With consistent dividend policy payment and quest to reposition its businesses in the services industry, of both the domestic and global market, Red Star Express Plc plans to shore-up its revenue base to N18.9 billion by year 2025.
The company said notwithstanding the challenging business environment, its key success factor of a stable board and vibrant management, experienced and dedicated workforce, investment in advanced technology and network/spread is the needed impetus that wills garvanised its operation to achieving its desired objective.
Group Managing Director/ CEO, Dr. Sola Obabori who made this disclosure while addressing the capital market community on the 5-year forecast post capital raise of the company during its facts behind the figures on the floor of the Nigerian Stock Exchange in Lagos, said business for the company’s subsidiaries (Red Star Freight, Red Star Logistics Limited and Red Star Support Services Limited) has been on the upward swing.
Obabori who noted there are verse areas that needed to be explored in the service industry, assured the investing public of a good yield on their investment, noted that the group has successfully maintained an upward trend in dividend payment over the last 5 years, with the highest record of 43 kobo in full year 2019. “The Earning Per Share recorded its highest of 79 kobo in full year 2019 over the 5-year period, which is 34 per cent above 59 kobo recorded in full year 2018.
Speaking on the income statement highlight of the company, the GMD/CEO said revenue grew by 20 per cent from N8.4 billion in full year 2018 to N10 billion in full year 2019 as a result of the company’s consistent increase in revenue drive, through increase in customer base, innovation and investment in assets.
He however noted that, gross profit declined by 0.2 per cent from N2.78 billion in full year to N2.776 billion in full year 2019 due to slightly higher cost of sales, even as Profit Before Tax increased by 22 per cent from N610 million in full year 2018 to N743 million in full year. This, he said was attributable to the company’s stringent cost management approach in its business operations.
On the company’s 5-year revenue overview, Dr. Obabori explained that the group has consistently increased revenue for the 5-year period by 51 per cent from N6.6 billion in full year 2015 to N10.0 billion in full year 2019, while the subsidiaries contribution has been hovering between 42-48 per cent during the period under review.
“As a percentage of revenue, the group has consistently maintained a PBT margin between 7.3 per cent and 9.2 per cent with PAT margin ranging from 4.1 per cent and 6.3 per cent in the last 5-years which is above industry average of 4-5 per cent. The PAT margin increased year-on-year from 4.1 per cent in full year 2018 to 4.6 per cent in full year 2019, while PBT increased year-on-year from 7.3 per cent in full year 2018 to 7.4 per cent in full year 2019: which is as a result of several cost savings initiatives being implemented with the hope of more positive impact in the future years”, he added.
It would be recall that the company’s offer Right Issue of 336,855,291 ordinary shares of 50 Kobo each at N4 on the basis of four new ordinary shares for every seven shares held as at August 2019 opened on Monday 11th November 2019. The purpose of the exercise was to raise additional capital to finance the expansion of the company’s current operations, the deployment of modern technology and improvement of its working capital.
Speaking on the Rights Issue, the Group Managing Director of Red Star Express Plc, Dr. Obabori, disclosed that the additional capital was to accentuate the growth potentials already put in place by the company’s management. “This move underlines our ambition to maintain the expansion activities undertaken in the last few years. “After opening international offices in Niger Republic, Burkina Faso and Benin Republic, we have established new business lines in the Agricultural and Technological sectors of the economy. “This right issue represents the next logical step in this regard,” he stated.
“We have a promise to keep towards our shareholders; which is to continue providing superior returns on their investment in our business. “With this additional capital, we will be able to ensure considerable growth of the company; making it more profitable and in a position to continue fulfilling that promise (of providing superior returns),” he added.
Meanwhile, the Chief Executive Officer of the Nigerian Stock Exchange, Mr. Oscar Onyema, said the capital market remains the veritable platform for capital formation for going concerns as the exchange will continue to provide the needed financial advice and leeway for companies to achieve their goals and objectives in the domestic economy.