Saturday, December 4, 2021

    At N464.35bn, MTN, NB, Dangote Cement May Exceed Trade & Other Receivables in 2021FY

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    Naija247news Editorial Team
    Naija247news is an investigative news platform that tracks news on Nigerian Economy, Business, Politics, Financial and Africa and Global Economy.

    On the heels of reporting N464.35billion trade and receivable in nine months ended September 30, 2021, the likes of MTN Nigeria Plc, Nigerian Breweries Plc, among other companies might exceed 2020 receivables in this year’s financial results.

    Trade and receivables are the amount owed to a business by its customers following the sale of goods or services on credit.

    THISDAY checks revealed that companies operating in the country have enhanced loan loss provision amid growing trade & receivables in the period under review.

    Specifically, MTN Nigeria in the period under review reported 92 per cent increase in Trade and other receivables to N97.62billion from N50.77billion reported in full year ended December 31, 2020.

    The primary contribution to the telecommunication giant’s trade and other receivables was N35.96billion “other non-financial receivables” in nine months of 2021 from N5.9billion reported in 2020.

    MTN Nigeria in its unaudited result and accounts to the Nigerian Exchange Limited (NGX) had explained that: “Other non-financial receivables includes the placement of minimum capital with Central Bank of Nigeria (CBN) for Payment Service Bank license and withholding tax receivables.”

    In the same vein, Dangote Cement closed nine months of 2021 with N52.19billion trade & other receivables, an increase of about 48 per cent from N35.19billion reported in 2020.

    The breakdown of Dangote Cement trade & other receivables revealed Value added tax receivables increase of about 97 per cent to N5.17billion in nine months of 2021 from N2.63billion reported in 2020, while “Other receivables” rose by 101 per cent to N30.85billion in nine months of 2021 from N15.3billion reported in 2020.

    The cement manufacturing company reported N226 million impairment of financial assets in the period under review as against N188 million reported in 2020.

    On the contrary, BUA Cement reported 33 per cent decline in trade & other receivable to N38.79billion in nine months of 2021 from N83.3billion reported in 2020, while Nigerian Breweries Plc closed nine months with 104.05 per cent increase in trade & other receivables to N23.3billion in nine months of 2021 from N11.42billion reported in 2020.

    Analyst at PAC Holdings, Mr. Wole Adeyeye explained that increasing trade & other receivables is an indication of growth in companies operations in the period, stressing that demand in supply often impact on company’s receivables.

    According to him, ”Trade & other receivables are an indication that the company is producing the more in a move to meet customers demand. When customers refused to payback, these companies will have to impair such receivable and it becomes a bad debt. For me, the growth recorded by these companies trade & other receivables is a reflection of growing economy.”

    Other market analysts attributed hike in trade & receivables to adverse impacts of the Covid-19 pandemic and hike in cost of goods and services.

    An Economist & Private Sector Advocate, Dr Muda Yusuf blamed hike in companies’ trade & other receivables on the adverse impacts of the Covid-19 pandemic on businesses and inflation rate.

    He noted that all sectors in the nation’s economy was affected by pandemic inflicted shocks that continued to mount pressure on receivables by companies.

    According to him: “This reflected in the unaudited financial statements of these companies in 2020FY and nine months ended September 30, 2021. Some businesses are even yet to recover from these shocks.

    “Across all sectors, payment defaults increased, sales dropped, contractual obligations were breached, some companies declared a force majure, supply chains were disrupted, foreign credit lines were lost and servicing offshore obligations became very difficult for most businesses.

    “The macroeconomic shocks were also very profound- sharp depreciation in the exchange rate, liquidity challenges in the forex market and high inflationary pressures.”

    He noted that the good news is the economy is on a positive trajectory, domestically and globally over improved global oil prices and total ease of businesses.

    He added, “But the good news is that we are gradually getting out of the situation. Economic activities are gaining momentum domestically and globally. Commodity prices are also recovering which has positive implications for macroeconomic outlook. But there are still lingering issues around some desirable reforms in the economy.”

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