By Michael Eboh & Nkiruka Nnorom

John Holt Plc has recorded significant erosion in its capital, as it posted a negative shareholders’ fund of N3.3 billion in its financial statement for the year ended, September 30, 2014.

This prompted the auditor of the company, BDO Professional Services, in the result presented to the Nigerian Stock Exchange (NSE) to raise an alarm over the ability of the company to continue as a going concern.

Specifically, John Holt has announced a profit before tax of N427 million for the group and N266 billion for the company, compared to N264 billion and N111 billion for the group and company respectively in 2013.

The Group also posted a profit after tax of N591 million compared to N93 million in 2013, while the company recorded after tax profit of N246 million, as against N97 million 2013.

However, the company’s revenue for the period nose-dived by 7.3 per cent to N2.815 billion compared to N3.038 billion recorded in the same period in 2013.

BDO Professional Services in the report of independent auditors, presented to shareholders of the company, said, “We wish to draw attention to note 42 to the financial statements which indicates that while the Company made a profit before taxation of N266 million, during the year ended 30 September 2014 and as at that date its current liabilities exceeded its current assets by N7.1 billion (2013:N6.9 billion and had a negative shareholders’ fund of N3.3 billion (2013:N3.7 billion).

“As at the same date, the Group’s current liabilities exceeded its current assets by N4.3 billion (2013:N4.3 billion). However, the Group had a positive shareholders’ funds of N3.3 billion (2013:N2 billion).

“These conditions indicate the existence of a material uncertainty which may cast significant doubt the company’s ability to continue as a going concern.”

Giving a basis for its opinion, the auditors said, “The comparative figures in the current year’s financial statements are as reported in the financial statements for the year ended 30 September 2013, which were issued by another auditor.

“We were unable to review the working papers of the predecessor auditor in line with the provisions of the International Standard on Auditing (ISA) 510. It is therefore not possible for us to carry out the required audit procedures necessary to obtain the required assurance in relation to the opning financial position included in the preceding year’s financial statements.”

Continuing, the auditors said, “We have not been able to obtain sufficient appropriate audit evidence about whether: the opening balances contain misstatements that materially affect the current year’s financial statements.

“Appropriate accounting policies reflected in the opening balances have been consistently applied in the current year’s financial statements or changes thereto are appropriately accounted for and adequately presented and disclosed in accordance with the applicable financial reporting framework.”