The Nation Newspaper

Tag: RT Briscoe

  • Auditors raise red flag on RT Briscoe

    External auditors might again express concerns over the going concern status and ability of RT Briscoe (Nigeria) Plc to meet its continuous financial obligations.

    In the latest audit on the company for the year ended December 31, 2016, external auditors  KPMG Professional Services, have indicated that preliminary reports point to the facts that there could be material uncertainty on the future survival of RT Briscoe. The company, say the  auditors, technically lacks the ability to meet emerging financial obligations and working capital; its continuing survival depends on its bankers.

    The audit noted that the negative bottom-line and net current liabilities of the company could affect its going concern status, referring to its ability to continue operations into the foreseeable future.

    Managing Director, RT Briscoe Plc, Mr. Oluseyi Onajide, had earlier stated that KPMG had during the auditing confirmed that there might be an “emphasis of matter” in the audit opinion, making direct reference to a segment of the audit report where auditors usually express concerns on liquidity and going concern status.

    According to him, the “emphasis of matter” implies that the financial statements of the company for the 2016 business year would have to be referred initially to the Financial Reporting Council of Nigeria for review before it could be submitted to the investing public through the Nigerian Stock Exchange (NSE).

    He noted that the extension of the audit process due to the “emphasis of matter” may delay the submission of the annual report and accounts beyond the March 31, 2017 deadline at the NSE, expressing optimism that the release of the annual report to the NSE will not go beyond April 28, 2017. RT Bricsoe has already secured a waiver to extend the deadline for the submission of its report.

    Post-listing rules at the NSE require quoted companies to submit their audited earnings reports, not later than three months after the expiration of the period. The rules also require quoted companies to submit interim report not later than 30 days after the end of the relevant period.

    Most quoted companies, including all banks, major manufacturers, oil and gas companies, breweries and cement manufacturers use the 12-month Gregorian calendar year as their business year. The business year thus terminates on December 31. While March 31 is usually the deadline for submission of annual report for companies with Gregorian calendar business year, the deadline for the quarterly report is a month after the quarter.

    In the audit for the year ended December 31, 2015, KPMG had under the same “emphasis of matter”, expressed concerns that there were conditions that indicate existence of material uncertainty that may cast significant doubt about RT Briscoe’s ability to continue as a going concern.

    RT Briscoe had in 2015 recorded a loss of N4.2 billion while its current liabilities exceeded its current assets by N4.8 billion. Altogether, total liabilities exceeded total assets by N300 million. The 2015 business year had marked a worsening in the financial condition of the company. Total assets had exceeded total liabilities by N3.1 billion in 2014 while loss and current account deficit was N1.9 billion and N1.0 billion.

    KPMG had also in 2015 audit expressed worry over a total of N1.1 billion that was written off by the company as an impairment loss to the profit and loss account. The auditors had noted that the amount had been confirmed in the prior year by a supplier as due to the company but it was surprisingly reclassified to the value added tax input account and thereafter written off to profit and loss in the 2015 accounts.

    “We were unable to obtain sufficient appropriate audit evidence regarding the nature and accounting for the underlying transactions as management was unable to provide satisfactory explanations and relevant supporting documents,” KPMG had stated.

    The Board of the company, also describing the explanation given on the N1.1 billion as unacceptable, stated that it has directed the internal auditors to conduct a detailed investigation into the matter with a view to establishing the facts of the matter, and making some possible recoveries.

    RT Briscoe had screeched to a halt in 2012 as huge borrowings and resultant negative trickle-down impact of the financial mismatch finally eroded its dwindling profit, breaking the company’s long track record of profit and dividends with a loss of N281 million. It has since sustained year-on-year losses.

    Shareholders of RT Briscoe had in 2014 authorised the board of the company to raise N10 billion to deleverage its operations as the automobile and real estate company struggled with losses induced by huge interest expenses.

    Shareholders had mandated the board to raise new funds through any option or a combination of debt instruments, preference shares and ordinary shares by way of rights issue, private placement or offer for subscription.

