BPOW reports 42% decrease in year end net profit

July 15, 2020

Blue Power Group Limited (BPOW) for the year ended April 30, 2020 recorded an increase in revenues by 4% to $485.44 million relative to $468.80 million recorded in 2019. For the quarter, revenue increased 62% from $88.20 million in 2019 to $142.98 million.  The Company indicated that overall sales growth was “supported by our continued efforts to develop and maintain export markets.” Moreover, “export sales during the quarter increased from $16.36 million to $33.27 million,” as per BPOW.

Cost of Sales for the period increased by 1% to $307.48 million (2019: $304.05 million). As such, gross profit increased by 8% to $177.96 million (2019: $164.76 million). For the fourth quarter, cost of sales climbed by 57% to $89.96 million (2019: $57.28 million); consequently, gross profit increased by 71% to $53.02 million (2019: $30.93 million).

Administrative expenses amounted to $146.94 million, a 66% increase relative to $88.60 million last year.  Impairment losses on trade receivables amounted to $11.54 million (2019: $2.83 million). Whereas, impairment losses on investment totalled $4.65 million (2019: nil).  Consequently, operating profit totalled $14.83 million, 80% less than the $73.33 million for the prior year’s period. For the quarter, operating profit amounted to $1.28 million, 82% less than the $7.20 million for the corresponding quarter last year.

Management noted that, “during the year, BPG incurred a one-off restructuring charge of $30.30 million associated with the divestment and discontinuation of the activities of the Lumber Depot Division.”

Other income amounted to $20.49 million relative to $586,609 booked in the prior year.

Finance income amounted to $39.45 million (2019: $10.61 million), while Finance Cost totalled $1.56 million (2019: $760,368) for the year end. As such, profit before taxation decreased by 13% to $73.20 million relative to $83.77 million for the corresponding period last year.

The company reported a 32% increase in taxes in the year to $13.92 million compared to the $10.51 million paid in the prior year. As a result, profit from continuing operations decreased by 19% to $59.28 million (2019: $73.25 million). Profit from discontinuing operations amounted to $21.30 million (2019: $66.02 million). As such, net profit for the year totalled $80.58 million relative to the $139.27 million booked last year.

Comprehensive income amounted to $70.32 million (2019: $139.27 million) for the year ended April 30, 2020.

Net profit for the quarter totalled $14.97 million relative to $19.31 million the prior year’s quarter.

Earnings-per-share for the period amounted to $0.14 (2019: $0.25), while earnings-per-share for the quarter amounted to $0.03 (2019: $0.03). The number of shares used in our calculation is 564,990,000. Notably, BPOW stock price closed the trading period on July 14, 2020 at $3.79.

Management noted that, “the results also benefitted from the inclusion of other income from the rental of property and management fees in connection with administrative services provided to Lumber Depot Limited. This was partially offset by the inclusion of $16m of impairment losses on trade receivables and investments related to a revised assessment under the IFRS 9 accounting standard which now accounts for an estimation of future losses rather than the prior standard of accounting for losses actually incurred. The total value of “investments” has been reduced by $10.3 million due to a reduction in the market prices of Lumber Depot shares held by the company and this has been matched by a decrease in equity of the same amount through an appropriate adjustment in the investment revaluation reserve.”

Notably, Management mentioned that, “the company has been very fortunate in avoiding any ill effects of the Covid-19 virus. The team has taken extra care in following the advice and directives of the Health Authorities. Our production and sales have maintained the levels achieved in the previous year.”

Balance Sheet Highlights:

The Company, as at April 30, 2020, recorded total assets of $1.01 billion, an increase of 9% when compared to $982.69 million recorded last year. This was as a result of the Company booking ‘Investment’ of $427.58 million relative to $197.54 million reported the prior year. This was mainly tempered by a 49% decrease in ‘Inventories’ which closed at $163.57 million relative to $321.19 million recorded as at April 20, 2019.

Total Stockholders’ Equity as at April 30, 2020 closed at $956.11 million (2019: $897.66 million). This resulted in a book value of $1.69 (2019: $1.59).


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