Aso Savings and Loans plc, a primary mortgage institution (PMI) in Nigeria, has reported a N38.6 billion loss in its shareholders’ funds, driven by accumulated losses as of December 31, 2022.
Shareholder fund or net asset position represents a company’s net worth, which is the naira amount that would be returned to shareholders if a company’s total assets were liquidated and all of its debts were repaid.
According to the financial report made available by the firm on the Nigeria Exchange Group, the company shareholders’ funds stood at a negative of N38.9 billion as of December 2021.
The accumulated losses also known as retained earnings widened to N86 billion in December 2022 from a negative of N73 billion in December 2021.
Accumulated losses or negative retained earnings means that the company has accumulated significant losses over time. This deficit diminishes the shareholders’ equity, reflecting financial instability, and indicates that the company’s liabilities may exceed its assets, leading to potential solvency concerns.
A further breakdown of the company’s financial report revealed that its total assets value rose to N34.8 billion in 2022 from N34.7 billion in 2021 while its total liabilities amounted to N73.3 billion from N73.7 billion.
When a firm’s liabilities override its assets, this means the company doesn’t have enough assets to cover its debts, leading to potential financial distress which can lead to bankruptcy, restructuring, or liquidation if not resolved.
However, the mortgage firm’s total comprehensive income (loss) for the year rose to N85 million in 2022 from N17 million in 2021.
Interest expense claimed 39 percent of the interest income generated by the mortgage firm during the period.
Interest income surged to N1.12 billion from N998 million while interest expense rose to N437 million from N2.2 billion.
Net Fees and commission income increased to N21.6 million from N13.2 million. A breakdown includes commission on turnover which fell to N2.7 million from N3.5 million, followed by administrative and processing fees to N5.5 million from N2.8 million and other fees and commissions to N13.2 million from N6.7 million.
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Other income surged to N950 million from N603 million while the firm’s movement in credit loss reversal / (allowances) fell to N74 million from N3.08 billion.
Personnel expenses fell to N937 million in 2022 from N1.04 billion driven by employee costs, other operating expenses also fell to N1.3 billion from N1.4 billion.
ASO savings in December 2022 income tax surged by 1,703.7 percent to N19.3 million from N1.07 million in December 2021.
Net cash from operating activities reported a negative of N1.95 billion from a positive N5.4 billion. Net cash flow used in investing activities was negative at N712 million from a positive N1.3 billion.
Net cash flow used financing activities was a positive N790 million in December 2022 this was driven by repayment of borrowings as against a negative N4.34 billion. Cash and cash equivalent fell to N809 million from N2.68 billion in the period under review.
