Caverton Offshore 2019Q1 Net Profit Up 170.18%, Despite Bloating Costs

The share price of Caverton Offshore Support Group changed by a marginal 0.37% on Monday, as investors were either not swayed by the 2019 first quarter financials presented during the trading session, or are still digesting the result.
Highlights of the financials show that top and bottom-line growth was significant, despite the equally high operating costs, just as management ensured finance cost was kept in check during the period.
Earnings per share, therefore, stayed impressive, ensuring that the board is able to offer a juicier dividend payout if the tempo is sustained into the months leading to year end and beyond for the good of its shareholders.
Revenue for the period was up by N3.834bn or 84.07% from N4.56bn in the first quarter of 2018, to N8.34bn, driven mainly by income from helicopter/airplane contract of N7.691bn, an increase from N4.476bn. The biggest percentage rise was the N597.425m income from helicopter charter, up from N30.197m, representing an increase of 1,879.79% within the period.
Operating expenses climbed by N2.021bn or 73.51% to N4.771bn, compared to the N2.749bn reported in the 2018Q1, the bulk of which was the N1.811nbn crew salaries, which rose from N1.031bn in 2018Q1; followed by aviation fuel and spare parts expenses that jumped by 284.44% from N440.602m in 2018 to N1.693bn. Aircraft rentals expense dropped marginally from N1.025bn to N1.022bn.
Operating profit, therefore, rose by N1.758bn or 97.13% to N3.569bn from N1.81bn in the corresponding period of last year.
Administrative expenses stood at N1.928bn, rising by N966.918m, or 100.57% from N961.404m in 2018, with employee benefit expenses rising to N461.829m from N319.815m; depreciation stood at N476.171m from N265.658m. The company also sustained exchange loss of N295.6m, a first-time expense; just like management expenses which stood at N147.724m. Other expenses and overheads increased from N182.448m in 2018Q1 to N328.994m.
Other operating income increased by N6.359m or 16.81% to N44.181m from N37.822m; with grant, income constituting N44.596m, up from N12.744m.
The company’s total operating profit, therefore, climbed by N798.094m or 89.98% from N886.988m in the corresponding Q1 of 2018 to N1.685bn this year.
Finance income fell sharply from N6.615bn to N250m, representing a drop by about 96.22%; while finance cost (interest on debts and borrowings) increased N50.262m or 12.05% from N417.083m to N457.345m.
Profit before tax, therefore, soared by N741.467m or 155.6% from N476.52m in 2018, to N1.217bn; while net profit increased to N793.065m from N283.533m, representing a rise by N499.532m or 170.18%; even when tax expense increased by N241.935m from N182.987m from N424.922m. Earnings Per Share, therefore, rose from just nine kobo in 2018Q1 to N24 kobo each.

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