In a recent announcement, FTN Cocoa Processors, one of Nigeria’s long-standing cocoa companies, disclosed its financial statements for the year ended December 2023.
The company reported zero earnings for the year, primarily due to challenges with working capital adequacy, which hindered its production activities.
Compared to the previous year’s revenue of N62.19 million, FTN Cocoa Processors experienced a significant decline in revenue, marking a 100 percent decrease in earnings for 2023. The financial report cited the ongoing working capital inadequacy as the primary reason for the company’s inability to engage in production, adversely impacting its gross margin due to substantial fixed costs that needed to be borne.
Despite the absence of production and revenue, the cost of sales amounted to N200.49 million, and operating expenses rose to N284.48 million. Additionally, the company faced an exchange loss of N7.76 billion in 2023, a significant increase from N13.30 million in the previous year. Moreover, finance costs incurred an additional deduction of N105.80 million, resulting in a reported loss of N8.13 billion for the year, compared to N431.19 million in 2022.
However, there were positive developments in terms of the company’s total assets and liabilities. FTN Cocoa Processors witnessed an 82.86 percent increase in total assets, amounting to N13.31 billion, up from N7.28 billion. Simultaneously, total liabilities rose by 106.77 percent, reaching N18.26 billion.
To address the pressing working capital challenges, FTN Cocoa Processors secured a short-term loan facility from Zedcrest Capital Limited, enabling the company to meet some of its immediate financial needs. Additionally, the company’s core investor, OH Ecosystem, expressed commitment by investing in FTN Cocoa Processors. The company also stated that it is currently undergoing a factory facelift, importing spare parts in preparation for the resumption of operating activities.
In June 2023, FTN Cocoa Processors announced that its stakeholders had approved the company’s plan to obtain a $6.35 million convertible loan from OH Ecosystems LLC. This move aimed to bolster the company’s financial position and support its business operations and working capital requirements. The company further disclosed that it had received authorization to provide security to Norwegian Investment Fund for Developing Countries and OH Eco, in line with the terms outlined in the relevant security documents. The directors were also empowered to raise additional funds as deemed necessary, subject to the approval of regulatory authorities and specific conditions determined by the board.
Furthermore, it is worth noting that in 2008, FTN Cocoa Processors issued an 18-year bond, maturing in 2026, to Daewoo Securities (Europe). This bond includes an option for conversion into ordinary shares of FTN Cocoa Processors upon maturity, providing potential flexibility for the company’s capital structure.
FTN Cocoa Processors continues to navigate its financial challenges and work towards revitalizing its production capabilities. The company remains determined to restore its position in the cocoa industry while leveraging the support of its stakeholders and investors to ensure future success.
Source: The Punch