Arbico reports 22% decline in profit to N413m
By Kayode Tokede
Arbico Plc has reported about 22 per cent in profit to N413.8million in 2020 from N527.62million reported in 2019.
With about N642.23million operating income in 2020 from N57.6million reported in 2019, the company’s profit before tax moved from N74.19 million in 2019 to N644.9 million in 2020.
The company in its audited result and accounts for full year ended December 31, 2020 on the Nigerian Stock Exchange (NSE) reported 8.5 per cent decline in revenue to N5.56billion in 2020 from N6.08billion in 2019.
In the year under review, Arbico’s total assets grew by six per cent to N8.24billion from N7.77billion reported in 2019.
The company’s external auditor, Ernest & Young in a report stated that, “At the reporting date, the Group had contract assets of N2.569 billion (2019: N3.936 billion) and trade receivables of N2.336 billion (2019: N2.307 billion) which was the most significant asset of the group as at year end.
“Provisions for impairment was N1.305 billion (2019: N1.100 billion) on contract assets and Nil (2019: N1.075 billion) on trade receivables. The construction industry continues to be impacted by certain macroeconomic challenges hence the Group experienced uncertainty over the collectability of contract asset and contract receivables from customers.
“An impairment assessment was performed on contract asset and contract receivables using the expected credit loss approach to determine the recoverable amount. The determination of the expected credit loss involves management judgement on historical payment pattern, age analysis of the balance and any other information.
“For the year ended 31 December 2020, the group recognized revenue from construction works of N5.561 billion (2019: N6.080 billion).
“The recognition of revenue involves management estimate at the commencement of the contract and regular assessment of the progress of the construction works based on the percentage of completion.
“Also, due to the fact that most construction works take years to complete and there could be scope changes, disputes and claims, revenue recognized may be difficult to estimate.
“Due to the significant judgement involved in recognizing revenue, we have identified revenue recognition from construction works as a key audit matter.”
Arbico (the Group or the parent) was incorporated on 18 June 1958 in Nigeria and commenced business thereafter. The company’s shares were quoted on the Stock Exchange on November 30, 1978.
Its principal activities comprise construction and civil engineering as well as investment in and operation of infrastructure.
