Chris Ugwu writes 
R.T Briscoe has continued to witness losses in profit following operational challenges. Chris Ugwu writes
Like some other automobile companies, R.T Briscoe Plc has seen continuous negative position in bottom line as the effect of instability in the economy impacts adversely on its operations due to reduction in credit opportunities, which in turn affected the company’s income.
The company, which came from a loss position in 2015 and 2016 in the same trend, ended 2017 unimpressively, finished 2018 with losses in after tax profits also ended the full year 2019 in the red to what market analysts majorly attributed to heavy cost of servicing bank, high cost of sales and administrative expenses. When the closing bell rang on Friday, the company’s share price stood also at 20 kobo per share
Financials
Despite efforts by the management, the group coming from losses position since 2015 has continued to sustain negative posture.
Though the group closed the year 2018 with 18 per cent increase in revenue from 4.376 billion in 2017 to N5.182 billion in 2018 full year ended December 2018, the firm reported a loss after tax of N2.188 billion in 2018, from N3.160 billion in 2017. Loss before tax stood at N2.168 billion from N3.137 billion in 2017.
According to the company, the automobile industry in Nigeria is currently undergoing very challenging times. Industry monitors revealed that the sales of brand new vehicles dropped significantly from about 50,000 units in 2013 to below 10,000 units in 2017 as well as in 2018, largely due to the prohibitive costs of imported fully built new vehicles which attract 70 per cent import duties.
“The situation in 2019 as at the time of writing has unfortunately largely remained the same. It is in this light that I review the results of the R.T. Briscoe group for the 2018 financial year. Despite the harsh operating environment, the group recorded an 18 per cent growth in revenue from N4.4 billion in 2017 to N5.2 billion in 2018.
“The significant improvement in revenue was attributable to the activities of the sales functions for motor vehicles and technical equipment which accounted for about 90 per cent of the group’s revenue while the sales of property units and rent from investment properties held by the company’s real estate subsidiary, Briscoe Properties Limited was responsible for the rest,” it noted.
The group began the financial year 2019 with a loss after tax of N214.270 million for the first quarter ended March 30, 2019 from a loss of N994.013 million in 2018. Cost of sales grew by 99 .56 per cent to N1.253 billion in 2019 from N627.868 million in 2018.
Revenue grew by 76.43 per cent from N894.931 million in 2018 to N1.579 billion in 2019. R.T Briscoe continued to be sub
dued by rising costs during the half year ended June 30 2019 as its cost of sales grew by 39.84 per cent to close at N2.397 billion in 2019 from N1.714 billion recorded in 2018.
Revenue grew by 29.37 per cent to N3.070 billion from N2.373 billion in 2018. Loss after tax stood at N424.331 million from N1.710 billion reported in 2018. For the nine months ended September 30, 2019 the group reported a loss after tax of N680.677 million from N1.190 billion posted in 2018.
However its revenue grew by 19.79 per cent to N4.237 billion from N3.537 billion in 2018, but cost of sales rose by 27.78 per cent to close at N3.311 billion from N2.591 billion in 2019. R.T Briscoe also ended the year in the red with a loss after tax of N1.287 billion for the financial year ended December 31,2019 as against a loss of 2.209bn in 2018.
The group’s audited financial report obtained from the Exchange also showed pretax loss of N1.239bn in 2019 from N2.168bn in 2018. However revenue grew by 33.91 per cent to N6.939bn in 2019 to N5.182bn in 2018. Finance cost stood at N1.432bn in 2019 from N2.294bn in 2018.
Suspension/lifting of trading
Following inability to file corporate accounts as at when due, the Nigerian Stock Exchange (NSE) had suspended trading in R.T. Briscoe (Nigeria) Plc and five other quoted companies.
The suspended companies are FTN Cocoa Processors Plc, Medview Airline Plc, Niger Insurance Plc, R.T. Briscoe (Nigeria) Plc, Union Dicon Salt Plc and Capital Oil Plc. The NSE suspended trading on the shares of the companies with effect from Tuesday September 1, 2020 over their failure to file their audited financial statement for the year ended December 31, 2019.”
Regulatory rules at the local bourse require all quoted companies to submit their annual audited report and financial statement not later than 90 days after the end of the financial year.
More than 85 per cent of quoted companies including all banks, insurers, major manufacturers, oil and gas companies and conglomerates use the Gregorian calendar year ending December 31 as their business year. Thus, the deadline for the submission was Monday, March 30, 2020.
The disruptions caused by the COVID-19 pandemic, had led both the NSE and Securities and Exchange Commission (SEC) to extend the deadline for submission of annual report and accounts by 60 days, till May 29, 2020.
The NSE stated that the companies were suspended after the expiration of the “grace” period and many notifications demanding the submission of the financial statements.
“In accordance with the rules set forth above, the suspension of trading in the shares of the above listed companies will only be lifted upon the submission of the relevant accounts and provided the Exchange is satisfied that the accounts comply with all applicable rules of the Exchange,” NSE stated.
However, R.T. Briscoe Nigeria last week filed its outstanding financial statements with the exchange. In view of the company’s submission of its outstanding financial statements, dealing members were notified that the suspension placed on trading on the shares was lifted on Friday, 25 September 2020.
Operational challenges
The Acting Chairman of the company, Sir Sunday Nwosu, addressing shareholders at the 2018 AGM, said the three major threats to the going concern status of the company over the past few years had been its liquidity challenges due to chronic undercapitalization, the loss-making business situation including the winding-up petition and another court case which arose due to the inability of our company to settle its indebtedness to its bankers.
Nwosu who noted that the major threats to the going concern status of the company are being firmly addressed and the results have been slow but encouraging explained that the Board and indeed the shareholders of our company are concerned about the liquidity challenges of the company and are taking steps to resolve this situation.
“It would be recalled that our shareholders at two separate AGMs in 2014 and subsequently in 2016, authorized the Board to raise up to N10 billion by way of equity, debt capital or a combination of both to recapitalize the company. To actualize this, the Board retained the services of Lead Capital Plc as financial advisers, to identify potential investors and facilitate the recapitalization exercise.
Recently, the services of Dunn Loren Merrifield Advisory Partners (DLM) were also engaged as Investment advisers, with the mandate to raise additional capital to refinance company’s existing debts, finance startup of new business and enhance working capital. DLM has developed and recommended a rather distinctive recapitalization scheme.
“The scheme involves the institution of a money market fund with a life span of about 12-18 months, where existing shareholders of the company and other interested investors may subscribe to units of the offer by making a single lump sum payment or commit to pay in instalments.
A share conversion exercise involving the shares of the company would subsequently be consummated after the termination of the fund. The board has approved an engagement letter from DLM setting out comprehensively the terms and conditions of the fund raising exercise in preparation for formal applications to the regulatory authorities to kick start the process,” he said.
Outlook
Nwosu noted that the future of our company lies in its ability to reposition itself and chart a differentiating course in the very competitive auto industry which currently accounts for about 70 per cent of our business activities.
“We are currently also focusing upon and developing our technical and real estate businesses which have shown promising prospects over the years but have had restricted growth due to limited working capital.
Our company holds licences (now due for renewal) for the assembling of motor vehicles and generators in Nigeria and in this regard, we are currently reinforcing our relationship with BYD, a global leader in electric automobiles, metro transportation and alternative energy with a new MOU to be executed. The expected recapitalization of the company would give the needed impetus for the exponential growth of our various business activities,” he said.
Last line
With the ongoing weaker global commodity demand and pricing decline, many forecast that automobile firms may take more time to settle unless government fast tracks people- oriented programmes to lift the economy from the state of despondency.