Caverton Offshore Support Group Plc experienced a significant financial downturn in 2024, reporting a substantial loss of N50.53 billion, a stark contrast to the N12.89 billion loss recorded in the previous year. This substantial decline was primarily attributed to a massive N43.49 billion net exchange loss, a direct consequence of the volatile foreign exchange market in Nigeria. The devaluation of the naira against foreign currencies significantly impacted the company’s financial performance, as a substantial portion of its operations and transactions are conducted in foreign currencies. This forex loss amplified the impact of rising operating costs and administrative expenses, resulting in a severe erosion of profitability.
Despite the substantial loss, Caverton witnessed a notable increase in revenue, growing by 42.7% to reach N45.64 billion in 2024, compared to N31.99 billion in 2023. This revenue growth, however, was overshadowed by the surge in operating expenses, which rose by 28.6% to N31.93 billion, and administrative expenses, which increased by 12.4% to N12.07 billion. These rising costs, coupled with the massive forex loss, played a significant role in deepening the company’s loss position. Furthermore, finance costs also contributed to the negative financial outcome, increasing by 51.3% to N8.81 billion, further straining the company’s financial resources.
The impact of these financial challenges reverberated across various aspects of Caverton’s financial position. Basic earnings per share plunged to N15.08, a significant decline from N3.85 in 2023, indicating diminishing returns for shareholders. The total assets of the company also contracted significantly, declining by 30.9% to N54.81 billion. This decline was primarily driven by a reduction in both current assets, mainly due to a sharp drop in cash and bank balances, and non-current assets, largely influenced by a complete write-off of right-of-use assets and a reduction in property, plant, and equipment. These asset reductions reflect the financial pressures faced by the company and its efforts to manage its resources in a challenging economic climate.
Simultaneously, Caverton’s liabilities increased by 30.5% to N104.50 billion, further complicating its financial standing. This increase was largely due to a 45.6% rise in interest-bearing loans and borrowings, suggesting an increased reliance on debt financing to navigate the challenging economic environment. Trade and other payables also nearly doubled, increasing by 90.7%, signaling growing obligations to suppliers and creditors. While lease liabilities decreased, this reduction was insufficient to offset the overall increase in liabilities, further highlighting the financial strain on the company. The mounting liabilities, combined with dwindling assets, paint a concerning picture of Caverton’s financial health.
The company’s retained earnings plunged into negative territory, reaching (N58.91 billion), significantly worsening from (N8.93 billion) in 2023. This negative retained earnings figure, coupled with the overall decline in equity, underscores the challenging financial situation faced by the company and its shareholders. Despite these difficulties, Caverton managed to improve its net cash flows from operating activities, reaching N15.42 billion compared to a deficit of N3.98 billion in the previous year. However, this positive development was countered by a sharp decline in cash and bank balances, raising concerns about the company’s liquidity position and its ability to meet its short-term obligations.
Despite the significant financial challenges, Caverton’s CEO, Bode Makanjuola, expressed confidence in the company’s resilience and its ability to navigate the volatile economic landscape. He emphasized the positive operating profit exceeding N9 billion as a testament to the strength of the company’s business model and its adaptability. Acknowledging the macroeconomic pressures impacting the company’s core operating sectors, Makanjuola highlighted the company’s focus on enhancing operational efficiencies and capitalizing on strategic opportunities to deliver value to stakeholders. He reassured stakeholders of Caverton’s commitment to overcoming these challenges and positioning the company for sustainable growth while maintaining a strong presence in both the charter flight and marine operations sectors. This optimistic outlook, despite the significant losses, suggests a belief in the company’s long-term viability and its ability to recover from its current financial predicament.