    To create room for the fresh capital, shareholders also increased the authorised share capital of the company from N2 billion divided into 4.0 billion ordinary shares of 50 kobo each to N3.25 billion divided 6.5 billion ordinary shares of 50 kobo each.

    The company has not been able to raise the new capital due to what it described as unfavourable economic climate. The board of directors has, meanwhile, indicated that it plans to launch the supplementary offer this year.

    Incorporated in 1957 and listed on the Nigerian Stock Exchange in 1974, RT Briscoe (Nigeria) has evolved overtime from a truck-engine importer to become Nigeria’s most visible automobile company. It had in recent years embarked on expansive diversification, which has seen addition of several emergent business lines to the dominant motors business. RT Briscoe Group now consists of RT Briscoe, the automobile-dealing parent company; Briscoe Property Limited, its real estate subsidiary, Suites Resorts Limited, a leisure company that it acquired in 2012 and CAWS Technical Nigeria Limited, a wholly-owned subsidiary trading in industrial equipment.

    RT Briscoe is owned by more than 43,000 Nigerian individual and institutional investors. Only two major shareholders- Mikeade Investments Limited and Classic Motors Limited, hold substantial shareholdings above five per cent.

  • N2.5b debt: Court restrains RT Briscoe’s access to funds

    N2.5b debt: Court restrains RT Briscoe’s access to funds

    • Firm: we’re not indebted to bank

    The Federal High Court in Lagos has restrained an automobile and generator company, R.T. Briscoe Nigeria Plc, from withdrawing its funds in any bank over an alleged N2.5billion debt owed Diamond Bank Plc.

    Justice Ibrahim Buba granted an order of interim injunction restraining the company, its directors or management from “operating, withdrawing from or otherwise tampering with the respondent’s funds in any bank of financial institution within Nigeria.”

    The order, the judge said, will subsist until the bank’s application for the appointment of a provisional liquidator for the company is heard and determined.

    Justice Buba also made a consequential order compelling the affected banks where R. T. Briscoe has accounts to furnish Diamond Bank or its firm of solicitors with details of credit outstanding in the company’s accounts within seven days.

    The judge further barred R.T Briscoe from alienation, dissipating or transferring its fixed and moveable assets, properties, machinery and tools of trade until the bank’s application for appointment of a liquidator is determined.

    Diamond Bank, in its winding-up petition, said R.T Briscoe is its long-standing customer since May 2012.

    It said it availed the bank global facilities which include an overdraft facility, letter of credit facility and term loan, which were all availed in tranches.

    The facilities, the bank said, were for the purchase of Toyota brands of vehicles and spare parts, importation of Atco brand of generators and compressors, purchase of a piece of land in GRA, augmentation of its working capital, among others.

    The bank said following a Central Bank of Nigeria (CBN) directive on non-performing loans, it made a demand for the recovery of total overdue loan obligations of N712,488,921.67 and a total outstanding indebtedness of N2,529,687,108.86 as at last June 3.

    Diamond Bank said it agreed to restructure the credit facilities by revising the repayment schedule, yet the company “willfully failed and/or neglected to liquidate the indebtedness in accordance with the strict adherence to the revised schedule.”

    “The respondent is still heavily indebted to the petitioner in the sum of N2,478,284,729.88 as at May 2016,” the bank told the court through its lawyer Kunle Ogunba (SAN) of Insolvency Forte.

    The bank said R.T Briscoe is “insolvent and unable to pay its just and legitimate debts”, and should, therefore, be wound-up by the court in line with sections 409(1) and 410 (1) (b) of the Companies and Allied Matters Act of 2004.

    But, R.T Briscoe has urged the court to discharge or set aside the interim order of injunction because the bank allegedly suppressed and misrepresented material facts to the court.

    The firm said the Companies Winding Up Rules require the petitioner to make the application for injunction on notice rather than ex-parte.

    Justice Buba adjourned until July 8 for hearing.

  • Skye Bank, RT Briscoe partner on automobile financing

    Skye Bank, RT Briscoe partner on automobile financing

    Skye Bank Plc has partnered with RT Briscoe by providing finance for the Ford brand of cars for people who may not have the bulk cash needed to purchase such cars.

