MEDVIEW AIRLINE'S 2016 SHYLOCK

Newly quoted Medview Airlines had what looked a very active 2016 but you know? It also had so many mouths wide open to snatch juicy bits out of earnings.

Together they actually amounted to Shylock of sorts demanding pound of flesh.

According to the audited figures released recently Medview's total income almost doubled (85.4%) to N26,250.6m as core revenue grew by 84.1% to N25,962.5m and other income ended 177.9% up at N176.2m.

Nice foundation for equally resounding growth in profit? Wrong. For starters, Medview ended with only 19.7% increase in gross profit to N4067.2m and worse, only 1.10% rise in profit before tax for the year.

Wide open mouths to feed, had the real lion share. First cost of sale increased by 104.6% to N21,895.3m thus deflating gross profit's tyres 

They included 109.9% rise in fuel costs to N8097.7m; 130% increase in handling charges to N1158.5m; 140% hike in catering expenses to N985.4m and 141.2% jump in overflight charges to N686.5m.

Don't say waoh yet, there is more. Others include 119.9% increase in statutory payments to NCAA; FAAN and NAMA to N3717.8m; 247.9% leap in bank  charges to N174.5m and 252.3% hike in royalty to N572.1m.

Yet there were others that did not quite double but made it equally tough for Medview Airlines to earn good profit from its sweat. 

These include 71.8% increase in flight attendants allowance to N120.4m; 52.2% rise in hotel accommodation to N433.3m and far less threatening 36.4% growth in administration expenses to N3321.3m 

The only breather came from 51.2% decrease in weighing charges to 19m and low single digit growth in insurance premium by 4.23% to N433.3m 

Thus, from N5.87 profit on each N100 income in 2015, Medview settled for N3.2 in 2016 despite the near doubling of earnings. Recipe for near future disaster?

Most likely especially when it is also recalled that Medview Airlines successfully raised more money by increasing issued share capital by 25% to N4875.3n and still ended the year walking liquidity tightrope.

Its working capital deficit increased to N4933.1m despite drawing down inventory to N15.9m from N162.4m; growing trade payables by 73.5% to N7488.6m and draining cash on hand by 13.4% to N525.9m 

One concedes though that it perhaps unwisely allowed trade receivables to rise 73.5% to N3074.8m; and perhaps wisely too repaid short term borrowing by 42.3% to N967.3_m and long term debts by 63.2% to N322.4m to reduce finance costs.

So, it entered 2017 year after getting new funds to reinvigorate its operations. By the way, hope none of the widely opened came about because of increased government appetite for more revenue?

MEDVIEW AIRLINES PLC. Nm
                               2016.         2015
Total income    26250.6.   14162.2
Core revenue.   25962.5.   14098.8
Cost of sale.      21895.3.   10700.8
Gross profit.        4067.2.     3398.0
Other income.       176.2.          63.4
Exchange gain.      56.4.                -
Property gain          55.5.               -
Administration.   3321.3.      2434.8
Finance costs.       193.9.        195.7
Profit before tax    840.0.        830.9
Profit margin %      3.20.           5.87
Working capital (4933.1). (2565.6)
(The harvest of doubled charges included in cost of sale).

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