By Dipo Olowookere
It was a disappointing year for one of the leading conglomerates in the country, UAC of Nigeria Plc, going by its financial statements for the year ended December 31, 2018.
The numbers churned out by the company at the weekend showed that things went south during the year.
For instance, the revenue generated by the firm dropped to N78.7 billion from N89.2 billion, while it recorded an operating loss of N5.3 billion compared with the operating profit of N7 billion in the previous fiscal year.
However, the cost of sales was pruned to N64.7 billion from N73.2 billion, while the selling and distribution expenses closed higher to N4.8 billion from N4.6 billion, with the administrative expenses rising slightly to N7.099 billion from N7.086 billion.
Though the finance income rose to N3 billion from N1.9 billion, the finance cost dropped to N5 billion from N6.2 billion.
In the year, UAC of Nigeria suffered a loss before tax of N5.5 billion against the profit before tax of N3.3 billion in 2017, while it recorded a loss after tax of N9.5 billion in contrast to the profit after tax of N1.3 billion a year earlier, with the earnings per share closing at -N2.11k in 2018 against 50 kobo of the previous year.
Business Post, in an analysis of the independent auditor’s report filed by Ernst & Young, gathered that one of the subsidiaries of UAC of Nigeria, UACN Property Development Company Plc, has huge intercompany receivables from its related parties majorly from joint ventures and subsidiary amounting to N3.11 billion versus N428 million in 2017.
“The joint ventures and subsidiary have been operating at a loss, have going concern issues, negative equity and liquidity issues; there are uncertainties around the ability of the subsidiary and joint ventures to generate cash flows to fully repay its indebtedness.
“The joint venture in question, First Festival Mall Limited, from whom N2.5 billion is receivable, has been fully written off and investment of N234 million has also been written off.
“An impairment assessment was performed on receivable due from joint ventures and subsidiary using the expected credit loss approach carried out by an external consultant to determine the recoverable amount. This led to the recognition of a total impairment loss and write off of N9.64 billion during the year.
“We consider this a key audit matter due to the significance of the amount and the complexity of the impairment assessment which involves management judgement on the recoverable amount,” the auditor said in its report.
Meanwhile, amid the issues and disappointing results, the board of UAC of Nigeria has recommended the payment of 64 Kobo as dividend for 2018 fiscal year.
