Earnings Review: Evans Medical Rides On Tax Credit To Post N285million PAT For 2012 FY

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[upme_private]Evans Medical Plc released its 2012 FY results with revenues rising 6.4% to N4.8billion (2011:N4.5billion). Gross profit rose 20% to N2.6billion during the year on the back of a 6% reduction in cost of sales. However, operating expenses will thread higher during the year to N1.9billion (2011: N1.6billion) or 75% of Gross Profit. The company’s finance cost also rose 28% to N503million compared to N393million posted in 2011.

Evans Medical ended the year with a profit after tax of N285million up 64% from the N174million posted the year before.

Key Highlights

• Earnings per share rose 95% to 41kobo during the period
• The increase in profit after tax was mainly as a result of a tax credit of N87million during the year. Otherwise 2012 actually had a lesser pre-tax profit of N198million as against N245million in 2011
• Debt to Equity ratio is high at 1:1. This pits interest at 77% of Operating Profit during the period. This puts the company under immense cash constraints as it tries to repay its loans. In 2012, N541million was spent in cash to repay a N867million debt obligation. The company had to basically refinance about N326million of the remaining debt as can be seen from their cash flow statement.
• Return on equity was 12.6%, only GSK posted a higher ROE at 18%.
• I assigned a black ink to the results because it was able to post higher organic profit (operating profit) of N650million (2011: N550million)

Evans Medical Posted its 2012 FY Results on the website of the NSE[/upme_private]