Briscoe Motors: Pioneer dealer of Toyota automobile in Nigeria suffers N1.27billion loss

Briscoe Motors has sent its audited financial results to the Nigerian Stock Exchange. The results revealed that the auto dealer suffered a loss of N1.27 bn in 2019.

According to the report released by the exchange today, the company’s performance is an improvement, when compared with the N2.18bn loss, the company reported in 2018.

Highlights

1) Revenue increased by 33.9%

2) Cost of sales increased 41.8%

3) Operating profit increased by 94.5%

4) Finance costs decreased by 37.3%

5) Loss for the year decreased by 41.7%

A cursory view of R.T. Briscoe’s performance, revealed that revenue increased from N5.18bn in 2018 to N6.94bn in 2019. This increase was driven by the improvement in the dealer’s core business segment, as the proceeds from the sale of Motor vehicle and accessories in 2019, rose by 59.7%.

This improvement in revenue is a consequence of the board’s decision in 2017, to return the company back to profitability, with avid steps taken to restructure the business for greater efficiency and economic rewards, via a strategic positioning of the company’s business segment to customers. This has helped the core business segment of Briscoe in recent years.

Despite this improvement, it is noteworthy that the 61% increase in the cost, coming from the company’s activities in the Motor vehicle and accessories segment, continue to pressure the growth prospect of the dealer.

In like manners, the rising cost of sales from this segment was compounded by a N1.45 billion finance cost, which the company incurred during the year, as the company is aggressively geared with bank overdraft of N15.76bn, representing 86% of the total liabilities of the company.

With recoverability of the trade and other receivables of the company long overdue, the Toyota Automobile dealer is exposed to credit risk, as trade and other receivables accounted for 31% of the total assets value of N8.914bn.

Key issues facing the company

It is noteworthy that the auto dealer has a massive working capital deficit of N14.76bn, driven by a current debt of N15.76bn.

With bank overdraft and other debt unpaid, the company faces penalty charges by banks and court litigations. All these issues have led to winding-up cases of the company, from the banks and other creditors.

As a result of both current and previous losses incurred over the years, the shareholders’ fund has been completely eroded, to the tune of N9.5bn and N9.9bn deficit for the group and company respectively, as at December 2019. The widespread vulnerability in the company’s book has cast doubts on the going–concern of the company.