FTN Cocoa Processors Plc (NSE – FTNCOCOA) has finally released its financial statements for the first quarter of 2020 (January to March), to the Nigerian Stock Exchange (NSE) and the investing public.
Similar to Q1 2019, the company reported a loss for the first quarter of the year. A review of the balance sheet showed that FTN Cocoa remained technically insolvent, as the total value of its liabilities exceeds total asset values.
The total revenue declined by 30.8% to N136.01 million from N196.54 million reported in Q1 2019.
Notably, FTN Cocoa’s cost of sales alone in Q1 2020 (N198.54 million) was more than its total revenue. The cost of sales represents 145.98% of the revenue. This was the same scenario in Q1 2019 – 155% of revenue.
Thus, the company reported a gross loss of N62.54 million in Q1 2020.
The company recorded a loss before and after taxation on N78.08 million. This represents a 36.4% improvement from the loss of N122.75 million in the same period in 2019. The loss per share settled at minus 3.6 kobo.
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The total assets dropped by 1.7% to N4.57 billion as at 31 March 2020 from N4.65 billion as at 31 December 2019.
The total liability remained relatively flat at N5.413 billion with just a decline of N285,000.
The company maintains negative equity of minus N842.85 million.
The value of the total liabilities of FTN Cocoa is more than its total assets, thus the company is technically insolvent also referred to as Accounting Insolvency.
Accounting Insolvency is a situation where the value of a company’s liabilities is more than the value of its total assets, thus resulting in negative net worth.
Although Accounting Insolvency differs from actual insolvency (when a company can no longer meet its financial obligations), if it persists, creditors and lenders might force the company to liquidate its assets or declare bankruptcy.
During the period under review, FTN Cocoa downsized to 73 employees from 112 employees it held as at 31 December 2019.
FTN Cocoa maintained a weak cash flow during the period in review, as the cash and cash equivalents at the end of the period declined to N5.08 million from N40.16 million in 2019 Q1. The company was able to generate N8.27 million from its operating activities while N10.17 million was used in financing activities.
On the other hand, the company did engage in any investing activities with the period according to its statement of cash flow.
Equity price movement
FTN Cocoa Processors Plc’s share price changed on the floor of the NSE for the first time in more than two years on Wednesday 26 August 2020 when it moved from 20 kobo per share to 22 kobo per share.
On 31 August 2020, the equity price reached a two-year peak of 26 kobo per share. However, trading was suspended on the shares due to the company’s non-compliance with NSE rules, regarding the release of financial statements.
About FTN Cocoa
FTN Cocoa Processors Plc was incorporated on 26 August 1991 in Nigeria as a private company limited by shares under the name Fantastic Abiola Nigeria Limited which later became Fantastic Traders Nigeria Limited on 26 August 1998.
The company became a public limited liability company on 29 February 2008 and got listed on the Nigeria Stock Exchange.
The principal activities of the company are the processing of cocoa beans and palm kernel into a cocoa cake, liquor, butter, palm kernel oil, and palm kernel cake for export and sales to local manufacturing companies.
By; Ifunanya Ikueze