Notore Reports N34.81bn Cumulative Loss, As External Auditors Notes Existence Of Material Uncertainty

The board of Notore Chemical Industries Plc, on Saturday, presented its audited financials for the 15 months ended December 31, 2021, to the Nigerian Exchange Limited , with highlights including the slow growth in revenue, and drop in operating income, which among others resulted in a loss after tax, despite a tax rebate of N10.162bn, up from N7.525bn in the corresponding period of 2020.

Apart from the recurrent losses, the external auditors-Deloitte & Touche, also drew attention to the group’s net current liabilities of N82.2bn, a significant jump over the previous year’s N29.95bn, which among others “indicate that a material uncertainty exists that may cast significant doubt on the group and company’s ability to continue as a going concern.”

The group also reported accumulated losses amounted to N34.816bn from N29.125bn, when the loss for the period was added to the outstanding N29.125bn, up from N25.898bn; after the “revaluation reserve released on depreciation of revalued PPE” rose from N3.43bn from N3.837bn.

According to the audited financials, revenue for the 15-month period rose by N6.907bn, or 36.74% from N18.799bn in the 12 months ended September 30, 2020, to N25.706bn; while the cost of sales jumped from N21.678bn to N28.975bn, representing a N7.296bn or 33.66%, leaving a gross loss of N3.269bn, up from N2.879bn as of September-end 2020.

Administrative expenses increased to N6.936bn, from N5.923bn, boosted by the N3.491bn employee benefits expense that rose from N2.715bn in the 12-month ended September 30, 2020; decrease in loss allowance stood at N40.185m, compared to the previous N92.437m increase in 2020; selling and distribution expenses dropped marginally from N293.696m to N272.047m; other income fell from N18.675bn to N17.126bn; resulting in a fall in operating income from N12.365bn to N9.957bn.

Finance income (interest income on short-term bank deposits) dropped to N388m from N1.074bn; finance cost however climbed higher to N26.427bn from N23.409bn, buoyed by the interest and fees on borrowings of N20.486bn from N15.663bn, and exchange difference on bank borrowings which fell from N7.724bn to N5.93bn.

The exchange difference, the company explained in the notes, “relates to exchange loss suffered on restatement of Dollar-denominated loan as a result of Naira devaluation by the Central Bank of Nigeria from N360/$ to N380/$ during the year ended 30 September 2020 and restated in December 2021 to N435/$ resulting in net finance costs of N26.426bn, from N23.408bn. Loss before income tax, therefore, soared from N13.922bn to N19.738bn; while income tax rebate left loss after tax for the period at N9.576bn, up by N3.179bn or 49.7%, translated to Loss Per Share of N5.94, up from N3.97 each.

The tax rebate resulted from the deferred tax credit of N10.411bn for the period, from N9.215bn, arising from its free zone developer status as granted by the Oil and Gas Free Zones Authority, added to the obtaining annual Free Zone Enterprise License, which exempts it from all Federal States and Local Governments taxes, levies and rates.

The group’s net loss of ₦9.6bn during the period ended December 31, 2021, and the net current liabilities as of that date at ₦82.2bn, the company explained indicate that a material uncertainty exists that may cast doubt on the group’s “ability to continue as a going concern as to be able to realize their assets and discharge their liabilities in the normal course of business.”