the obvious. Many companies were groaning under the burden of taxation, acute power shortage and a slightly improved foreign exchange system made possible by the reforms in the financial sector. Vitafoam Nigeria Plc is one of such companies. The company’s Chairman, Chief Sam Bolarinde alluded to this fact as he argued that the 2007 financial year was more challenging.

Specifically referring to the foam manufacturers, Bolarinde during Vitafoam’s annual general meeting (AGM) recently in Lagos said that they are affected by the substantial rise in the cost of the major inputs into foam productions. However, the company has braced all odds as revealed by its financials. Vitafoam in the financial year ended September 30th, 2007 recorded a turnover of N6.15billion compared with N4.06billion in 2006.Profit after tax increased from N302.56million to N652.28million while the company performance is expected to improve further due to ongoing replacement of its aged plant and machinery.

As part of efforts to build on its achievements, Vitafoam has put in place programmes to consolidate its investments. While the company, according to Bolarinde is making efforts to revive Nipol Limited, a plastic company in Ibadan, it has at the same time invested in equities in several banks. Vitafoam has bought One million units of Union Bank shares at N20.00 per share and One million units of Zenith Bank shares at N16.90 per share respectively. The investments have since grown considerably with the value of both stocks standing at N40.7million each.

The company has also paid for two million shares of First Bank at N33 per share, One million shares of Access Bank at N14.90 per share and two million shares of Oceanic Bank at N16.50 per share.
Also, Vitafoam bought 10million units of Unico CPFA Limited at N1.00 per share. Altogether, the company has invested over N150million on stocks, hoping to become a good source of generating revenue in the nearest future.

Having achieved these feats, Vitafoam is working hard to consolidate its core business. The company as revealed by its 2007 financial reports is using research and development as a tool to achieve better results. The efforts have paid off as the company developed technical products for the constructions and oil and gas industries. In addition, the company has developed several products to complement its core lines.

Shareholdings capacity is one area that Vitafoam is leveraging on to achieve success. The company’s shareholding is 819million while shareholders are 27,721.The shareholders cut across corporate, staff and individuals. Out of this figure, individuals hold the largest percentage. The company boasts of 26,457 individual shareholders accounting for 95.44 per cent.

The huge number of individual investors, industry observers argued has twin objectives of increasing the company’s capital base and at the same time helping Vitafoam to achieve its marketing objectives. Still on investors, Vitafoam has achieved capital appreciation in the last one year. It has recorded about 400 per cent increase within a year. The stock’s value hovers between N13.00 to N14.00 as against N3.00 last year.
While speaking on the stock growth, Dr Dele Makanjuola, Vitafoam’s Managing Director said that the surge in investor’s confidence and the uniqueness of the brands largely responsible for this.

However, the shareholders like proverbial Oliver twist, are asking for more. Specifically, they are requesting for scrip bonus that they claimed has always being paid by the company every three years. Reacting to this development, Bolarinde said the company is not mandated to declare share bonus all the time.
Said he: share bonus is not a traditional thing as the decision to give share bonus lies with the boards of directors. Pressed further to know whether the company is paying dividend next year, Bolarinde response was more political saying that it would be very soon. However, that is not to say that the company is not having certain challenges to contend with. The issue of corporate governance is of great concern to shareholders who argued that the company has not been complying with 21 days notice in which a company must have sent its notice of annual general meeting to shareholders.

They argued that the company has failed in this regard as it sent notice of meeting few days to the scheduled date, to which the management immediately agreed. Another issue is the payment of dividends. Accusations were levelled against the management that it pays dividends weeks after the annual meeting.

Though, the company has promised to look into issues raised in order to ensure that the company achieves its set objective. But the major hurdle to cross as stated in the 2007 reports is the issue of getting new technical partners. The agreement between Vitafoam and Vita International Limited has expired on September 30,2007 which means that Vitafoam has since the last quarter of 2007 has not been receiving any technical assistance. then the question is when will the search for a technical partner end?