Cadbury writes off overstated amount, send report to SEC
Category: Capital Market
Cadbury Nigeria plc has written off the overstated amounts as contained in its 2005 annual reports and accounts. This is effected 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 2006 annual reports and accounts which has been submitted to the Securities and Exchange Commission (SEC) for verification and approval prior to its being made public.
According to a reliable source, the company decided to absorb the total overstated amount in one go as a way of pushing the incident behind and move the operations of the company forward.
The source said the decision to write off the amount in one year may result to a loss in the 2006 accounts, but noted that it is a temporary set back which the company is well positioned to overcome in the shortest time.
\"Obviously, we will record a loss in the 2006 financial result following the quantum write-off, but our fundamentals remain very strong, our factories are running, our products still command the larger share of the market resulting in steady growth in turnover, and we are still very cost conscious. So in all we look forward to better years.\"
In spite of the crisis of confidence that the firm may have suffered as a result of the unethical practices of the two principal actors in the mess of 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 accounts, the source said Cadbury as a corporate body still maintains high ethical standards and good corporate practices.
BusiessDay had exclusively reported that a stock broking firm and a group of shareholders numbering about 341 took Cadbury Nigerian plc to court over what they described as a flagrant negligence and disregard to duty by two key officials of the company.
Specifically, they accused the defendants of presenting incorrect, deceitful, and deliberate overstatement of financial position 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 annual reports and accounts for the financial year ended December 31, 2005. They aver that the defendants were aware that the said annual reports and accounts was a deliberate overstatement of 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 financial position over a number of years to the tune of between N13 and N15 billion.
But contrary to a report that the company preferred to settle out of court, the source at Cadbury said they are yet to receive any summon from the court and that as soon as that happens, they will simply go to the court and state their case.
He explained that high value ethical process in Cadbury is what led to the discovery of the overstatement internally, contrary to believe that the matter was discovered following a prompting from an external influence.
\"We carried out an internal review and discovered the overstatement. Going by our principle of good ethics, we decided to blow our own whistle by alerting our stakeholders.\" - BusinessDay