Business

Auditors raise doubt on Multiverse over N1.7b deficit

Published

9 years ago

August 11, 2015

In from Success Allantee …
There is material uncertainty that casts doubts on the ability of Multiverse Plc to continue as a going concern, the auditors to the company have said.
The audit report on the company’s latest financial statement, for the period ended December 31, 2014, raised concerns over Multiverse’s burgeoning deficit, which closed the period at N1.75 billion.
The auditors to the company, Sola Oyetayo & Co, noted that while the latest financial statements gave a true position of the company, there was doubt on the continuing survival of the company.
The audit report, which was obtained alongside the financial statements by ripples.com.ng, drew attention to the fact that Multiverse incurred a net loss of N552.41 million in 2014, building on previous loss of N549.33 million in 2013. By December 2014, the company’s current liabilities exceeded its current assets by N1.75 billion, a worse position on N1.13 billion deficit in 2013.
“These conditions together with other matters as explained in Note 27 indicate the existence of a material uncertainty which cast doubt on the company’s ability to continue as a going concern,” the auditors cautioned.
The auditors however affirmed that the financial statements give a true and fair view of the state of affairs of the company as at December 31, 2014 and its financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards and in the manner required by the Companies and Allied Matters Act 1990, CAP C20 LFN 2004 and the Financial Reporting Council of Nigeria Act, 2011.
Audited report and accounts of Multiverse for the year ended December 31, 2014 showed that turnover dropped from N286.18 million in 2013 to N49.17 million in 2014. The company posted a gross loss of N91.49 million in 2014 as against gross profit of N183.76 million in 2013. Operating loss stood at N336.36 million in 2014 as against N438.53 million in 2013. Loss before tax closed 2014 at N580.01 million compared with N612.73 million in 2013. Loss after tax increased from N549.33 million to N552.41 million.
The balance sheet of the company had emerged weaker year-on-year over the past three years. Total assets dropped consecutively from N5.49 billion in 2012 to N4.99 billion in 2013 and closed 2014 at N4.77 billion. Shareholders’ funds also dropped from N2.70 billion in 2013 to N2.15 billion in 2013 and declined further to N1.60 billion in 2014.
The board and management of the company have however assured that the company would continue as a going concern citing existing business partnerships, foreign capital investments and turnaround strategies.
The board explained that the net current liability was due to backlog of trade and other liabilities and current portion of long-term borrowings which were unpaid over years.
The company noted that accumulated losses, which rose from N1.22 billion in 2013 to N1.77 billion, were primarily caused by no production and sales during the year as well as massive finance costs of N243.65 million in 2014 and N174.21 million in 2013, arising from non-payment of overdue long-term borrowings and poor performance of the company over years.

The company said it had experienced significant labour turnover in 2014, including exit of senior management personnel.
The company explained that with the signing of the partnership agreement with Anhui Huishang Metal Company of China that plans to invest $111 million over five years in the company’s Abuni Lead/Zinc mine, and with extensive exploration carried out by the mining technical partner that confirmed the availability of Lead/Zinc Ore in commercial quantity and a written confirmation to the board of directors of the company that production will commence at the mine site before the end of 2015, the fortune of the company will change significantly.
It pointed out the significance of its quarry joint operation with Sinotrust Partners Limited that have started full operation, expressing optimism that it will retain back its leading role in granite production in South Western Nigeria, a situation that will improve its cash flows significantly.

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