By Chukwuma Umeorah
Nestlé Nigeria Plc (Nestle) has revalued its property, plant, and equipment (PPE) to N305.4 billion as of March 16, 2024, up from the previous carrying value of N88.3 billion under the historical cost model as of December 31, 2023.
The revalued properties include its Agbara Factory, Flowergate Factory, Sagamu, Abaji Factory in Abuja and its Agbara and Ota Distribution Centres. According to Nestle, this revaluation, conducted by M/s Niyi Fatokun, certified by the Financial Reporting Council of Nigeria, aims to more accurately reflect the company’s market value amid ongoing economic challenges.
At its Extra-Ordinary General Meeting (EGM) held in Lagos recently, the company’s Board presented a detailed Explanatory Note to shareholders, stating that the negative net assets reported at the end of 2023 were driven by the revaluation of foreign currency obligations. However, the revaluation of PPE is a strategic move to provide a clearer picture of the company’s financial standing.
Nestle Chairman, Gbenga Oyebode noted that the company had established a technical memo outlining the accounting treatment of the revaluation of the class assets under PPE in accordance with relevant requirements stipulated under the International Accounting Standard (IAS), International Reporting Standard (IFRS) and the Companies and Allied Matters Act (CAMA) 2020.
Oyebode added that the Board has approved the adoption of the “revaluation model” on 25 March 2024 and subsequent financial statements will be prepared based on the revaluation model. “The financial statements for January-March 2024 were prepared based on the revaluation model for the class of assets revalued under PPE. This shift to the revaluation model is expected to give more reliable and relevant information on the company’s financial position, aligning asset values with current market conditions,” he stated.
The Board concluded that despite the difficult operating environment, the fundamentals of the company remain robust. They assured shareholders, “Going forward, the Board will continue to monitor the developments on the policy front and support the measures to address the negative net assets of the Company.
While no formal resolutions were passed at the EGM, the steps taken by the Board to revalue the assets and protect the company’s interests were acknowledged positively.