John Holt In Assets Stripping | Independent Newspapers Limited
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John Holt In Assets Stripping

Posted: Mar 2, 2016 at 9:26 am   /   by   /   comments (0)

*Moves to Sack Staff to Enhance Liquidity

Olisa Egbunike, Lagos

John Holt Plc, one of Nigeria’s oldest and legacy companies quoted on the Nigerian Stock Exchange (NSE), has embarked on serious assets stripping nationwide in an aggressive move to garner financial muscle for its operations.
The assets stripping, which currently saw the legacy institution holing up at Plot 1609 Adeola Hopewell St, Victoria Island, Lagos, Independent gathered was part of the options taken by board and management to save the company from the heavy threat of bankruptcy.
Independent investigation showed that the company which had sold three of its choice properties in Lagos, some in the South East and South-South, took to asset stripping following the company’s external auditors’ warning that the conglomerate’s financial position from 2015 operations makes its highly doubtful for them to continue as a going concern.
The current audit report of John Holt incorporated in Nigeria in August 1961 and listed on the NSE in 1974, showed that the conglomerate’s liabilities exceeded its assets by N4.2 billion while it has a negative shareholders’ fund of N3.6 billion.
The external auditors to John Holt, BDO Professional Services, said the liabilities, negative shareholders’ funds and reversion to loss indicate “the existence of a material uncertainty which may cast significant doubt about the company’s ability to continue as a going concern”.
The Lagos-based auditing firm, a member of BDO International Limited, a United Kingdom company by guarantee, said in the audit report for the year ended September 30, 2015, that the company’s negative debt to adjusted capital ratio deteriorated from 51 percent in 2014 to 38 percent in 2015 following huge losses incurred in 2015.
“This is an indication that there is serious shortage in the company’s working capital requirements and the company’s future operations are threatened. To meet the shortfall, the shareholders and the parent company would have to introduce additional capital not only to provide for the shortfall but also future operations,” the report argued.
Independent also reports that in the era of good corporate governance the company’s directors agreed with the auditors on the basis that the validity of the going concern will require the shareholders to provide additional support through provision of fresh working capital in addition to new financial leveraging from their bankers.
The audit report also advised the company to adjust and seek the reduction of its value assets to provide for further liabilities in the absence of financial support by shareholders and their bankers.
Some of the directors confirmed to Independent that the asset stripping is part of the measures they are implementing to improve the liquidity and profitability of the company.
One of the directors, who spoke on condition of anonymity, identified some of their strategic measures as closure of non-performing branches, disposal of properties to enhance liquidity and staff retrenchment.
“As part of our strategies, we are expecting from this month (March 2016) fresh seed funds from some of the banks and concluded arrangements for new business windows toward sustainable expansion of the John Holt revenue base,” he said.
Meanwhile, audited report of John Holt for the year ended September 30, 2015 showed that turnover dipped N2.43 billion in 2015 from N2.82 billion recorded in 2014.
Gross profit also fell to N655 billion in the period under review from N967 million. With the reported loss of N528 million in 2015, operating profit shrank to N60 million from N677 million in 2014.
The report also showed that while operating costs reduced from N250 million to N231 million, the group incurred a loss before tax of N171 million in 2015 as against profit before tax of N427 million in 2014.
After taxes, net profit of N591 million in 2014 turned into a net loss of N254 million in 2015. Earnings per share reversed from N1.52 in 2014 to a loss of 65 kobo in 2015.
John Holt is a subsidiary of John Holt & Company (Liverpool) Limited, United Kingdom. John Holt & Company currently holds 53 percent majority equity stake in the Nigerian subsidiary.