Northern Nigeria Flour Mills Plc has released its financial statement for the year ended March 31, 2017, closing on a negative note with a loss after tax of N16.2 million.
The loss was 91.8 percent lower than N197.2 million declared as loss in 2016.
Even though the wheat and maize miller declared a profit before tax of N405,000 for the review period, as against a loss before tax of N233.11 million posted a year ago, a tax expense of N16.6 million further deteriorated the company’s bottom line.
During the year, the firm posted a revenue of N940.5 million compared to N979.0 million achieved in the previous year. The company’s operating profit stood at N8.4 million compared with a loss of N280.5 million posted a year ago, while revenue earned from investment depreciated to N24 million from N45.4 million recorded in 2016.
Despite the loss making situation, the company’s independent joint auditors said in their report that “there is no material uncertainty on the ability of the flour milling company to continue as a going concern.”
The auditors noted that “Other operating income during the period under review was the intra-group subsidy of N390 million. The parent Company (Flour Mills of Nigeria Plc) pays a subsidy for every metric tonne of sales volume short of 50,000 metric tonnes.”
In the current year, it was disclosed that the parent firm approved to increase in the subsidy from N5,000 per metric tonne to N9,000 per metric tonne.
In the past two years, the company recorded total comprehensive loss of N11.359 million (2016: N175.67 million), which were cushioned by the intra-group subsidy provided by the parent company. With the exclusion of the intra-group subsidy, the total comprehensive loss for the year would have been N401.37 million (2016: N377.13 million), which is a potential threat to the going concern of the entity.
An evaluation of the company’s management strategies and plans to revive the company hinges strongly on diversification of operations to include sorghum production.
The auditors confirmed the implementation of management’s plan to diversify into sorghum by inspecting the upgrade being made to the D-Mill and assessing the viability by confirming the existence of adequate demand for the product, also checking that sales of the product to the parent company is on a sustainable basis.
It was disclosed that the company received the strong support of its parent company to aid its recovery plan. During the year, the parent company provided a working capital loan of N800 million and a capital project loan of N1.4 billion to support the financing of the company’s sorghum mill project.
As at March 31, 2016, the company said its Total Assets improved by 152 percent from N1.7 billion to N4.3 billion as liabilities grew to N3.1 billion from N488 million in 2016.
The company also confirmed that had upgraded its D-Mill plant, projecting it to be a major source of revenue in the next financial year.
The plant which had been idle due to the suspension of wheat production in 2015 incurred significant costs on its redesign and upgrade to enable the milling of sorghum.
The Directors of the company said that the plant will be commissioned and capitalized this month.