    Under the arrangement, the bank will provide 70 per cent  of the cost of the car to its existing and prospective customers during the six-month promo organised by RT Briscoe. The customer contribute 30 per cent of the cost.

    The special arrangement is to complement RT Briscoe’s attractive incentives for aspiring car owners in commemoration of its 10th year anniversary as Ford auto dealers in Nigeria.

    According to a statement issued by the bank, the financing window is available to as many Nigerians who earn a regular income, including business owners with viable and thriving businesses under its Skye Auto finance scheme.

    “ All a prospective buyer needs do is make his or her choice from any RT Briscoe outlet and visit any Skye bank branch with the purchase invoice, 30 per cent of the purchase price and evidence of income”, the bank explained.

    It further said customers who purchase Ford vehicles during the promo period through the bank will enjoy some exclusive benefits like discounted vehicle prices, two per cent interest rate discount on loans granted for vehicle acquisition, and four-year free labour service on such cars.

    Other benefits include free car delivery on purchase, three-year warranty, eligibility to win another Ford vehicle in a raffle draw, among others.

    Skye Bank has an auto loan scheme for its customers through which such customers can buy a wide range of vehicles after paying their equity contribution of 30 per cent, leaving the bank to provide the balance of 70 per cent.

     

     

  • RT Briscoe gets shareholders’ nod to raise N10b

    Shareholders of RT Briscoe (Nigeria) Plc yesterday authorised the board of the company to raise N10 billion to deleverage its operations as the automobile and real estate company struggled with losses induced by huge interest expenses.

    At the annual general meeting in Lagos, shareholders mandated the board to raise new funds through any option or a combination of debt instruments, preference shares and ordinary shares by way of rights issue, private placement or offer for subscription.

    To create room for the impending fresh capital, shareholders also increased the authorized share capital of the company from N2 billion divided into 4.0 billion ordinary shares of 50 kobo each to N3.25 billion divided 6.5 billion ordinary shares of 50 kobo each.

    Addressing the shareholders, chairman, RT Briscoe (Nigeria), Mr. Clement Olowokande said the directors on the company have been strategizing on how to optimize the use of available resources and opportunities for maximum returns.

    According to him, in order to raise the much needed capital for business expansion and working capital, the board is exploring the possibilities of recapitalizing through debt instruments, additional equity or a combination of both.

    He assured shareholders that the board will on behalf of the shareholders, carefully select auspice time and modality for implementing these options.

    He enjoined the shareholders to support the company in its efforts to recapitalize its business and stem the tide of losses in recent years.

    “The automobile industry in Nigeria, particularly for motor dealers and distributors like us, is currently in a development phase that requires significant capital outlay for stock, after sales infrastructure and implementation of development phase for the future,” Olowokande said.

    He said the competition in the market place has become more severe as all major brands in the world are now present in the country.

    On the future prospect of the company, the chairman the recent rebasing of Nigeria’s GDP confirmed enormous business opportunities in the country for a company like RT Briscoe.

    Olowokande observed that contrary to prior economic data before the rebasing, that the oil and gas sector represented 32 per cent of the economy, under the new set of data, that sector only contributed 14 per cent while much of the balance came from previously unreported, consumer-driven sectors.

  • RT Briscoe gets shareholders’ nod to raise N10b

    RT Briscoe gets shareholders’ nod to raise N10b

    Shareholders of RT Briscoe (Nigeria) Plc yesterday authorised the board of the company to raise N10 billion to deleverage its operations as the automobile and real estate company struggled with losses induced by huge interest expenses.

    At the annual general meeting in Lagos, shareholders mandated the board to raise new funds through any option or a combination of debt instruments, preference shares and ordinary shares by way of rights issue, private placement or offer for subscription.

    To create room for the impending fresh capital, shareholders also increased the authorized share capital of the company from N2 billion divided into 4.0 billion ordinary shares of 50 kobo each to N3.25 billion divided 6.5 billion ordinary shares of 50 kobo each.

