KUALA LUMPUR, March 7 — Leading regional agricultural and industrial chemicals manufacturer and supplier Ancom Berhad has today proposed to distribute dividend-in-specie worth RM18.4 million ordinary shares of its subsidiary Nylex (Malaysia) Berhad.

The proposed dividends will be on the basis of one Nylex share for every 20 ordinary Ancom shares held while the proposed share split involves the subdivision of every Ancom share into three Ancom shares.

“The development at Ancom has been very encouraging with progress moving along very well for us on multiple fronts,” group chief executive Lee Cheun Wei said in a statement.

“Operationally, we are catching tailwinds in both our core chemical segments on the back of new products, favourable regulatory shifts, and higher commodity prices.”

“On the corporate side, we recently concluded the acquisition of Nylex’s businesses, giving us full control of the industrial chemicals arm. In line with these positive developments, we have decided to pay out dividend-in-specie to our shareholders, giving them an opportunity to benefit from the future of Nylex as and when it acquires a new venture.

“The gesture is our way of thanking them for their unwavering support throughout the years,” he added.

A dividend-in-specie refers to distribution to shareholders in a form other than cash.

In June 2021, Ancom announced its purchase of Nylex for RM179.3 million.

The deal was finalised on January 26, 2022 to be satisfied with a combination of new issuance of 31.1 million new Ancom shares set to be listed on March 24, 2022. This will bring the total outstanding shares of Ancom to 284.6 million.

For the proposed dividend-in-specie, Ancom will distribute 14.2 million Nylex shares under the minimum scenario, and up to 18.4 million Nylex shares under the maximum scenario.

The former currently holds a 50.3 per cent stake in Nylex, which is equivalent to 90.1 million Nylex shares.

“The Proposed Share Split, on the other hand, may result in improved trading liquidity of Ancom and potentially lowering the price volatility of our stock by increasing the number of shares.

“On top of that, the relative affordability per unit after the split could induce greater participation of a wider range of shareholders and investors as well,” said Lee.

The proposed share split will increase Ancom’s share capital by a minimum of RM881.4 million shares and a maximum of 1.10 billion shares.

In January this year, Ancom reported its highest-ever results for the first half of its 2022 financial year (1HFY22) by doubling its net profit from the same period last year.

It reported a net profit of RM21.1 million for the period between June to November 30, 2021, over twice the net profit of RM9.2 million Ancom recorded during the first half of its 2021 financial year. Net profit refers to the profit after tax and non-controlling interest.

“We are confident of our future that is augmented by the consolidation of Nylex

businesses, alongside expansion plans in motion that include the recent acquisition of a livestock chemicals company and the imminent completion of the new manufacturing plant for agricultural chemicals.

“Recent geopolitical events have also driven industrial chemicals prices higher, benefiting large distributors like us.

“On the whole, we expect further breakthroughs in our financial performance premised on the aforementioned factors, which also mean greater value creation for our shareholders,” Lee concluded.

The proposals are expected to be completed by the second quarter of this year.