Analysis:Top 20 Things You Need To Know About Caverton Group…See Details

Caverton Group list officially on the 20th of May 2014. The group follows the likes of Seplat and CWG having joins the fray of publicly quoted companies. A lot ordinary folks out there may be interested in this listing and as a result we have decided to present a 20 point summary of key details of the company. Here are what we think are fundamental details of the company.

1. Caverton Off Shore Support Group has  4 major subsidiaries Caverton Energy, Caverton Helicopters, Caverton Integrated Services and Caverton Marine. They own 99% of each of the subsidiaries. The company began operations in 1999 and branched into helicopter services in 2002
2. Caverton Offshore Support Group provides services for several IOC’s in Nigeria some of which are Saipem, LNG, ExxonMobil, Total, Shell, Addax etc. They also have as technical partners the likes of VP.Ships, AgustaWestland etc
3. The group offers the following services; Offshore & onshore Oil Field logistics, Private charters, Third party maintenance, Executive ground handling services , Hangarage, Vessel charter, Vessel management § Ship stevedoring
4. The combined group has a total of 650 employees operating out of 9 locations
5. The group relies heavily on the Nigerian Oil and Gas Industry for it revenue. However, it plans to diversify client base by servicing the government and military. It also plans to expand its businesses into training facilities and helicopter maintenance. It also plans to expand into other countries.
6. The group has vessels of 1330mt, 1380mt and 1380mt of deadweight respectively. It uses this of its offshore marine services. It also has about 22 Helicopters ranging from 11 seater to 15 seated.
7. It uses its vessels to transport LPG for the likes of NLNG and NNPC. It also imports LPG
8.  The group claims it has grown its revenue over the last 6 years (2008-2013) at a compounded annual growth rate (CAGR) of 34%. Revenues was N4.2b, N5.4b, N7b, N10.9b,N16.1b and 17.9b for the 6 years between 2008 and 2013 respectively.
9.  It also reveals its revenue growth in 2010 and 2011  was as a result of winning major contracts with IOC’s such as Shell and Total respectively
10.  Despite the increase in revenues EBITDA margins haven’t witnessed the same growth trajectory. For example it was N1.5billion in 2008 and rose to N2.7billion in 2010 only to drop to N1.5b in 2011. It rose again to N3.7b and N5.6b respectively.
11. Profits has also grown in leaps in and bounds over the last six years. Profit was N128m, N436m, N402m, N60, N1b and N1.3b for 2008, 2009, 2010, 2011, 2012 and 2013 respectively.
12.  You may have noticed the dip in 2011. Well they attributed that to an “increase in operational costs directly related to the contracts won in 2010/2011.” It will be nice to get better clarification of that.
13. The group has also paid out dividends over the years paying N168m, N251m, N268m and N318m respectively. This translated to over 30% in dividend payout ratio or an average of 52% in dividend payout ratio. At a listing price of N9.5 trailing dividend yield would be about 1% much less than the average 5% we see in the NSE.
14.  It had a debt balance of about N18.2b as at December 2013. It was N14.8b and N21.4b in June 2013 and June 2012 respectively.
15.  It has a Net operating cashflow of N7.4b in December 2013. It was a negative N6.2b in 2012.
16.  Net Assets is N10.8b indicating a debt to equity ratio of 1.8X. A listing at N9.5 per share values the company essentially at N31.8b or 3x its current Net Assets (PB Ratio). Rather high considering other well grounded stocks.
17.  The most recent return on equity is about 12%. Current details released by the company suggest ROE may not have been more than 14%.
18.  Profit margin was 7% at the end of December 2013.
19.   The Chairman of the company is Mr Aderemi Makanjuola and CEO (his son) Mr Olabode Makanjuola. They have two other executive directors and 5 other non executive directors including former minister of state for petroleum Hrm Edmund Maduabebe Daukoru.
20.  The company has 5 top shareholders with Tasmania Investments Ltd owning 54% of the company. Shareholding structure is as follows.

Shareholder                                               No. of ordinary shares                  Ownership %

Tasmania Investments Ltd                       1,810,199,025                          54.02%

Molar Vessels and Supplies Ltd.               402,950,000.                          12.02%

Mr. Aderemi Makanjuola.                         589,110,975.                           17.58%

Mr. Olabode Makanjuola.                         50,005,000.                             1.49%

Mr. Adeniyi Makanjuola.                           50,005,000.                             1.49%

Others.                                                         448,239,750                             13.37%

Total                                                            3,350,509,750                            100%

It is almost inconceivable that this listing will not be immediately followed by a capital raising exercise in the near future with the target being to repay its debts. The current entry price looks relatively high at first glance but further insight into the company financials may help with decision making. For now thought this is what we have been able to scoop.

Finally, it’s exciting seeing more indigenous companies listing on the Nigerian Stock Exchange and giving Nigerians the opportunity to invest across diverse sectors. Kindly send us an email if you require further information regarding the company.