One of Nigeria’s oldest cocoa companies, FTN Cocoa Processors, recorded zero earnings in 2023 due to its inability to engage in production because of working capital adequacy concerns.
This was indicated in its financial statements for the year ended December 2023 filed with the Nigerian Exchange Limited recently.
The report showed that the firm suffered a 100 per cent decline in revenue in 2023 compared to revenue of N62.19m it earned in 2022.
The report stated, “The company has not been producing due to the lingering working capital inadequacy. This impacted on the gross margin as a result of huge fixed cost that has to be borne.”
Despite the zero production and revenue, the cost of sales stood at N200.49m, operating expenses rose to N284.48m and exchange loss ballooned to N7.76bn from N13.30m in 2022.
Finance cost added an extra deduction of N105.80m and brought the loss declared by the firm to N8.13bn compared to N431.19m in 2022.
In contrast, the firm’s total assets rose by 82.86 per cent to N13.31bn from N7.28bn, while total liabilities increased by 106.77 per cent to N18.26bn.
To resolve its working capital challenges, FTN Cocoa said that it obtained a short-term loan facility from Zedcrest Capital Limited to meet some of its urgent needs.
It also revealed that its core investor OH Ecosystem was investing in the company.
“Factory facelift is ongoing alongside import of spare parts in preparation for commencement of operating activities,” it explained.
The cocoa processor announced in June 2023 that its stakeholders had resolved and given approval for the company to obtain a convertible loan of $6.35m from OH Ecosystems LLC.
The notice FTN Cocoa filed with the NGX then partly read, “That the company be and is hereby authorised to provide security in favour of Norwegian Investment Fund for Developing Countries and OH Eco in accordance with the terms of the relevant security documents;
“That pursuant to the company’s Articles of Association, the Directors having recommended, be and are hereby authorised to raise such additional amount considered necessary for the business operations/working capital requirement of the company in any way thought fit and subject to the approval of relevant regulatory authorities and on such conditions/terms as the directors may determine.”
Meanwhile, the firm issued an 18-year bond in 2008 due in 2026 to Daewoo Securities (Europe) with an option to convert the bond into ordinary shares of FTN Cocoa Processors at maturity.
The proceeds from the bond issue received in 2009 were used for the initial expansion of the company, the firm said.
