Japaul released its much awaited 2012 Audited Accounts with revenues rising 20% to N12.2billion. Gross Profit at the end of the period was N5billion (2011: N4.7billion) even as margins dropped to 40% during the period. The company suffered rising operating expenses which grew 28% to N4.3billion during the period thus slicing off 87% of gross profits. The company will post a pre-tax profit of N521million at the end of the year a huge 62% drop from 2011 (N1.37billion). Earnings per share at the end of the period dropped 71% to 4.53kobo at the end of 2012.
Japaul is also saddled with a combination of pure debt and quasi debt of over 12billion. However, N7.4billion of this are finance leases obtained from vessel owners which the company uses for his upstream operations. It also appears the company obtained about N5.4billion in loans during the year paying back about N1.9billion of that. With the company generating about N1.2billion in operating cash flow, it is not unlikely that they will struggle to meet debt repayment obligations in a timely manner.
Shareholders of the company would surely see this year as a failure for the company. Earnings per share are down 71% and returns on equity is a paltry 1.4%. The group also posted negative retained earnings as the provisions of IFRS wiped out about N5.6billion in adjustments. Whilst, it is comforting that the company is seeing double digit revenue growth, it inability to contain rising expenses will continue to eat into profitability. No company spending 87% of Gross Profit on operating expenses can remain competitive. It’s no wonder profit margins is a paltry 2%. The company share price has risen 6% in the last year but remained flat at 60kobo at the close of trading 3/5/2013. This is indicative of a sell, sell for not very few investors. Fortunately for the company it’s already close to its floor.
Japaul Plc posted its 2012 Audited Accounts on the website of the NSE
