Tantalizers Plc., Nigeria’s foremost fast food company and the only quoted QSR Company on the Nigeria Stock Exchange have returned to the path of profit, helped by sale of assets.
For the year ended December 2017, Tantalizer posted a profit after tax of N443.37 million from a loss position of N1.01 billion lit recorded the previous year.
N730.38 million proceeds from the sale of property plants equipment was a major driver of net income as the QSR firm continues to grapple with weak margins, working capital deficiencies and debt burden.
Gross margin, a measure of efficiency fell to 15.19 percent in December 2017 from 34.75 percent the previous year.
Stiff competition from small restaurant operators that charges lower prices have hindered Tantalizer from benefitting from a price increase in products.
Tantalizer has a retained deficit of N3.16 billion as at December 2017, which means it has been incurring more losses than profit through its existence.
The accumulated losses have left the firm with a shareholders fund of N665.53 million.
Investors have been reacting to the company’s disappointing results as share price has been stuck at N0.50 since 2014 to drop further to N0.38 as of close of trading on April 20.
Tantalizer is optimistic the efficiency of its on-going strategic initiatives aimed at restructuring the business and boost shareholders fund.
The results of some of the initiatives have yielded fruit as the company’s total systems revenue (corporate and franchise) has increased by 2.27 percent to N3.73 billion in the period under review.
Revenue from franchise increased by 18.87 percent to N1.89 billion in the period under review from N1.59 billion the previous year.
Tantalizer is highly geared, which means it has a lot of debt in its capital structure as debt to equity ratio stood at 147.55 percent in the period under review.
Total debt (Both long and short term) stood at N982.98 million in March 2018, which represents 38.62 reduction from N1.60 billion incurred last year.
The company has been in discussion with the local banks and IFC for debt restructuring.
Tantalizer is endowed with assets and profitability but short of liquidity as its current assets of N1.07 billion cannot cover total current liabilities of N2.78 billion, resulting in a negative working capital of N1.71 billion.
Analysts say if something urgent and responsible is not done to correct the liquidity bottlenecks, the firm’s ability to settle future short term obligations could be in jeopardy.
Tantalizer’s cost control measures has paid off as cost of sales fell by 8.69 percent to N1.26 billion in December 2017 as against N1.26 billion the previous year.
Operating expenses were up 0.72 percent to N1.38 billion in the period under review from N1.37 billion the previous year.
BALA AUGIE