    Addressing the shareholders, chairman, RT Briscoe (Nigeria), Mr. Clement Olowokande said the directors on the company have been strategizing on how to optimize the use of available resources and opportunities for maximum returns.

    According to him, in order to raise the much needed capital for business expansion and working capital, the board is exploring the possibilities of recapitalizing through debt instruments, additional equity or a combination of both.

    He assured shareholders that the board will on behalf of the shareholders, carefully select auspice time and modality for implementing these options.

    He enjoined the shareholders to support the company in its efforts to recapitalize its business and stem the tide of losses in recent years.

    “The automobile industry in Nigeria, particularly for motor dealers and distributors like us, is currently in a development phase that requires significant capital outlay for stock, after sales infrastructure and implementation of development phase for the future,” Olowokande said.

    He said the competition in the market place has become more severe as all major brands in the world are now present in the country.

    On the future prospect of the company, the chairman the recent rebasing of Nigeria’s GDP confirmed enormous business opportunities in the country for a company like RT Briscoe.

    Olowokande observed that contrary to prior economic data before the rebasing, that the oil and gas sector represented 32 per cent of the economy, under the new set of data, that sector only contributed 14 per cent while much of the balance came from previously unreported, consumer-driven sectors.

     

     

     

     

    He also said that a report by the World Bank that the Nigerian had expanded by an average of six percent annually since 2006 and which according to IMF data is expected to achieve a rate of seven percent this year, gives much room for optimism and confidence in the business outlook, adding that this is further bolstered by reports that the population is growing by more than two percent per year, indicating a growing market for the company’s goods and services.

    The chairman also said the new automotive policy designed to favour local manufacturers and assembling of semi and completely knocked down parts is viewed by the board of the company as a challenge to improve the business horizon of the company.

    Owing to difficult operating environment in 2013, RT Briscoe recorded a group turnover of N21.8 billion during its financial year ended December 31, 2013 compared with a turnover of N21.9 billion during the corresponding period of 2012.

    “Irrespective of the progress made in property development projects, the International Financial Reporting Standards do not allow income to be realised until contractual arrangements are concluded and interest in the property is transferred to a third party,” Olowokande said.

    RT Briscoe recorded a loss before tax of about N152 million in 2013 as the company continued to wriggle in mounting interest expenses. Key extracts of the audited report and accounts of RT Briscoe for the year ended December 31, 2013 showed top-down decline in all key performance indices, underlining the decline in sales and continuing negative impact of the company’s financing expenses.

    The report indicated a loss before tax of N151.60 million in 2013, sustaining the red line that started in 2012 when the company lost N228.50 million. However, with tax gains of N59.59 million in 2013, net loss after tax dropped from N280.72 million in 2012 to N92.02 million in 2013.

    Turnover dropped from N21.98 billion in 2012 to N21.77 billion in 2013. Gross profit slipped from N2.68 billion in 2012 to N2.56 billion while operating profit dropped from N941.78 million to N801.81 million. Finance expense meanwhile rose from N1.26 billion in 2012 to N1.47 billion in 2013. The depressed bottom-line also impacted on shareholders’ funds, which slipped from N3.13 billion in 2012 to N3.05 billion in 2012.

    After several years of unbroken dividend payment, RT Briscoe had entered the red zone in 2012. Shareholders saw a reduction of about 25 kobo in the underlying value of each of their shares as returns for the 2012 business year in contrast with dividend per share of 10 kobo received in 2011 and 2010 respectively. The company is also not paying any dividend for the 2013 business year, obviously due to the negative bottom-line.

     

     

  • RT Briscoe gets shareholders’ nod to raise N10b

    RT Briscoe gets shareholders’ nod to raise N10b

    Shareholders of RT Briscoe (Nigeria) Plc yesterday authorised the board of the company to raise N10 billion to deleverage its operations as the automobile and real estate company struggled with losses induced by huge interest expenses.

    At the annual general meeting in Lagos, shareholders mandated the board to raise new funds through any option or a combination of debt instruments, preference shares and ordinary shares by way of rights issue, private placement or offer for subscription.

