Caverton reports N202.7 million Profit After Tax for the first half of 2022

Caverton Offshore Support Group Plc (NGX: CAVERTON) reported a Profit After Tax (PAT) of N202.79mn for the first half of 2022. The company recently published its unaudited consolidated financial statements for the period ended 30 June 2022 to the Nigerian Exchange Limited.

A source of worry for Shareholders of the company will be its performance for the second quarter period of April to June, wherein it reported a loss of N409.05mn. The Q2 negative performance comes with a reduced revenue of N6.00bn, from N9.90bn it booked in Q2 2021.

That the company reported profit in H1 2022, was because of the N611.85mn profit after tax it recorded in the first quarter period from January to March 2022.

Commenting on the results, Caverton’s Chief Executive Officer, Mr. Bode Makanjuola, said that the company faced tremendous financial and operational head winds in the first half of the year which necessitated the need for the management and the board of Caverton to urgently review the company’s management structure and business portfolio as a Group.

We recently announced the appointment of a new Managing Director for Caverton Helicopters, restructured Caverton Offshore Support Group’s executive management and diversified our aviation business from oil and gas aviation logistics to third party training and maintenance, via our recently commissioned Maintenance Repair and Overhaul (MRO) facility and our Caverton Aviation Training Centre (CATC), both in Lagos. These announcements have been well received by the wider aviation and oil and gas industry and we are confident this strategy would yield positive financial fortunes for the Group whilst addressing this infrastructure gap in the aviation sector of Nigeria and sub-Saharan Africa.

Our marine subsidiary, Caverton Marine, has also been repositioned for growth with our foray into local manufacturing of GRP boats. We recently launched our prototype 40-seater GRP ferry at the recently concluded NOG 2022 conference in Abuja, Nigeria and reception has been very positive. The ferry protype was locally built to the highest safety and quality standards under guidance of government and safety agencies and has applications in both oil and gas and commercial mass transit ferry transportation.

Analysis of the Financial Statements

Income Statement:

Revenue: N13.96bn, compared to N18.06bn earned in H1 2021, an 22.74% YoY decline. The bulk of the revenue came from Helicopter/Airplane contract, which brought in N12.02bn (H1 2021: N17.47bn). Helicopter charter brought in N358.52mn (H1 2021: N514.17mn), Vessel Agency Service brought in N65.64mn (H1 2021: N51.99mn), Helicopter maintenance brought in N9.05mn (H1 2021: N2.18mn) while other revenue which included CATC, MRO, LASG etc brought in N1.50bn (H1 2021: N2.00mn).
Operating Expenses: The company spent N10.45bn on operating expenses, 10.66% lower than the N11.70bn it spent in H1 2021. Most of the expenditure was made on Crew Salaries (N4.57bn), Aviation fuel, spare parts and consumables (N2.08bn), and Aircraft Insurance premium (N1.10bn).
Administrative Expenses: The company’s administrative expenses dropped 27.09% to N1.80bn from N2.47bn. A bulk of the administrative expenses was made on Employee benefit expenses which amounted to N764.35mn (H1 2021: N982.10mn).
Finance cost: CAVERTON paid an interest of N1.24bn on its debts and borrowings, significantly lower than the N2.42bn it paid in H1 2021.
Profit Before Tax: N253.87 million, compared to N924.51 million in H1 2021 (72.62% YoY Decline).
Profit After Tax: N202.79 million, compared to N780.01 million in H1 2021 (74.10% YoY Decline).
Earnings Per Share: 6 kobo (23 kobo in H1 2021).

The company’s Gross Margin dropped from 35.25% in 2021 to 25.14%, while its Net Profit Margin dropped from 4.32% in H1 2021 to 1.43%. The EBITDA Margin is 51% (50% in 2021), while the EBIT/Interest Expense is 5.65% (3.71% in 2021).

Balance Sheet:

Total Assets: N81.05 billion, compared to N78.33 billion as at 31st December 2021 (3.48% Increase). Of these assets, N20.45bn is on property, plant and equipment under non-current assets. The company’s contract assets are worth N10.18 billion, while its trade and other receivables was N22.34bn. It’s cash and bank balances was N7.41bn.
Total Liabilities: N63.62 billion, compared to N61.02 billion as at 31st December 2021 (4.25% Increase). The biggest ticket on Caverton’s liabilities book is its interest bearing loans, which combined amounts to N25.26bn. its Trade and Other Payables rose to N29.66bn, from N20.26bn.
Shareholders’ Fund: stood at N17.43 billion, a marginal reduction from N17.30 billion as at 31st December 2021.
Retained earnings: N9.05bn, against N8.85bn as at 31st Dec. 2021, 2.26% up.

The Net debt/Equity is 0.89x (128x in 2021), and the Net debt/EBITDA is 2.16x (2.46x in 2021). Long-Term Debt/Total capitalization is 0.51x (0.53x in 2021). Asset turnover is 0.17x (0.23x in 2021) and the EBIT/Capital Employed is 4% (9% in 2021).

Cashflow:

Operating activities: N9.62 billion was used in operating activities, against N7.04 billion generated in H1 2021.
Investing activities: N17.11 billion was generated from investing activities, against N4.80bn used in the same activity in H1 2021.
Financing activities: N11.08 billion was used in financing activities, against N497.11 million used in H1 2021. N7.68bn was used in the repayment of borrowings, while N2.15bn was repayment of principal portion of lease liabilities and N1.24bn was interest paid.
Cash and cash equivalents at the end of the period was N7.41 billion (31st December 2021: N1.11 billion).

There was no corporate action announcement following the release of the financial statements.

About the Company

Caverton Offshore Support Group Plc is a limited liabilities company incorporated and domiciled in Nigeria. The registered office is located at 1, Prince Kayode Akingbade Close, Off Muri Okunola Street, Victoria Island, Lagos, Nigeria.

The Group is principally engaged in the provision of offshore services to the oil and gas industry, harbour and general marine operations; and the provision of charter, shuttle and maintenance services of helicopters and airplanes to third parties. Information on the Group’s structure and other related party relationships of the Group is provided in Note 30.

The Group has a 99% interest in both Caverton Helicopters Limited and Caverton Marine Limited. The Group also has a 100% interest in Caverton Helicopter Cameroon.

Caverton Marine, one of the fastest growing indigenous shipping companies commenced operations in 1999 while Caverton Helicopters a helicopter charter, sales and Maintenance Company was established in 2002.

Both companies were consolidated to form Caverton Offshore Support Group on 2ndJune 2008. The Group’s focus and primary business is to provide logistics and environmental support services to oil and gas fields with broader plans to support energy operations along the West African shelf as well as other ancillary support services. Caverton has a young and growing fleet of vessels and aircrafts operating out of nine locations.

The Group has a 49% interest in Caverton Aviation Cameroon. The Group also has a 49% interest in Caverton Offshore Support Group (Ghana) Limited.