… Management Raises Directors Pay By 120% Despite Debt Crisis
The independent auditors of Tourist Company of Nigeria Plc, BDO Nigeria are doubtful of the company’s ability to continue operation after accumulating N59.2bn losses.
Despite the crisis, the management of Tourist Co.incurred huge payment to directors and the chairman. These were disclosed in the company’s financial statement for 2023, analysed by NewsNGR.
Tourist Company is the owner of Federal Palace Hotel and Casino in Victoria Island Lagos.
The year 2023 went was not too good for the company as its loss before tax rose by 891 per cent to N31.65bn.
In 2023, its books showed that shareholders suffered N1,409 loss per share in Tourist Company Nigeria.
Aside from its profit setback, the hospitality company has a negative equity of N7.7bn after its total assets of N56.3bn fell far below its liability.
Its liability had risen from N33.55bn in 2022 to N64.1bn in 2023, casting doubt on the company’s ability to meet obligations.
By the end of 2023, Tourist Company’s current assets which are made up of loans and borrowings had risen to N61.49bn.
The company blamed its losses on high inflation, the effects of the petrol subsidy removal and the continued depreciation of the naira.
But its external auditors are worried about accumulated losses worth N59.2bn, a condition BDO said indicates material uncertainty.
The auditors said, “We draw attention to note 31 of the financial statements which indicates that the company incurred a loss before taxation of
N31.63bn during the year ended 31 December 2023 (2022: N3.17bn) and as at that date, the company’s current liabilities exceeded its current assets by N1.1bn (2022: N600m).
“The company also has accumulated losses of N59.2bn as at 31 December 2023 (2022: N27.5bn). These conditions indicate the existence of a material uncertainty which may cast significant doubt about the Company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.”
But the company’s directors are still hopeful that Tourist Company of Nigeria Plc has the ability to continue to trade despite ongoing losses, and borrowings exceeding available cash resources.
“The repayment of the borrowings is governed by the Second Shareholders Agreement, which specifies repayments of the borrowings would only be triggered by the Company achieving specific profitability targets, and provided adequate funding is available.
“The profitability targets will not be realised for the foreseeable future. Despite the economic indicators, the directors remain concerned with the challenging trading environment. The directors have assessed the cash flows position and subject to trading conditions normalizing, the Naira not being devalued further against the US Dollar and the board being able to secure additional funding for the business, believe the Company has sufficient resources to continue to trade for the immediately foreseeable future.”
The board said its directors would continue to closely monitor the liquidity position of the company and notify shareholders.
Amidst the struggle for survival, the company raised the remuneration of its directors and chairman.
The pay of the executive director was raised by 120 per cent to N220.28m in 2023, from N100.1m in 2022.
This excludes “certain benefits of directors of the company, who discharged their duties mainly in Nigeria.”
NewsNGR’s findings showed that the chairman’s fee was raised from N352,000 to N500,000 while the highest-paid director’s earning was raised from N100.1m in 2022 to N220.28m in 2023.
The fees of the non-executive directors were raised from N2.32m in 2022 to N3.32m in 2023.
The directors who served during the period are, the Chairman, Chief Anthony Idigbe (SAN); Mr. Abatcha Bulama; Mr. Ufuoma Ibru and Mr. Toke Alex-Ibru.
Other directors who are South Africans include, Mr Ramakhatela Mokhobo; Mr. David Kliegl; Mr. Andrew Johnston and Mr. Graham Wood.