Caverton Offshore Support Group slipped into a loss of N4.3 billion in 2021 from an after-tax profit of N1.2 billion in 2020.
The challenges of the aviation and logistical support company stemmed from a huge debt burden of N31 billion that bore finance charges of over N5.8 billion for the year.
The company’s full-year audited accounts for the 2021 operations ended December indicate that finance costs rose from N4 billion in the preceding year while operating profit dried up in 2021 from N5.2 billion in 2020 to N26 million. The finance cost, therefore, threw the company’s accounts into the red to the tune of N5.6 billion pre-tax profit at the end of the financial year.
A net foreign exchange loss of N3.7 billion is one of three developments on the income statement that dried up operating profit in 2021. It is a further build upon a foreign exchange loss of N2.4 billion in the prior financial year, consuming 38 per cent of gross profit.
The company is indebted to banks in both foreign and local currencies in Nigeria and overseas, which leaves a wide room for exchange losses in the sustained local currency depreciating environment. New borrowings happened in 2021, raising total debt from a little below N21 billion in 2020.
Resort to borrowing is compelled by the huge and rising level of receivables, amounting to over N24 billion at the end of 2021. This constitutes largely of security deposits, withholding tax and trade receivables and advance payments.
Another major rising cost is the cost of sales, which grew well ahead of revenue at over 34per cent to roughly N25 billion. It claimed a significantly increased share of revenue at nearly 72per cent in 2021 compared to less than 58per cent in 2020.
The overriding challenge for the company in the year is the inability to grow revenue while costs grew. The company’s management blamed the revenue weakness on a drop in oil production activities caused by the coronavirus pandemic.
Turnover amounted to N34.7 billion for the 2021 operations, just marginally up from N32 billion in the preceding year.
Revenue improvement failed to cover an N6.4 billion increase in the cost of sales, which compressed the gross profit margin considerably. Gross profit dropped by 28per cent to close at N9.8 billion for the year. This barely covers administrative expenses of N6.3 billion and foreign exchange loss of N3.7 billion.
The loss incurred in the year shrank the size of the company’s balance sheet from N21.8 billion in 2020 to N17 billion in 2021. Its retained earnings are however robust enough to absorb the loss and still closed at over N8.8 billion for the year. Loss per share amounted to N1.28 for the company in 2021, down from earnings per share of 35kobo in 2020.
Looking forward to 2022, the company is exploring opportunities for diversification of operations and earnings within and outside the oil and gas logistical sector. It is also focusing on third party training and maintenance for the year, according to the company’s chief executive officer, Bode Makanjuola.
“Our Maintenance Repair and Overhaul facility and our Caverton Aviation Training Centre, both in Lagos, officially commenced business operation in the second half of 2021”, Makanjuola said. He assured that the current financial year holds extremely positive prospects for training and maintenance, having entered into advanced contract negotiations with several government and private institutions across sub-Saharan Africa.
Comments are closed.