November 8, 2024
Fixed Assets

Nestle Nigeria revalues fixed assets to fix negative shareholders funds


Nestlé Nigeria PLC has announced a strategic revaluation of its fixed assets, a decision spurred by the company’s FY 2023 financial results which reported a substantial loss, erasing shareholders’ funds by N78 billion.

Nairametrics earlier reported Nestle recorded a loss before tax of N104 billion for the year ended 2023 compared to a profit before tax of N71 billion same period in 2022.

The losses were largely due to a foreign exchange loss of N195 billion which was the major reason for the overall loss reported by the company. The company however, stated that “94%” of the fx losses were “unrealized” and as the company still had strong fundamentals.

Recommended reading: Nestle Nigeria reports N104 billion loss in 2023, shareholders funds wiped out

What Nestle is saying

According to Nestle, this revaluation aims to provide a more accurate representation of the company’s financial health and asset value.

  • The company’s board disclosed that its property, plant, and equipment (PPE), previously recorded at historical costs, will now reflect their fair market value.
  • Historically, these assets were listed at cost less accumulated depreciation and impairment losses.
  • Nestlé Nigeria stated that despite stating its assets at cost, it has heavily invested in enhancing its manufacturing and distribution facilities over the past five years, more than doubling the net book value of its PPE from N73.3 billion in 2018 to N165.4 billion by the end of 2023.
  • It also claimed that the investments, accelerated by the addition of new capacities and the integration of advanced technologies, necessitated a revaluation to align with current market conditions and the increased foreign obligations on the liabilities side.

How they revalued the assets

Nestle stated that an independent valuation was conducted by the certified firm of valuers, M/s Niyi Fatokun & Co.

  • The evaluation covered key facilities including the Agbara Factory in Agbara, the Flowergate Factory in Sagamu, the Abaii Factory in Abuja, and distribution centers in Agbara and Ota.
  • The valuation, which assessed the market value of land, buildings, and plant and machinery as of March 16, 2024, concluded a total market value of N305.4 billion, a significant increase from the previous carrying values recorded at the end of 2023 and February 2024.

The comparative figures outlined in the report showed a drastic increment in market values:

  • Land: From N1.2 billion to N14.8 billion
  • Buildings: From N28.5 billion to N51.3 billion
  • Plant and Machinery: From N58.5 billion to N238.9 billion
  • Total Increase:From N88.3 billion to N305.4 billion



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