Directors Present 2016 Financials, Worry Over ‘Going Concerns’ Basis Of Union Dicon Salt

Despite 2016 Profit, Auditors Flag N1.5bn Negative Liabilities, S’Funds

Nine months after the end of the reporting period, directors of Union Dicon Salt presented its audited result for the year ended December 31, 2016, showing a return to profit which arose from write-back of statute-barred amount due to related companies and staff employee benefits.
This is just as BDO Professional Services, the external auditors warn that the company may not be out of murky waters just yet, drawing attention to the net current liabilities (current liabilities less current assets), as well as the negative shareholders’ funds of N723.393m and N774.516m respectively for the period.
Above all, the result points to the urgent need to recapitalize the company ahead of the keen competition in its core operational business and given the present administration’s focus on the agric sector to boost economic growth and development.
The result showed that while there was no revenue or cost of selling salt, there was no gross profit, while other operating income increased from N471.116m, arising from rental income, provision written back, investment income and other income, from N78.659m, administrative expenses dropped to N72.154m from N80.944m.
Provision written back of N427.93m, up from N4.915m, the company explained, represented write-off of long outstanding liabilities in the books which have become statue-barred. The breakdown showed that accrued expenses stood at N201.559m, up from N4.915m, while payables to related parties were N146.371m and obligations to the employees amounting to N80m.
This resulted in profit before tax of N398.962m, as against the previous loss of N2.285m, following which tax expenses climbed to N10.929m, as against the preceding N347,000.
Profit after tax therefore stood at N388.033m, an improvement over the preceding year’s N2.632m loss.
The board therefore noted the “immediate need to address the impact of the negative working capital and net liabilities respectively,” as a result of which the board opted to diversify of the company from its core business into agriculture, investing N25.5m on acquisition of land in Edo State for farming activities.
To sustain the company’s going concern, the directors noted that “amount due to the related parties will not be required for immediate repayment until the company returns to profitable position.”