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Friday, March 31, 2023

Union Dicon Salt Seeks Going Concern Status Despite Zero Revenues 

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Union Dicon Salt Plc, whose principal activity is the processing of crude salt, and sales of packaged water in sachets and plastic bottles, is seeking to remain a going concern, despite recording zero revenues from operations for 2 years running.

The company says its objectives when managing capital are to safeguard the company’s ability to continue as a going concern in order to provide returns for shareholders and to maintain an optimal capital structure to reduce the cost of capital.

Going concern is an accounting term for a company that is financially stable enough to meet its obligations and continue its business for the foreseeable future.

The Company is currently experiencing difficulty in maintaining a positive working capital position. It made a loss before taxation of N19.35 million during the period ended 31 March 2019, and its current liabilities exceeded its current assets by N979.55 million and had a negative shareholders’ funds of N1.075 billion.

“Accordingly, there is an immediate need to address the impact of the negative working capital and net liabilities respectively. To facilitate this, the management is committed to engage in productive activities in the coming year with the approval by the Board to revive salt production and diversify into other business opportunities. As part of the measures to sustain the going concern, the amount due to the related parties will not be required for immediate repayment until the Company returns to profitable position,” Union Dicon said in its fourth quarter (Q4) financial statements released on Thursday.

For the December 2020 period, despite recording zero revenues, Union Dicon still racked up expenses worth N114.5 million. Rental and other income of N61.4 million meant it reported a loss after tax of N53.06 million.

The firm says it prepared the financial statements on the basis of accounting policies applicable to a going concern.

“This basis presumes that the actions being taken by the directors…will yield positive result and that the realisation of assets and settlement of liabilities will occur in the ordinary course of business,” it said.

Union Dicon Salt’s issued share capital is held thus: 28 percent by Aims Limited, 19 percent by Defence Industries Corporation, 14 percent by Danjuma T.Y, 8 percent by Taraba Fisheries Ltd, 8 percent by T.Y. Holdings Ltd, 1 percent by Danjuma Grace Elizabeth, 4 percent by UDS Plc (Staff Trust Fund) and 18 percent by others.

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