Thomas Wyatt Nigeria Plc, a company listed on the Nigerian Exchange, has released its financial results for the fiscal year ending March 31, 2024, painting a grim picture of its financial performance. The company reported a substantial loss of N12.4 million, a stark contrast to the N43.1 million profit it registered in the previous financial year. This represents a staggering 129% decline in profitability, signaling significant challenges within the company’s operations. This downturn is attributed to a confluence of factors, including a decline in revenue, reduced other income, and a surge in administrative expenses.
The company’s revenue stream witnessed an 8% contraction, decreasing from N87.2 million in 2023 to N80.2 million in 2024. This decline suggests a weakening in the company’s core business activities, potentially reflecting broader economic headwinds or challenges specific to the company’s industry. While the company managed to achieve a positive gross profit of N4.2 million, a significant improvement from the N3.3 million loss incurred in the previous year, this positive development was insufficient to offset the negative impact of dwindling revenues and escalating expenses. The gross profit improvement suggests some success in cost management at the production level, but the overall picture remains concerning.
A key contributor to the company’s financial woes is the substantial reduction in other income, which plummeted by 27% to N81.5 million from N111.9 million in the preceding year. This sharp decline indicates a significant drop in income generated from non-core business activities, further exacerbating the impact of the revenue decline. The combination of shrinking revenue and diminished other income significantly hampered the company’s ability to generate profits. This coupled with rising administrative expenses created a perfect storm that pushed the company into a loss-making position.
Adding to the company’s financial burdens, administrative expenses witnessed a significant increase, climbing by 32% to N63.5 million from N48.2 million in the prior year. This surge in administrative costs suggests inefficiencies in the company’s operational structure or potentially increased investment in administrative functions that have yet to yield positive returns. Furthermore, depreciation costs also rose to N22.1 million from N21.2 million, while distribution expenses remained stubbornly high at N8.1 million, further contributing to the overall cost burden. These escalating expenses, combined with the revenue decline and the drop in other income, placed immense pressure on the company’s profitability.
The cumulative effect of declining revenue, reduced other income, and escalating expenses resulted in a substantial drop in profit before tax, which plummeted by 88% to N5.1 million from N43.6 million in 2023. After factoring in a tax expense of N17.6 million, the company ultimately reported a net loss of N12.4 million, a dramatic reversal from the N43.1 million profit recorded in the previous year. This significant swing in profitability underscores the severity of the financial challenges confronting the company. The tax expense, despite the overall loss, further underscores the complexities of the company’s financial situation.
The company’s balance sheet further reveals a deteriorating financial position. Total assets experienced a marginal decline to N1.02 billion from N1.03 billion in the previous year. Liabilities, on the other hand, increased by 2% to N512 million from N501.7 million, while shareholders’ equity declined by a corresponding 2% to N511.5 million. These figures reflect a weakening in the company’s overall financial health. The decline in shareholders’ equity is particularly concerning as it indicates a reduction in the residual value of the company after all liabilities have been met. This decline could erode investor confidence and further complicate the company’s efforts to secure future financing. The company’s cash flow situation worsened, with cash and cash equivalents ending the year at a negative balance of N5.4 million, compared to a negative N2.9 million in the prior year. This dwindling cash position further restricts the company’s ability to invest in growth initiatives or weather further financial storms. While the net cash flow from operating activities improved to N18.9 million from an outflow of N11.6 million in the previous year, this improvement was not enough to offset the overall negative cash position. The negative cash balance raises concerns about the company’s ability to meet its short-term obligations and underscores the urgency of addressing its financial challenges. Finally, the Nigerian Exchange Limited’s decision to suspend trading in the company’s shares, effective February 11, 2025, further highlights the gravity of the situation and suggests a lack of confidence in the company’s ability to turn its fortunes around. This suspension will undoubtedly impact the company’s ability to raise capital and further complicate its path to recovery.
