In what may be a call for strategic thinking that could reposition the company to take advantage of its location for increased market share, leading to more robust revenue that would enable it return to profit, auditors of Northern Nigerian Flour Mills Plc have called the attention of stakeholders, including the management, to the third consecutive annual loss before and after tax.
As a result, the company, which is into milling of wheat, maize and other grains and 53% owned by Flour Mills of Nigeria and 47% by Nigerian individuals and institutions, has been unable to propose a dividend to shareholders at the annual general. Besides Flour Mills, other significant shareholders, according to the audited financials, are: Northern Nigeria Investment Limited, 7.27%; and Dantata Investment & Securities Limited, 5.55%.
Their reported attached to the financials for full year ended March 31, 2018, the joint auditors’, KPMG Professional Services and Ahmed Zakari & Co, noted the three-year losses due to the decline in revenue, which they noted, has significantly eroded the company’s net assets.
In what may be a subtle call for recapitalization of Northern Nigeria Flour Mills, the auditors said: “These factors are indicators of impairment of the company’s property, plant and equipment which represents the cash generating unit for the company’s revenue.”
A look at the financials submitted to the Nigerian Stock Exchange (NSE) on Saturday, June 30, 2018, showed that sales revenue (though below capacity) grew by a relatively robust N1.531bn or 114.59% from N1.33bn in 2017 to N2.861bn. Cost of sales however rose by an equally significant N1.156bn, or 116.46% to N2.149bn, from N993.072m in the corresponding full year of 2017. This was driven mainly by the N1.668bn spent on raw materials consumed, up from N684.584m.
Gross profit rose to N713.131bn, from N337.464m, an increase of about N374.667m or 111.02%.
Other income jumped to N90.522m from N40.969m, selling and distribution expenses was slashed from N50.084m to N15.86m; while administrative expenses increased to N438.414m from N321.791m, resulting in operating profit of N348.379m, compared to the N6.556m in the corresponding period of last year.
Finance income rose slightly to N27.278m from N23.983m, while cost soared by N447.679m or 1,401.53% from N31.942m; which threw the company into a bigger loss before tax position than previous year at N103.964m, from just N1.403m. A tax rebate of N52.199m, compared to the tax expense of N9.264m in 2017, resulted in loss for the year of N60.988m, up from N18.042m.
Other comprehensive loss for the year at N4.328m, as against a previous income of N6.683m left total comprehensive loss for the year at N65.316m, up from the N11.359m reported in 2017, translating to loss per share of 34 kobo, compared to 10 kobo.
