PBC Limited teeters on the brink of collapse: Auditors warn of 'complete bankruptcy'

Produce Buying Company (PBC) Limited, the once-dominant cocoa buying company, is facing an existential threat as its latest financial statements reveal a 99 per cent collapse in revenue and a dire warning from its independent auditors of "complete bankruptcy."

The company's financial results for the year ended September 30, 2024, paint a picture of distress. The group revenue plummeted to GH¢41.5 million, down from GH¢778.9 million the previous year. The performance of the parent company was even more startling, with revenue falling to GH¢10.1 million from GH¢756.6 million in 2023.

In a damning assessment, the external auditors, Adom Boafo & Associates, issued a qualified opinion on the accounts, stating the company is "facing going concern challenges which continues to deteriorate." 

They underscored the severity of the situation, noting, "This is the lowest turnover over the past 10 years. This had adverse effects on the already deteriorating liquidity position." The auditors concluded that "the definitive conclusion from the trend analysis is a complete reliance on loans for continuous operations, the absence of which operations will grind to a halt with huge liabilities that cannot be settled with existing assets."

The Group’s loss after tax widened to GH¢69.9 million from GH¢34.1 million. More alarmingly, the company’s total equity stands at a negative GH¢441.3 million, a clear indicator that its debts far outweigh its assets. The directors acknowledged this in their report, confirming "the company is technically bankrupt with adverse equity position."

Liquidity has evaporated. The company’s working capital — a key measure of its ability to meet short-term obligations — plunged further into negative territory at GH¢208.7 million, worsening from negative GH¢142.9 million. The Group’s position is even more precarious at negative GH¢328 million.

The directors’ statement on the company's ability to continue as a going concern is wholly conditional. They state survival is only possible if: "1. Cocoa Board will provide sufficient funds for working capital on a timeous basis. 2. The company is restructured and some of its assets are disposed off... 3. Shareholders authorise the Directors to raise equity capital."

Adding to the uncertainty is a significant unresolved issue regarding the company’s core assets. The auditors highlighted a "Material Uncertainty," noting, "We have not sighted the Title Deeds for the sheds and buildings ceded to the company by Ghana Cocoa Board (COCOBOD) as stated in the Company's books to establish the company's ownership of these assets." The Government has provided an undertaking to ensure COCOBOD executes the terms of a ceding agreement dating back to June 30, 1999.

PBC Limited, which was de-listed from the Ghana Stock Exchange for a period for regulatory non-compliance, is majority-owned by state entities. The Social Security and National Insurance Trust (SSNIT) and the Ministry of Finance collectively hold approximately 75 per cent of the shares.

No dividend was recommended for the year, and the report disclosed that "no specific steps were taken to build directors' capacity to discharge their responsibilities during the year."

The future of the company, a historic player in Ghana’s cocoa sector, now appears dependent on urgent and substantial intervention from its state shareholders and COCOBOD to avert a total collapse.