Management inefficiency deprives Berger Paint shareholders o

Management inefficiency deprives Berger Paint shareholders o

July 18, 2006

 

 

 

Shareholders of Berger Paint Nigeria Plc who attended the company’s annual general meeting (AGM) held in Lagos last week were disappointed that they could not go home with any reward for their investment in a whole financial year.


But the company’s financial report showed that neither the shareholders nor the economy was to be blamed as Management owned up on page 25 of the accounts that they were responsible for the problem.  The sum of N466.212million was lost during the accounting year due to what they described as weakness arising from poor implementation of the company’s management information systems in previous years.


The weakness according to the report included irregularities, unsubstantiated debit balances missing/incomplete records supporting certain accounting entries resulting in losses totaling N466.212million.The Board reportedly wrote off the losses during the financial year ended December 31, 2005. Two of the company’s executive directors and the chief executive have been sent packing as a result of their inefficiencies.

The company incurred an increase in interest expenses of over 93percent from N74.954million in 2004 to N144.954million in 2005. Increase in interest charges in the reviewed period was attributed to a rise in loan portfolio  from N312.82 in 2004 to N542.52million in 2005 .Besides the company’s financial state was further complicated by  cost of sales which stood at N1.154billion compared to  a turnover of N1.914billion generated during the year.

Berger Paint has a contingent liability of N112million in respect to staff gratuity as at December 31, 2004 out of which N59million was provided for in the current year. The company’s board said they intend to amortize the shortfall of N53million in 2006 and 2007 based on approval from the Nigerian Accounting Standard Board to spread the shortfall in provision up to December 31, 2007.


Shareholders seem to have developed apathy to the company as unclaimed dividends portfolio continues to grow. It has increased to N8.531million in 2005 compared with N3.7million in the previous year.


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