VFD Group Posts N1.02 billion Pretax Loss in 2023
VFD Group Plc recorded N1.021 billion loss before tax in financial year 2023 due to sharp decline in net investment income and other income line, details from its financial statement for 2023 revealed.
Its audited financial report submitted to the Nigerian Exchange showed that gross earnings rose significantly to N45.113 billion in 2023, representing a 33% year on year growth above N34.025 billion recorded in 2022.
However, its steep costs profile, monetary loss from its subsidiary in Ghana, including surge in operating expenses, eclipsed what would have been a better year on year earnings performance.
“The application of IAS 29 resulted in the recognition of a net monetary loss of N241.6 million in the consolidated statements of profit or loss and other comprehensive income”, PWC, its auditor said in the report.
Figure from the audited financials showed that net investment income plunged to N1.528 billion, representing more than 83% year on year decline from N8.160 billion in 2022. The contraction was attributed to spike in investment and similar expenses. Details analysis of the figure showed that in 2023, investment and similar expenses grew by more than 67% year on year to N34.283 billion from N20.468 billion in 2022.
On the other hand, investment and similar expenses accelerated faster, up by 166% year on year to N32.754 billion from N12.3027 billion in the comparable year. The component of the group investment and similar expenses recorded significant increase year on year individually. Fixed debt takings rose to N28.818 billion in 2023 from N9.048 billion in 2022.
The group also double down on its borrowings, up from N349.472 million in 2022 to N1.514 million in 2023. The figure revealed that the group’s costs of sales grew to N6.116 billion in 2023 from N1.646 billion 12 months earlier.
The group reported that operating expense rose to N1.304 billion from N860.86 million in 2022. At the same time, the company reported that its other income line item declined sharply due to hyperinflation treatment of activities of its subsidiary in Ghana.
Details from audited report showed that other income dropped by about 36% year on year to N6.757 billion from N10.502 billion in the previous year. The contraction was driven by net monetary loss arising from hyperinflationary economy is with respect to the re-measurement of monetary items in VFD Ghana Limited following the designation of Ghana as a hyperinflationary economy, according to the audited financials.
As a result of the tough operating environment, VFD group saw a 36 % decline in its net revenue which printed at N11.812 billion in 2023 from N18.354 billion in the comparable year 2022. >>> Financial Reporting in Hyper-Inflationary Condition Delays VFD Audited Report
Total operating expenses climbed to N13.208 billion, an increase of 30.68% above N10.107 billion expended in 2022. With more than N375 million share of profit from associates, pressures on bottom line eased miniscule. Its pretax loss printed at N1.02 billion versus about N8.6 billion posted in 2022.
The company recorded N750.441 million as net loss in 2023, a sharp decline from profit after tax of N6.835 billion reported in 2022. VFD said in its note that hyperinflationary accounting is applied to those subsidiary operations in countries where the three-year cumulative inflation rate is approaching or exceeding 100%. In 2023, this affected the Group’s operations in Ghana.
