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Caverton Helicopter’s fortunes continue to decline

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Caverton Group boasts of being Nigeria’s leading provider of aviation, marine, and logistics services to local and international oil and gas companies in Nigeria. On paper it can be easily assumed that the business is going well when oil and gas firms perform well and poorly when oil and gas firms struggle. However, recent results show that is not the case in reality.

The company recently released its 2021 FY results revealing it recorded a whopping loss after tax of N4.3 billion compared to a profit after tax of N1.1 billion in 2020 which ironically was a Covid-19 year. That year, the result was a 74% drop from the N4.3 billion profit reported in 2019 which was its best year yet. Well, 2021 has now seen things go from bad to worse with its worst result in at least 5 years. So, what happened?

According to the company, the loss was due to the impact of the “Covid-19 pandemic” and other factors which it claims had “negatively impacted business operations in Nigeria and the rest of the world” thus leading to the losses. As they say, the devil is in the details. A cursory review of the company’s financial statement reveals the losses were due to a spike in its cost of sales, the direct cost of doing business.

More specifically, in 2021 consumables gulped N12.2 billion out of the N24 billion incurred in total cost of sales compared to 2020 with N6.4 billion and N18.5 billion, respectively. Consumables the company explains include aircraft spare parts, aviation fuels, freight and courier services protocol and immigrations etc. Another cost component that recorded a rise were foreign exchange losses and higher finance cost adding N8.5 billion to finance cost compared to just N6.3 billion a year earlier

Unfortunately, it could not pass on this cost to its customers most of whom may have locked in price by paying for service upfront. Revenues topped N34 billion just N2.6 billion higher than a year earlier. This was not enough to cushion the spike in expenses. The worst hit was its core business, Helicopter Services where it lost N5.8 billion.

Despite this challenge, Calverton still had a healthy cash pile of about N5.7 billion helped by a net loan increase of about N11 billion. Over 90% of the bank’s N31 billion loans were borrowed in foreign currency further posing a headwind for operational cost. If the exchange rate situation in the country gets worse this year or even remains as is, the company might take N4-5 billion hit on foreign currency losses. It will point to its revenue being charged in dollars but that is not enough. So, what can management do?

The solutions we see here are two-pronged. One is to immediately raise revenues to levels that can accommodate the rising cost of doing business. This will involve raising prices and increasing orders. It will have to hope that oil and gas companies use more of its helicopters at a higher cost than they ordinarily did. It might also need to look at other customers beyond the oil and gas sector. It is the election season and politicians will want to move from one destination to another as campaign picks up. However, the company seems to be looking in another direction. Here is what its CEO Mr, Bode Makaonjuola said:

“To further boost revenues, the Group has been exploring further opportunities within and outside the oil and gas sector. In addition to growing our market share in the oil and gas logistics sector, our primary focus for the year will be on third party training and maintenance. Our Maintenance Repair and Overhaul (MRO) facility and our Caverton Aviation Training Centre (CATC), both in Lagos, officially commenced business operation in the 2nd half of 2021. Prospects for training and maintenance is extremely positive as we are in advanced contract negotiations with a number of government and private institutions across sub–Saharan Africa.”

It will be interesting to see what these business segments add to revenues in the first quarter of this year. The second thing the company must do is raise capital. Currently, total debt of about N31 billion (without adding leases) is almost twice its total equity of N17.3 billion. Its free cash flow of N4.6 billion will not be enough, so sooner rather than later that loan will have to be repaid and it will have to come from fresh equity.

These are not easy actions, but it appears time is running out. If it does not take urgent action, the situation might not stop worsening.

 

Nairametrics

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Court rejects Lagos AG, Lawal Pedro’s move to stop N1.35bn ‘fraud’ case Against Olalekan Abdul Prosecuted By EFCC.

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Drama as judge, SAN argue over alleged ruling alteration, rudeness…

 

 

The Special Offences Court, in Ikeja, Lagos, yesterday, declined an application by the Lagos State Attorney General, Lawal Pedro, to completely halt the trial of Olalekan Abdul and another person, being prosecuted by Economic and Financial Crimes Commission, EFCC, for alleged N1.35 billion fraud.

