GUINNESS NIGERIA: SAVED BY RIGHTS ISSUE

For Guinness Nigeria, the current financial year ends by June this year but from the half year figures released this week, the company was saved by the rights issue it successfully handled within the year.

Guinness had raised through rights N342.2m share capital at hefty N38.48bn premium and it certainly made a difference 

So much so that much of the N3.54bn profit before tax reported compared to N4.662bn loss at the same time last financial year, could be traced directly to efficiencies or relief brought about by the new money.

By half year, overdraft was down by 65.3% to N2.61bn; short term loans dropped 81.7% to N1.73bn and long term liabilities decreased by 67.5% to N8.09bn.

The net result? Finance cost went down by 21.6% to N4.79bn and finance income rose by 9.84% to N1.68bn.

Bulk purchase too and others funded through cash in hand must have helped too to make cost of sale grow by only 13.2% to N46.56bn in an inflationary environment  core revenue recorded therefrom rose by 18.6% to N70.55bn.

Thus the lower % increase in finance income and 25.8% drop in Other income to N274.6m led to reduced 18.1% increase in total income to N72.518bn.

Not to worry, Guinness Nigeria brought down administration expenses by 21.9% to N4.73bn and marketing and distribution cost ended the half year up by only 0.99% to N12.88bn.

The end result was the super rebound from the loss league for 4.88% closing profit margin compared to 7.59% loss margin previously.

Guinness Nigeria too ended up being quite refreshed. Its working capital came to N13.29bn compared to life threatening negative N6.49bn previously and cash at hand and bank stood at 10.99bn compared to N6.59bn earlier.

All these while mounting inventories by 11.3% to N25.69bn; receivables by 30.1% to N29.86bn and reducing all those short and long term loans.

But then let's take a breathe: Sure issuing rights was a good move no doubt but why was it not resorted to earlier instead of mounting overdrafts and other loans? What magic wand brought down administration overhead and kept marketing bill well under control?

Those are the kind of questions that could help stakeholders see the way ahead better. But there is no doubt now, Guinness Nigeria is headed for a year end to remember, all things being equal.

GUINNESS NIGERIA: Half year, Nm
                                   Dec 17.       Dec 16
Total Revenue        72518.3.     61396.2
Core revenue.         70557.2.     59490.6
Cost of sale.           46562.7.     41125.1
Gross profit.           23994.5.     18365.5
Other income.             274.6.         370.2
Marketing etc         12883.8.     12757.4
Administration.        4737.8.       6062.9
Finance income.      1686.5.       1535.4
Finance cost             4792.5.       6113.4
Profit b4 tax.             3541.5.      (4662.7)
Profit margin %.          4.88.        (7.59)
Working capital.     13295.8.    (6492.9)
Cash.                        10992.6.     6594.5
Short term loans       1736.5.     9495.6
Long term loans.       8099.8.   24889.4
Share capital              1095.2.       752.9
Share premium.       47447.0.     8961.3

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