Cadbury Nigeria Plc released its much-anticipated 2015 Full Year results revealing a profit after tax of N1.1 billion compared to the N2.1 billion declared a year earlier. Here are the highlights of the results
Revenue
- One of Cadbury’s biggest challenges is its dwindling revenues. Revenue decline continued this quarter due to a combination of competition for its major products as well as the widespread reduction in consumer spending.
- Cadbury’s combined revenue of about N27.8 billion (2014: N30.5 billion) is much lower than its 2013 high of N35.7 billion.
- Revenue for 2016 Q1 is currently up 5.9% to N7.1 billion.
Account Restatement
- Cadbury restated its 2014 income statement resulting in a profit of N2.1 billion compared to the N1.5 billion it reported in the year before.
- According to the company, it had to restate profits due to a change in its management and technical fees (for 2013-2015) following the approval of the rates by NOTAP. According to the company, the approval which was retroactive meant that they overpaid for the fees and as such had to write part of the fees expensed back to profits. The result is as savings f about N453.3 million and N465.2 in Royalty & Technical Fees and Management Fees respectively. Whilst this will not result in any cash refund, Cadbury does reduce its payable of about N918.5 million which may have been paid to its Parent company
- The management and technical fees are paid to its Parent Company Cadbury UK and Mondelez (owners of Cadbury UK).
Notap Approval
- NOTAP approved a technology fee of 0.5% of Net Sales not exceeding N436 million to be paid to Cadbury UK and Trebor Basset UK. The certificate is valid for the period January 2015 to March 2016 and as such it is expired.
- A “Technical knowhow and Management Service Fee” of N1.5% of Net Sales and 2% of PBT not exceeding N1.5 billion will be paid to its parent company Mondelez. This is also valid for the period January 2015 to March 2016
- Cadbury did not provide details explaining of an application for a renewal has been made. It did however, confirm it had agreed with the Financial Reporting Council of Nigeria that it will not accrue any of the fees till it obtains approvals from NOTAP.
Dividend
- Despite the string of poor results, Cadbury still declared dividend per share of about 65 kobo compared to N1.3 declared in 2014.
- This represents a dividend payout decline of about 50%
- Total dividend that will be paid will therefore be N1.2 billion. It currently has a cash balance of about N6.1 billion (as at Q1 2016)
Advertising and promotional expenses
- Cadbury spent about N4.9 billion (2014: N4.2 billion) on advertising and promotional expenses as it strived to maintain market leadership for some of its products.
- Cadbury spent about N5.1 billion on advertising expenses in 2013 leading a revenue of about N35.7 billion (its highest since we started tracking from 2012).
- A significant advertising spend suggest the company is serious about fighting competition and defending market share as it as consistently lost ground since 2013.
- This could be significant in the profitability outlook for the company.