THE CHAMPION IN CHAMPION BREWERIES

Virtually all the credit for Champion Breweries PLC final jump from the loss league in 2015 year goes to the real champions: Shareholders for injecting new funds.
According to the figures for the year released last week to the stock market, this saved the company from paying any interest to banks in 2015 compared to 2014 when N1287.6m was paid as finance cost.
The fact was that 2015 profit before all forms of taxes came to N248.4m, a figure which could have so easily been wiped out if Champion Breweries had paid even one quarter of its 2014 finance charges in 2015.
Within the year new shares had been issued at a premium increasing share capital by 8.74% to N3914.7m from N3600m and premium reserve by 10.2% to N9093.8m from N8251.9m.
However, management also deserves some credit especially over 6.03% decrease in cost of sale from N2662.5m to N2502.1m in a year core revenue from the goods sold increased by 6.04% to N3501.8m from N3302.3m.
Unfortunately, that was about the only credit management can take without raised eyebrows. Administration expenses and selling and marketing costs increased at a higher percentage than the growth in core revenue.
Selling and marketing cost closed the year at N255.9m compared to N185.7m previously while administration consumed N589.3m in 2015 as against N532.9m in 2014.
Also, as if to leave Champion Breweries more in the hands of the stakeholders new capital, income from non core sources dived significantly.
In 2014 finance income earned by the company came to N200.4m but the 2015 figure was N41.7m, down by 79.2%.
Also income from other sources chipped in N104.7m in 2014 but ended 2015 at 49.8% down at N52.3m.
Thus Champion Breweries ended 2015 gaining N6.91 on each N100 income and so for the first time in years, reduced accumulated loss, instead of adding to it. In 2014 it lost N29.4 on each N100 income.
SO:
* There is no gainsaying the need for management to earn more credits by at least keeping overhead cost growth in line with core revenue increase.
* This is because the breather offered by the new capital can only last if the company's profit margin grows further.

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