    To create room for the impending fresh capital, shareholders also increased the authorized share capital of the company from N2 billion divided into 4.0 billion ordinary shares of 50 kobo each to N3.25 billion divided 6.5 billion ordinary shares of 50 kobo each.

    Addressing the shareholders, chairman, RT Briscoe (Nigeria), Mr. Clement Olowokande said the directors on the company have been strategizing on how to optimize the use of available resources and opportunities for maximum returns.

    According to him, in order to raise the much needed capital for business expansion and working capital, the board is exploring the possibilities of recapitalizing through debt instruments, additional equity or a combination of both.

    He assured shareholders that the board will on behalf of the shareholders, carefully select auspice time and modality for implementing these options.

    He enjoined the shareholders to support the company in its efforts to recapitalize its business and stem the tide of losses in recent years.

    “The automobile industry in Nigeria, particularly for motor dealers and distributors like us, is currently in a development phase that requires significant capital outlay for stock, after sales infrastructure and implementation of development phase for the future,” Olowokande said.

    He said the competition in the market place has become more severe as all major brands in the world are now present in the country.

    On the future prospect of the company, the chairman the recent rebasing of Nigeria’s GDP confirmed enormous business opportunities in the country for a company like RT Briscoe.

    Olowokande observed that contrary to prior economic data before the rebasing, that the oil and gas sector represented 32 per cent of the economy, under the new set of data, that sector only contributed 14 per cent while much of the balance came from previously unreported, consumer-driven sectors.

    He also said that a report by the World Bank that the Nigerian had expanded by an average of six percent annually since 2006 and which according to IMF data is expected to achieve a rate of seven percent this year, gives much room for optimism and confidence in the business outlook, adding that this is further bolstered by reports that the population is growing by more than two percent per year, indicating a growing market for the company’s goods and services.

    The chairman also said the new automotive policy designed to favour local manufacturers and assembling of semi and completely knocked down parts is viewed by the board of the company as a challenge to improve the business horizon of the company.

    Owing to difficult operating environment in 2013, RT Briscoe recorded a group turnover of N21.8 billion during its financial year ended December 31, 2013 compared with a turnover of N21.9 billion during the corresponding period of 2012.

    “Irrespective of the progress made in property development projects, the International Financial Reporting Standards do not allow income to be realised until contractual arrangements are concluded and interest in the property is transferred to a third party,” Olowokande said.

    RT Briscoe recorded a loss before tax of about N152 million in 2013 as the company continued to wriggle in mounting interest expenses. Key extracts of the audited report and accounts of RT Briscoe for the year ended December 31, 2013 showed top-down decline in all key performance indices, underlining the decline in sales and continuing negative impact of the company’s financing expenses.

  • RT Briscoe loses N152m as interest expense rises to N1.47b

    RT Briscoe loses N152m as interest expense rises to N1.47b

    RT Briscoe (Nigeria) Plc recorded a loss before tax of about N152 million in 2013 as the company continued to wriggle in mounting interest expenses.

    Key extracts of the audited report and accounts of RT Briscoe for the year ended December 31, 2013 showed top-down decline in all key performance indices, underlining the decline in sales and continuing negative impact of the company’s financing expenses.

    The report indicated a loss before tax of N151.60 million in 2013, sustaining the red line that started in 2012 when the company lost N228.50 million. However, with tax gains of N59.59 million in 2013, net loss after tax dropped from N280.72 million in 2012 to N92.02 million in 2013.

    Turnover dropped from N21.98 billion in 2012 to N21.77 billion in 2013. Gross profit slipped from N2.68 billion in 2012 to N2.56 billion while operating profit dropped from N941.78 million to N801.81 million. Finance expense meanwhile rose from N1.26 billion in 2012 to N1.47 billion in 2013. The depressed bottom-line also impacted on shareholders’ funds, which slipped from N3.13 billion in 2012 to N3.05 billion in 2012.

    After several years of unbroken dividend payment, RT Briscoe Plc had entered the red zone in 2012. Shareholders saw a reduction of about 25 kobo in the underlying value of each of their shares as returns for the 2012 business year in contrast with dividend per share of 10 kobo received in 2011 and 2010 respectively. The board has also not recommended any dividend for the 2013 business year, obviously due to the negative bottom-line.

