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John Holt Plc: Remarkable stride in bottom line despite weak liquidity position

Jan 13, 2015

John Holt Plc Company was incorporated on 28 August 1961 in Nigeria as A Limited Liability Company. The Company was listed on the Nigerian Stock Exchange in May 1974. John Holt Plc is a subsidiary of John Holt & Company (Liverpool) Limited, UK. 51.46 per cent of the issued share capital of the Company is owned by John Holt & Company (Liverpool) Limited, UK, while 48.54 per cent is owned by Nigerian Individuals and corporate investors. The principal activities of the Company are the assembly, sale, leasing and servicing of power equipment and the distribution of consumer and other goods.

John Holt Nigeria Plc has proven with its impressive full year 2014 financial results that a well diversified business reduces risk, gives high returns on investment to owners of a firm. As a conglomerate with subsidiaries and businesses that span in assembly, sale, leasing and servicing of power equipment and the distribution of consumer and other goods, we believe the company is well diversified enough to tap into the Nigeria robust economy.

The company’s audited financial statement for the year ended 30 September 2014 showed revenue reducing by 7.34 percent to N2.81 billion from N3.03 billion the same period of the corresponding period of last year.

Although management hasn’t issued statements explaining the slow growth at the top line level, we are of the views that the drop may be due to the security challenges in the north part of the country which has hampered most firms from pushing their products to the crisis region, thus crimping market share.

Additionally, the squeeze in consumer wallets may have culminated in low patronage for some of the firm’s products. While inflation rate reduced to 7.9 percent in November 2014 from 8.1 in November, most firms in Nigeria are still grappling with receding sales due to weak consumer purchasing power.


While most firms are under the shackles of spiraling costs that dents bottom line, John Holt has achieved remarkable stride in the areas of reduced input costs as cost of sales fell by 17.0 percent to 1.84 billion from 2.22 billion the preceding year. Additionally, finance costs reduced by 104 percent to N250 million in the review period from N510 million the same period of the corresponding year. Gross profit was up by 18.4 percent to N967 million compared with N813 million last years, signifying the better management of direct costs attributable to projects. Operating expenses in the review period was flattish at N1.31 billion, which shows the company is cutting down costs while pursuing aggressive expansion with a view of increasing its share of the market.

As a result of the aforementioned costs reduction mechanisms put in place the savvy management of the company, profit before tax (PBT) increased by 61.74 percent to N427 million in the current year from  N264 million the preceding year. Profit after tax (PAT) also followed the same growth trajectory as it rose by 535.48 percent to N591 million as against N93 million last year buoyed by a tax gain of N127 million. The tax gain may have arisen as a result of tax relief called capital allowance enjoyed by the company on some of its newly acquired assets.


Current ratio which measures the ability of a firm to meet short term obligation were in negatives as total current liabilities exceeded total current assets (negative current liabilities or negative net working capital).

The company recorded negative net current liabilities of N4.31 billion which is 6.55 percent lower than the N4.61 billion negative figures recorded last year. It should be noted that the company’s negative net working capital (net current liabilities) of N7.10 in the 2013 financial year end  was deleterious, harmful and detrimental to the company’s going concern as it culminated in negative shareholder’s fund of N3.30 billion. John Holt weak liquidity position earned it a qualified opinion from its external auditors who stated unequivocally that except for the material uncertainty that threatens the going concern of the company, the financial statement give a true and fair view. 

Although the liquidity position of a company does not necessary jeopardize its profitability position, we advice the company to be more stringent in liquidity management in order to prevent bottlenecks that may impair its ability to meet the day to day running of the organization.


There was a 66.78 percent drop in property plant and equipment (PPE) to N1.87 billion in the period under review compared with N5.63 billion last year. Despite the drop in PPE, total assets increased by 11.29 percent to N10.30 billion in the current year as against N9.25 billion the same period last year. The rise in total assets can be attributed to a 274.58 percent increase in investment property to N5.61 billion from N1.49 billion the preceding year.

Revaluation reserves were up by 78.87 percent to N1.55 billion compared with N833 million last year while revenue reserve also increased by 61.12 percent to N962 million. The swell in revaluation reserve and revenue reserve helped expiate this year’s shareholders fund.


We are optimistic that cornucopia of investment opportunities lies ahead for John Holt and other conglomerate given Nigeria’s growing population. The country the large chunk of the country’s population are youth between the ages of 16 and 28 years, which means a lot of people will need automobile in the near future. Furthermore, the burgeoning middle class with disposable income means the demand for John Holts products will be on the increase thus bolstering its top line performance.

The last rebased GDP showed the country’s economy at N80.22 trillion ($510 million), a positive prognosis that the future is bright for conglomerates in Africa’s most populous nation.