 

 

Justice Mojisola Dada discharged the duo of the 20 counts filed against them by the state but ordered the continuation of their trial on five related counts simultaneously filed against them by the EFCC.

 

A mild drama ensued in the process, leading to the judge accusing the defence counsel of disrespecting the court and the lawyer maintaining his innocence.

 

 

The matter was adjourned to October 31, 2024 for continuation of trial.

 

The AG had filed for discontinuance after an earlier move to take over its prosecution failed. The court had also earlier ruled that the defendants had a case to answer, and that the prosecutor could prosecute the defendants.

 

 

The anti-graft agency filed in December 2019, a 26-count conspiracy, forgery, and stealing charge against the defendants. They were arraigned on January 29, 2020.

 

It alleged that the defendants conspired with Adeyinka Adewole and Morakinyo Bolanle, at large, to obtain N350 million, and N1 billion from Wema Bank under false pretences.

 

The defendants, one of them former Managing Director of Cleanserve, pleaded not guilty and were granted bail.

 

 

The matter resumed, yesterday, for the ruling on the notice of preliminary objection by the prosecution concerning the notice of discontinuance filed by the AG. It relied on Section 211 of the Constitution for discontinuing both state and Federal offences before the court.

 

 

Franklin Oforma appeared for the prosecution, Jonathan Ogunsanya for the AG of Lagos State, Adeyinka Olumide-Fusika, SAN, appeared for the 1st defendant while A. Abdulrasaq represented the 2nd defendant.

 

The second defendant’s counsel informed the court that the learned Silk, Dr. Muiz Banire was ill and on his way.

Reading her ruling, Justice Dada discharged the 1st and 2nd defendants on all 20 out of the 26 counts brought against them under the laws of Lagos State relying on sections 211 of the 1999 constitution.

 

 

Nevertheless, the judge ruled that the defendants should continue their defence in the remaining six-count charge brought against them under the Advance Fee Fraud Act and EFCC Act.

 

Mr. Olumide-Fusika asked that the case be stood down for 30 minutes. Afterwards, he attempted to make an oral application for his client to be acquitted, but the judge declined.

 

 

A mild drama ensued in the process, leading to the judge accusing Olumide of being “lousy” and “rude” and the SAN denied the allegation and maintaining his stand.

 

Olumide-Fusika: “At least it will be on record that I made the applications.

Judge: “I’ll consider it in the final judgment.”

 

Olumide-Fusika: “No, I’m making the application now.”

Judge: “Ehn let it be there.”

 

Olumide-Fusika: “I’m making the application now. Now, my lord.”

Judge: “Please don’t shout. No shouting.”

 

 

Olumide-Fusika: “I’m not shouting. I’m making the application now.”

Judge: “And watch your language please.”

 

 

Olumide-Fusika: “I’m making the application now. I’m making the application now. The prosecutor made an application when Your Lordship read the ruling.”

 

Judge: “What application did he make?”

 

Olumide-Fusika: “He made an application. He pointed your lordship’s attention to the fact that your lordship made an order discharging and asking the second defendant to go.”

 

Judge: “Discharging them?”

 

Olumide-Fusika: “Your lordship said so.”

 

 

 

 

 

 

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Festus Keyamo  Emphasizes Nigeria’s Strategic Position as Africa’s Aviation Hub at Moscow Conference 

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The Honourable Minister of Aviation and Aerospace Development of Nigeria, Festus Keyamo SAN CON FCIarb (UK), addressed the global aviation community at the on-going International Route Development Conference themed Network Cargo 2024 in Moscow, Russia. The conference, focused on enhancing global partnerships through the highest standards of freight forwarding services, attracted transport ministers and industry leaders from across the world, all seeking to establish efficient and competitive cargo routes.

 

During his keynote speech, the Aviation Minister emphasized Nigeria’s unique geographical advantage in becoming the central hub for air transportation in Africa. He stated, “Geographically, we are in the best position to be the real hub of Africa. If you look at the map, we are equidistant to South America across the Atlantic, to Europe, and to Asia. We are about 6 to 7 hours to Doha, Dubai, and Brazil. With our population, we have the dream to develop a real hub for Africa.”

