LA FARGE AFRICA'S NIGHTMARE CALLED 2016

For veteran cement manufacturer, LA Farge Africa PLC, financial year 2016 was indeed a nightmare but happily, it found a strange good Samaritan in the tax collector.

The bare fact was this: According to audited report for the year released recently, La Farge almost made as much loss in 2016 as it made as profit before tax in 2015.

It was like leaping from a height of N29286.8m profit in 2015 to a sudden pit of N22818.7m loss in 2016. Within  12 months!.

The audited report reveal so many trying developments like 16.1% decrease in total income to N227232.6m as core revenue dropped by 17.8% to N219,714.1m; other operating income grew by only 1.26% to N3842.2m leaving finance income's 44.9% increase alone to raise hopes.

Even then, the raised hopes were dashed almost imnediately because despite the decline in core revenue, associated cost of sale rose by 15.8% to N179052.4m.

This resulted in 50.3% dive in gross profit to N40661.7m. Hence, even though administration cost was depressed by 0.81% to N26806.1m, the 14.3% increase in selling and distribution expenses to N3926.7m; 67.3% hike in other operating costs to N24747.5m and only 1.26% rise in other operating income, was too much.

Thus, La Farge Africa landed squarely in N10978.4m operating loss compared to N38040.8m operating profit in 2015.

Yet the nightmare continued. For one, investment income reduced by 59.6% to N1.07m; and finance cost grew by 44.9% to N15504.1m thus absorbing the little relief offered by 88.5% increase in finance income to N3675.2m.

With share of assoiated companies loss rising to N12.6m from N4.81m in 2015, the leap into the loss pit from the previous year height was inevitable.

How do you then take such a huge hole in the pocket in your stride and hope for better 2017? This was when the tax collector offered N39717.5m tax credit thus turning a huge loss into N16898.8m profit in one stroke of goodwill.

In the end, when you later add paper profits like forex difference (N1494.6m) and other net gains and losses, La Farge Africa ended with N18,553.3m comprehensive profit, just slightly higher than 2015's N18,377.7m after the same good samaritan took its pound of flesh then.

Now lets see what 2017 has in store.

LA FARGE AFRICA: Nbn Full year
                              2016.          2015
Total income.  227232.6. 270888.2
Core revenue   219714.1. 267234.2
Cost of sale.    179052.4. 154688.9
Gross profit.       40661.7.   82645.3
Selling& Distr.      3926.7.     4482.8
Administration  26806.1.  27026.2
Other op. Cost  24747.5.   14796.7
Other op. Income 3842.2.  4482.8
Operating profit(10978.4) 38040.8
Investment income  1.07.       2.65
Finance income   3675.2.   1950.1
Finance cost.       15504.1 10702.0
Share of ass.loss (12.6).     (4.81)
Profit b4 tax     (22818.7)  29286.8
Tax.                     39717.5.   (2123.9)
Profit after tax  16,898.8. 27,163.0

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