Crisis Looms as RT Briscoe Erodes Shareholders’ Fund by N9.4bn

By Dipo Olowookere

All may not be too well with RT Briscoe Plc as the company’s auditors, PKF Professional Services, have said if urgent steps are not taken; the automobile firm may be forced to wind down.

On Monday, September 21, 2020, the Nigerian Stock Exchange (NSE) made the financial statements of RT Briscoe for the year ended December 31, 2019, available to the investing public.

An analysis of the results done by Business Post showed that the organisation is struggling to remain in business. This is because the firm is not generating enough funds to meet its normal obligations.

Though the revenue generated in the 2019 reporting year went up to N6.9 billion from N5.2 billion in 2018, the firm still recorded pre and post-tax losses.

The loss before tax reduced to N1.2 billion from N2.2 billion and the loss after tax dropped to N1.3 billion from N2.2 billion, while the retained earnings closed in negative N13.4 billion versus negative N12.1 billion in 2018.

The loss for the year was attributed to the finance costs, which remain high at N1.4 billion, though it recorded positive operating profits of N196 million during the year.

In the year, the group’s current liabilities exceeded its current assets by N14.8 billion versus N13.4 billion in 2018, while its total liabilities exceeded its total assets by N9.5 billion compared with N8.2 billion in 2018.

It was stated that “due to the losses incurred over the years, the shareholders’ fund has been totally eroded to the tune of N9.4 billion deficit as at December 31, 2019.”

In their notes, the auditors said the bank overdrafts of RT Briscoe as December 31, 2019, stood at N15 billion, representing 86 per cent of the total liabilities which is significant in the consolidated financial statements.

“The company has not been able to repay the bank overdraft and this has led to winding-up cases by the banks and other creditors.

“There are also issues on penalty charges by the banks. The significant, in relation to the inability to repay the borrowings which led to court litigations and also the going concern issues, makes it a key audit matter,” the auditors said in the report.

According to PKF Professional Services, “the issues raised in the financial statements indicate the existence of a material uncertainty that may cast significant doubt about the company’s ability to continue as a going concern.”

However, it was noted that the board has taken steps to return the company back to profitability by coming up with a number of strategic measures, which it said are already yielding positive results.

One of these strategies includes restructuring the business for greater efficiency and profitability and positioning the company and or its subsidiaries to attract potential investors.

RT Briscoe stressed that this has led to an increase in operating profits of N100.3 million and N195.0 million in 2018 and 2019 respectively.

Another strategy implemented, according to the firm, is recapitalising the business, which is to explore the possibility of raising about N10 billion by way of equity, debt capital or a combination of both.

RT Briscoe said it engaged the services of Lead Capital to see how to make this a reality and a draft prospectus for a Special Purpose Money Market Funds was designed and approved by the board and is about to be submitted to the Securities and Exchange Commission (SEC) for approval.

The company also said it engaged some forensic experts to look into its bank statements and it was discovered that rather than owing the banks the huge amounts being currently claimed by the banks against the firm, the company should, in fact, have positive balances with some of these banks, as the huge liabilities claimed by the banks are mainly due to questionable excess and penal charges.

Business Post recalls that on September 1, 2020, the NSE suspended trading in the shares of RT Briscoe and five other companies because of their failure to release their financial statements. It was not the first time such action was taken on RT Briscoe, which was also suspended on July 2, 2019, for the same reason. A year earlier, on July 5, 2018, the NSE also suspended RT Briscoe from the exchange due to failure to submit its 2017 financial results. The suspension was only lifted two months after it did the needful.

RT Briscoe is allegedly indebted to Access Bank (through Diamond Bank), Polaris Bank (through Skye Bank), GTBank, UBA, First Bank, FSDH Merchant Bank and the Federal Inland Revenue Service (FIRS).