Caverton Sheds N28.8bn as Stock Declines to 95 kobo

Investors in Caverton Offshore Support Group Plc have lost 90 per cent of their investment as the stock fell from N9.50 to 95 kobo per share 28 months after listing on the Nigerian Stock Exchange (NSE).

The stock, which was listed at N9.50 has experienced a consistent decline that hit 95 kobo monday. Consequently, the market capitalisation of Caverton fell from N32 billion to N3.2 billion, meaning that investors in the company have lost N28.8 billion.

The provider of marine, aviation and logistics services to local and international oil and gas companies in Nigeria, recently reported a loss of N2.422 billion for the half year ended June 30, 2016, compared with a profit of N1.093billion in the corresponding.

The company had sent a profit warning saying it would report lower earnings for the H1 of 2016.

Caverton had explained that the lower earnings resulted largely due to the unavoidable impact of the recent Naira devaluation which took place within the second quarter of the year.

It said the impact of the recent devaluation by the Central Bank of Nigeria (CBN) is expected to result in unrealised foreign translation loss arising largely from the groups’ dollar denominated borrowing used to finance core assets in both its helicopter and marine businesses.

When the H1 results were reported last week, it showed a revenue of N9.143 billion in 2016, down from N11.908 billion in 2015. Gross profit stood at N3.091 billion, down from N5.114 billion. Indirect operating (administrative) expenses rose to N5.031 billion, compared with N 3.233 billion in 2015. Earnings before interest and tax was negative N1.624 billion, compared with a positive N2.582 billion. Caverton ended the period with loss after tax of N2.432 billion, as against a profit of N1.093 billion.

In spite of the loss, the company assured that it would continue to focus on its diversification programme.

“We continue to focus our efforts on diversifying and increasing our revenue streams and also improving our profitability through expansion into higher margin offshore service offerings. Management is confident that its ongoing initiatives and investment across its value chain will provide improved future performance, positioning it for long term success,” the company said.