Cadbury Nig Plc Sacks MD/CEO for Financial Irregularities
Category: Corporate Earnings
The Independent accountant, PriceWaterhouseCoopers, appointed to investigate the financial irregularities of the company has now completed the exercise and can confirm that the companyÃƒÆ’Ã†â€™Ãƒâ€šÃ‚Â¢ÃƒÆ’Ã‚Â¢ÃƒÂ¢Ã¢â€šÂ¬Ã…Â¡Ãƒâ€šÃ‚Â¬ÃƒÆ’Ã‚Â¢ÃƒÂ¢Ã¢â€šÂ¬Ã…Â¾Ãƒâ€šÃ‚Â¢s books were overstated for the period 2003 ÃƒÆ’Ã†â€™Ãƒâ€šÃ‚Â¢ÃƒÆ’Ã‚Â¢ÃƒÂ¢Ã¢â€šÂ¬Ã…Â¡Ãƒâ€šÃ‚Â¬ÃƒÆ’Ã‚Â¢ÃƒÂ¢Ã¢â‚¬Å¡Ã‚Â¬Ãƒâ€¦Ã¢â‚¬Å“ 2006.
The overstatements resulted from accounting irregularities, inappropriate recognition of revenue and inappropriate application of accounting principles. In the circumstances, the Board has resolved to act swiftly and properly, in accordance with best practice, and good corporate governance, in the overall interest of all the stakeholders of the Company.
Immediate steps have, therefore, been taken to properly adjust for this in the companyÃƒÆ’Ã†â€™Ãƒâ€šÃ‚Â¢ÃƒÆ’Ã‚Â¢ÃƒÂ¢Ã¢â€šÂ¬Ã…Â¡Ãƒâ€šÃ‚Â¬ÃƒÆ’Ã‚Â¢ÃƒÂ¢Ã¢â€šÂ¬Ã…Â¾Ãƒâ€šÃ‚Â¢s books. Accordingly, Cadbury Nigeria will report an underlying operating loss for 2006 of between N1 billion to N2 billion. After exceptional and financing costs, the net loss after interest is forecast to be approximately N5 billion.
In addition, following adjustments of N12 billion to N15 billion to correct the accounting errors, the Company\'s net assets has considerably diminished to around N1.2 billion, as at 30 September 2006. The Company is undertaking a revaluation of its land and buildings which overall should improve the net asset position. The Company is also considering the possibility of utilizing the share premium balance to absorb the restated negative\' revenue reserves.
The Managing Director and Chief Executive and Finance Director of the Company - Messrs Bunmi Oni and Ayo Akadiri - being the primary officers with ultimate executive responsibility for these matters, have been relieved of their appointments.
In view of the scale of the overstatement of the company\'s financial position, the Board has ordered a complete strategic review of our business model, which is expected to be completed within three months.
The company reiterates that this situation has arisen out of an internal review and believes that it will continue to take the necessary steps to ensure that the interests of all stakeholders are protected, in keeping with the highest corporate governance standards.
In the interim the Board has appointed Mr. Wallace Garland, an experienced hand, and he has accepted to become Acting Managing Director for Cadbury Nigeria PIc. He will lead the business through this period, and hopefully bring it back to good reckoning and profitability soon.
In view of this development, the Nigerian Stock Exchange today lifted the technical suspension on the stock.