Dismal: May And Baker Post N76million PAT

May and Baker released its 2012 Audited Accounts with revenue rising 17% to N5.6billion. Operating profit dropped 52% to N221million at the end of this year (2011: N468million). Profit after tax dropped a whopping 66% to N76million at the end of the period under review

Key Highlights

• The current years financial statements adopted the IFRS reporting standard for the first time

• Their revenue is segmented as follows: Pharmaceuticals, Beverage and Food. The segments produced N4.5billion, N59million and N1billion respectively

• Whilst the Pharmaceutical department contributed 42% to Gross Profit the food segment contributed just 14%

• Distribution and Selling Expenses rose 23% and sliced 90% of the company’s gross profit. 40% should be a reasonable charge and not 90%!!!

• Much of this is attributed to the rise in  depreciation and staff cost. Depreciation rose by about N215m and staff cost added an extra N100million. Both basically accounted for the N343million rise in operational expenses.

• Finance charges almost doubled to N470million and was 212% of operating profit when 15-20% should be the ideal percentage.

• Profit margin was a paltry 1.3%. Return on Equity was also just 2.4% in an industry where GSK posted 29% ROE.

• The company is also burdened with debt. Debt constitute about 116% of Equity. Their debtors include local banks, CBN, Bank of Industry. The company obtained a N2billion from a related party Ty Holdings.

• The company directors own about 35% of the company’s 980million shares. TY Danjuma the company’s chairman owns 24% of the company

• Share price is currently N2.17 and has risen 32% in the last year. The highest rise in the last year is N2.44. Current P.E ratio is 8.3x

May & Baker 2012 Audited Accounts was posted on the website of the NSE