VitaFoam Records NGN104 Million Loss In Q2 2016

Vitafoam

Vitafoam PLC, a major maker of foam and furniture has declared that it recorded a net loss of NGN104 million in the second quarter of 2016.

The result showed that the company’s profit increased by 42% when compared to NGN73 million, another period of loss it had 2015 half year.

In the second quarters of the year, Vitafoam as a company recorded positive results but was too small to make significant impact due to heavy debts in the books of the group. The company’s net profit for Q2 2016 is NGN34 million versus NGN24 million recorded in 2015.

The group’s revenue fell by 35% to NGN2,9 billion versus NGN4,5 recorded with the same period last year. The company also cut its cost of sales drastically to NGN2,9 billion compared to NGN3 billion expended last year.

This might also be an indication of a slowing business for Vitafoam giving the fact that inflation has increased to 17.6% according to the last figure released by the National Bureau of Statistics, NBS.

If the result is anything to go by, Vitafoam’s current ratio is nearly becoming negative. Another quarter of loss might render the company insolvent. Current assets at the end of the Q2 is NGN7,3 billion compared to a current NGN6,7 billion.

The total asset of the company as at the end of the quarter is NGN12,5 billion compared to NGN8,7 billion. This shows that the company is not bankrupt but might becoming insolvent.

Vitafoam is also using loans to run its capital expenditure. The company disclosed that it has a term loan of NGN1,3 billion (unaudited result) in its books. According to its notes, “The term loans represent the outstanding balances on two facilities – 4-year term loan of N450 million and 3 -year term loan of N350 million granted to the parent by a commercial bank in 2014 and 2015 respectively. Both loans are secured by a negative pledge on the parent’s fixed and floating assets”

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