 

Keyamo further highlighted Nigeria’s untapped aviation potential, citing the significant volume of international traffic originating from the country. However, much of this traffic is currently serviced by foreign airlines. “If you look at it, most of the flights originating from Nigeria are not indigenous. Airlines from Ethiopia, Egypt, Morocco, and other countries feed on our traffic. They know that Nigerians travel all over the world,” he remarked.

 

To address this imbalance, the Honourable Minister expressed the Nigerian government’s commitment to increasing the capacity of local airlines. He noted that President Bola Ahmed Tinubu is focused on strengthening Nigeria’s domestic aviation sector, ensuring that local operators benefit from the nation’s air traffic. “Instead of giving up our traffic and airspace to other people, we are focused on ramping up the capacity of our local airlines. That is a major priority of President Tinubu’s administration,” he said.

 

In line with the theme of the Network Cargo 2024 conference, the Honourable Minister announced Nigeria’s plans to expand its international routes, with a particular focus on establishing direct connections to South America, specifically Brazil. “It is ironic that to fly to Brazil from Nigeria, one has to first travel east to Addis Ababa or go to Angola before heading west. We are working to open up direct routes from Nigeria to South America, addressing this gap in our aviation connectivity,” Keyamo revealed.

 

Furthermore, the Minister elaborated on Nigeria’s recent adoption of the Cape Town Convention’s practice directions, which regulate dry leasing—a common global practice in the aviation industry. By domestically implementing these regulations, Nigeria has provided assurances to the leasing world that aircraft brought into the country will be protected under Nigerian law. “The practice direction we signed last week ensures that Nigerian courts protect lessors and financiers, giving them the confidence that their aircraft are safe in Nigeria. This move will foster a symbiotic relationship, as we have the traffic and the need for new routes,” he added.

 

In conclusion, the Minister underscored Nigeria’s commitment to achieving global standards in aviation by enhancing local airline capacity, securing international partnerships, and expanding direct routes to underserved destinations.

 

Tunde Moshood

SA Media and Communications to the Honourable Minister of Aviation and Aerospace Development

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Extortion: Customs launch investigation into alleged extortion by officials…

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The Kano-Jigawa command of Nigeria Customs Service (NCS) says it has launched an investigation into an alleged extortion involving businessmen at Abubakar Rimi market popularly known as Sabon Gari.

 

The investigation followed a complaint by the businessmen alleging extortion by some officials of the command.

 

 

According to the Public Relations Officer of Sabon Gari Shop owners and online marketers Association, Nazifi Auwalu, business has been made difficult for their people as the level of extortion has instilled fear among them.

 

“We are facing a difficult situation because we are now in a dilemma of transporting goods from elsewhere into Kano State. We are now like rat and the cat between us and customs officials. They follow us into nook and crannies of the state arresting goods. We did not share any border whether land or sea and what we are selling are mostly bought in the country, Lagos in particular.

 

 

Recently, our vehicle load of perfume was arrested by some customs officials who accused us of conveying contraband. The vehicle was moved to the customs office and was ransacked and nothing was gotten from it.

 

“One Officer in charge, FOU, told us that we have to pay the sum of N1 million or else the vehicle will not be allowed to go out of the building. You can’t even go into his office until you are searched and you have to drop your phone. That’s how we were extorted that amount which was received by the Officer.”

 

 

Also narrating his ordeal, another businessman, Nura Abdullahi, said he was extorted to the tune of N3 million of which after a bargain paid N2 million at Kaduna customs office.

 

“For me, my vehicle was arrested at Kano-Kaduna toll gate on its way from Lagos and was taken back to Kaduna. It was searched and there was nothing. At first, they told us that if they found anything they will seize the vehicle and the goods and we agreed.”

 

 

We asked them to allow the vehicle to go since there is nothing but they refused. We first paid N150,000 for uploading and taking back the goods and we paid. At last we have to pay that N2 million cash.”

 

But reacting to the issue, the Public Relations Officer, Kano-Jigawa command, Customs, Nura Abdullahi said the command has launched an investigation into the matter and all involved will be brought to book.

 

 

 

The office is on the matter currently investigating who and who are involved. The team sent to investigate have already begun arrest of officials found wanting on the issue.”

 

 

“I want to thank the businessmen for raising the alarm and anyone that was cheated will

be duly compensated,” he said.

 

 

 

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