Food and Beverage company, Cadbury Nigeria Plc confirmed it took an intercompany loan of $15 million from its parent company Cadbury y Schweppes Overseas Limited.
The company disclosed this in its 2021 audited financial statement published on the website of the Nigerian Exchange.
The loan increased Cadbury’s total borrowing to about N10.4 billion up from just N3.45 billion a year earlier. The loan was obtained in the third quarter of 2021.
The Company is a subsidiary of Mondelēz International incorporated in the United States of America. Mondelēz International, through Cadbury Schweppes Overseas Limited, holds 74.97% of the issued and fully paid share capital of the company.
Cadbury Nigeria also reported the amount due to Cadbury Schweppes Overseas Ltd at the end of the period was N867.1 million for 2019 and 2020 Dividend (2020: N632.6 million for 2019 dividend).
What the loan is for
- A cursory review of the cash flow statement of the company reveals the company is yet to utilize the proceeds of the loan as its net cash balance was N17.8 billion at the end of the year.
- However, we suspect the loan will probably be used to pay back its related party loans which includes a $22 million syndicated loan from two local banks that cost Libor +6% and Libor+ 7% respectively.
- Cadbury also has about N2.2 billion in related-party loans from another of its sister company Cadbury Enterprises Pte Ltd (Singapore).
- Despite the increase in loans, the company had a net finance income of N606.4 million in 2021. It is unlikely that it will be able to maintain a net finance income this year.
- Cadbury’s 2021 results saw a drop in profit after tax going from N868 million in 2020 to N449 million in 2021.
- Cadbury has found it difficult to maintain consistent profits over the years. It also declared a dividend of N940.5 million this year (50 kobo per share compared to 18 kobo per share the year before.
- The share price closed at N9 per share.