RT Briscoe, an authorised dealer of Toyota Motors and industrial equipment such as forklift, does not have the capacity to meet its interest obligations, which resulted in a net loss even as it makes a profit from its core business.
It is important to note that the company has not turned a profit in the last nine years, and auditors have expressed their concerns that the auto dealer. may seize to exist in the foreseeable future.
The beleaguered firm posted a loss after tax of N1.30 billion in the third quarter of 2022, from a loss of N1.64 billion as at September 2021.
While operating income surged by 583.40 percent to N1.29 billion due to an uptick in revenue, it was not enough to cover finance costs.
The interest coverage ratio for RT. Briscoe stood at 0.49 at the end of 2022, from 0.10 last year, according to MoneyCentral calculations. The figure is a measure of a company’s ability to repay its debts, with a ratio of at least 2 generally considered the minimum acceptable amount for a company with solid revenues. Analysts typically prefer a coverage ratio of 3 or higher.
The deteriorating financial health of the company has elicited a qualified opinion of auditors who said owners must take urgent steps to stem shrink debts that have created material uncertainty over the future of the entity.
In 2020, the company said it had defaulted on N15.7 billion loan facilities from seven banks who might sue the car dealer to court and such litigations could lead to a receiver been engaged to liquidate the company and share the proceeds to creditors.
Drilling down the financial statement shows bank overdraft (current liabilities) of N17.95 billion is 1.97 times total asset.
Of course, the firm does not have sufficient liquid assets to pay its short term obligations as total current liabilities of N22.94 billion exceeds N3.79 billion current assets.
There are concerns that a negative cash flow from operating activities of N1.73 billion and negative retained earnings of N18.05 billion means shareholders will not be paid dividend, and the consequences is that investors are going to continue to dump shares.
R.T. Briscoe Nigeria PLC is a publicly quoted diversified holding company that has operations in Automobile, Industrial Compressor, Material Handling, Industrial Equipment, Power and Real Estate business.