    RT Briscoe has been unable to actualize its recapitalization plan, forcing the company to depend on short-term bank loans. While the company’s total assets and liabilities declined in 2012, borrowings increased during the period, underlining the increasing dependence of the company on short-term funding. Borrowings, which were categorized as current liabilities and thus implied a short-tenor of a year, rose from N8.10 billion in 2011 to N8.93 billion in 2012. Total assets however dropped from N15.05 billion to N14.11 billion while total liabilities declined to N10.98 billion as against N11.53 billion in 2011.

    Audited report and accounts of RT Briscoe for the year ended December 31, 2012 indicated that turnover rose by 12 per cent from N19.61 billion in 2011 to N21.98 billion in 2012. The company had maintained appreciable profitability until financing charges for its N8.9 billion loans sucked all profit. Gross profit increased from N2.18 billion to N2.68 billion. After deducting administrative, selling and distribution expenses, operating profit stood at N941.8 million in 2012 compared with N965.66 million in 2011. However, interest expense jumped by 62.3 per cent from N776.38 million in 2011 to N1.26 billion in 2012, reversing the company’s profit before tax of N319.66 million in 2011 to pre-tax loss of N228.50 million in 2012. After taxes, net loss rose to N280.7 million in 2012 as against profit after tax of N149.9 million.

    The board of RT Briscoe has severally fingered what it described as “an unfortunate but unavoidable reality” of “high level of bank borrowings and short term loans as well as interest expenses.”

    On the heels of the loss in 2012, the board of directors of RT Briscoe had ordered the management of the company to immediately present a turnaround plan for the flagging company.

  • Board orders RT Briscoe’s management to present turnaround plan

    The Board of RT Briscoe (Nigeria) Plc has ordered the management of the company to immediately present a turnaround plan for the flagging company as directors and shareholders rue the first loss in many decades of the operations of the company.

    RT Briscoe literally came to a screeching halt in 2012 with a loss of N280.7 million, its first loss in several years. With basic loss per share of 32 kobo in 2012 as against earnings per share of 15 kobo in 2011, the negative bottom-line broke the enviable long-standing records of consistent dividend payment of the automobile and real estate group.

    The board has not recommended any dividend payment for consideration at the July 2013 annual general meeting of company as against N98.03 million and N81.7 million distributed for 2011 and 2010 respectively. The board has also not recommended any bonus issue as against the practice in the previous two years.

    Impeccable source in the know of the situation at the company said the board demanded for turnaround plan and ordered tightening of the company’s expenditure profile following the 2012 audit which indicated negative bottom-line.

    The management of the company is expected to outline strategic initiatives to curtail administrative, selling and distribution expenses as well as significantly increase the group’s top-line performance.

    The turnaround plan is also expected to dwell on options for the resolution of the company’s huge indebtedness, which has been a major drag on profitability.

    With increase in bank loans from N8.1 billion in 2011 to N8.9 billion in 2012, RT Briscoe’s interest expenses rose by 63 per cent from N776.3 million in 2011 to N1.3 billion in 2012. The huge interest expense significantly eroded the bottom-line.

    Audited report and accounts of RT Briscoe Group for the year ended December 31, 2012 had shown that turnover rose from N19.61 billion in 2011 to N21.98 billion in 2012. Gross profit increased from N2.18 billion to N2.68 billion. While operating profit decreased slightly from N965.66 million to N941.8 million, the huge increase in finance costs reversed the company’s profit before tax of N310.66 million in 2011 to a loss of N228.5 million. After taxes, net loss increased to N280.7 million in 2012 as against net profit of N149.9 million in 2011.

    The board and shareholders of the company had lamented the financial mismatch that arose from the inability of the company to access capital through the capital market, in spite of expressed interest to raise new equity funds.

    Chairman, RT Briscoe (Nigeria) Plc, Mr. Clement Olowokande had told shareholders at the last general meeting that the huge debt outlay and the pressing financing expenses were due to the inability of the company to source equity capital since the capital market meltdown in spite of the company’s growing business.

