Shareholders of Aluworks Limited has approved a resolution for the company to rasise US$10 million from a rights issue from to enable the company acquire a new Cold Mill for its operations.
The acquisition of an additional mill is in line with the company’s reolve to improve its maintenance culture where one mill can be maintained while the other is in use to ensure continous operation.
The Board Chairman of the Company, Mr Kwadwo Kwarteng prior to the adoption of the resolution explained that a second Cold Mill would increase operational capacity and stabilize production of the company.
“We trust you will support this resolution appropriately to bring your company back to cost- effectiveness,” he said.
The resolution he said was to authorise the Directors to accept this much needed finance arrangement in the form of a six year convertible bond and “a memoratium of two years while the new cold mill is being built, installed and commissioned has been agreed as part of this financing.
Shareholders at the Annual General Meeting also gave their consent for the directors to raise additional US$ 10million through a renounceable Rights Issue to enable them issue sufficient shares for the company.
The Chairman said to facilitate the intended rights issue, the company is seeking an approval of the resolution from shareholders to increase authorized shares from 300,000,000 ordinary shares to 1,000,000,000 ordinary shares.
Funds from the Right Issue according to Mr Kwarteng would be used to rehabilitate the existing Cold Mill to enhance production of other new aluminium products and to increase the working capital of the company to reduce dependence on high interest bank borrowing.
Presenting an overview of the company’s financial performance for 2011, he said the company was able to reduce their net losses significantly from GHC7,350,000 in 2010 to GHC 3,477,000 this year after charging financing expenses of GHC3,670,000.
This he said meant their net losses were reduced by 52 per cent compared to last year.
Mr Kwarteng added “although this is certainly an improvement over the previous year it was not what we had wished to achieve; our target was to make a profit in 2011 and not a loss.”
Recounting reasons for their loss, he said “we were confronted with the same problems of low volumes in production and sales during the year. Regrettably therefore, the Directors are not able to recommend the payment of dividends due to the losses in 2011 which have worsened the deficit balance in the Retained Earnings Account.
The performance of the company’s shares on the Ghana Stock Exchange he also explained has not been encouraging adding “despite the improving business trend the company’s share prices continue to be depressed.”
Their share price at the end of 2011 was GHC 0.13 from GHC 0.11at the beginning of the year but explained has fallen further as at the time of filing the report for the meeting.
“There is obviously a lag in information to the investing public required to change this low perception, which we expect will be reversed as the improved business trend becomes more evident in the next few months,” he said.
The Managing Director of the company, Mr E. Kwasi Okoh in his report said although 2011 was a difficult year for the company it made some inroads and was also optimistic that the company will achieve more profit this year.
He said, “Total production in 2011 amounted to 8,833 metric tonnes, compared with 4,948 metric tonnes produced in 2010. We believe that with prudent maintenance and repairs management we shall maintain sufficient capacity to buttress the growth over the next two years until the new proposed cold mill becomes available.”
With respect to its exports, he said “in 2011 we did even better exporting 3,852 metric tonnes and earning US$13.5 million adding our exports were into West Africa with most going into Nigeria.”
Challenges from the supply side during the 2011 financial year he explained made the company incur extra cost as they had to import raw materials at very high additional costs following the closure of VALCO, their main supplier during the year.
Demand he also said weakened considerably during the credit crunch and the ensuing recession adding “and had we had supply we would have had a hard time selling the goods anyway.”
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