    According to him, the excruciating liquidity squeeze and lack of access to amenable capital have continued to militate against corporate growth and returns. RT Briscoe’s third party borrowings doubled from N4.1 billion in 2010 to N8.1 billion in 2011.

    He had hinted that the company would consider raising new funds through public offer as the capital market improves.

     

  • Interest expenses put RT Briscoe in red

    After several years of unbroken dividend payment, RT Briscoe Plc’s bottom-line finally entered the red zone in 2012 as the company struggled with huge interest expenses.

    Shareholders of RT Briscoe would contend with a reduction of about 25 kobo in the underlying value of each of their shares as returns for the 2012 business year in contrast with dividend per share of 10 kobo received in 2011 and 2010.

    The Board of Directors of RT Briscoe has reported that the company made a net loss of N280.7 million in 2012 following a 62 per cent increase in interest expense.

    The loss resulted in a loss per share of 24.93 kobo in 2012, which further reduced the net capital base of the company from N3.52 billion in 2011 to N3.13 billion in 2012.

    Audited report and accounts of RT Briscoe for the year ended December 31, 2012 indicated that turnover rose by 12 per cent from N19.61 billion in 2011 to N21.98 billion in 2012. The company maintained appreciable profitability until financing charges for its N8.9 billion loans sucked all profit. Gross profit increased from N2.18 billion to N2.68 billion. After deducting administrative, selling and distribution expenses, operating profit stood at N941.8 million in 2012 compared with N965.66 million in 2011.

    However, interest expense jumped by 62.3 per cent from N776.38 million in 2011 to N1.26 billion in 2012, reversing the company’s profit before tax of N319.66 million in 2011 to pre-tax loss of N228.50 million in 2012. After taxes, net loss rose to N280.7 million in 2012 as against profit after tax of N149.9 million.

    With the primary capital market still dormant, RT Briscoe has been unable to actualise its recapitalisation plan, forcing the company to depend on short-term bank loans.

    While the company’s total assets and liabilities declined in 2012, borrowings increased during the period, underlining the increasing dependence of the company on short-term funding. Borrowings, which were categorised as current liabilities and thus implied a short-tenor of a year, rose from N8.10 billion in 2011 to N8.93 billion in 2012. Total assets however dropped, from N15.05 billion to N14.11 billion while total liabilities declined to N10.98 billion as against N11.53 billion in 2011.

    The Board of RT Briscoe has several times point fingers at what it described as “an unfortunate but unavoidable reality” of “high level of bank borrowings and short term loans as well as interest expenses.”

    Chairman, RT Briscoe (Nigeria) Plc, Mr. Clement Olowokande, had in previous review noted that in spite of the appreciable growths of 30 per cent in turnover and 42 per cent in profit after tax in 2011, the company operated under unfavourable financing structure as interest expenses soared to N776.4 million as against profit after tax of about N216 million.

    RT Briscoe’s third party borrowings doubled from N4.1 billion in 2010 to N8.1 billion in 2011.

    Olowokande attributed the huge debt outlay and the pressing financing expenses to the inability of the company to source equity capital since the meltdown in spite of the company’s growing business.

    According to him, investors’ apathy to new equity investments and anxieties over several banks’ shares worsened the new capital market as local fund managers opted for more secure and predictable bond market, thereby depriving real and productive sector opportunity to raise much needed equity capital.

    “The sorry picture is that our company operates largely on borrowed funds. … We do hope that you will support your company when the investment climate is conducive and the board decides to have a public offer,” Olowokande had hinted of possible new capital raising in 2012 which the company has been unable to achieve.

    He noted that the current state of high cost of funds weighed in on the possible payouts to shareholders as the company opted to conserve net earnings to mitigate financing pressure.

    According to him, when considering the level of dividend to be recommended to shareholders, the board had to be mindful of the escalating costs of funds and financing needs of a capital intensive business, such as RT Briscoe and decided to carefully balance the delicate need to retain cash in the business and compensating shareholders.