Despite topline and bottomline growth in 9M 2024, the rise in receivables is a cause for concern. 

About the firm

Chams Plc  was incorporated as a limited liability Company on 10 September 1985 and became a public Company (via a listing by introduction) on 4 September 2008.

There was a change of name on 12th May 2022, from “Chams PLC” to CHAMS HOLDING COMPANY PLC, due to CBN guidelines for licensing and regulation of Payment Service Holding Company in Nigeria.

The group includes identity management, payment collections and transactional systems

 9M 2024 results

There was decent topline and bottomline growth in 9M 2024. Revenue went up by over 74% from N7.5 billion in 2023 to N13.1 billion in 2024.

Profit after tax was up nearly 4X from N255 million in 9M 2023 to N1 billion in 2024. 9M 2024 figures are way better than audited FY 2023 numbers. In FY 2203, the group had a profit after tax of N20.2 million.

Operating profit margins improved year on year. In 9M 24, for every N100 in revenue, N12.5 was operating profit. In the same period last year, operating profit margin was N4.5 or every N100 in revenue. 

Receivables are a headache 

In FY 2023, the company had trade receivables of N2.4 billion. It ended up taking an impairment loss of N1.08 billion. 

Some colour was provided on that in the financial statement. Quote below. 

The group writes off a trade receivable when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery, e.g. when the debtor has been placed under liquidation or has entered into bankruptcy proceedings, or when the trade receivables are over two years past due, whichever occurs earlier. None of the trade receivables that have been written off is subject to enforcement activities.

In 9M 2024, trade and other receivables amounted to N9.3 billion. Unlike H2 2024,  the latest results don’t give a split of the receivables in question.  it took an impairment charge of N821 million on receivables. It is not clear if the receivables impaired where trade receivables or others. 

Management needs to prepare their financials in a neater and more comprehensive manner. 

The firm also needs to go aggressive on debt recovery or tighten its credit practices.

Dont expect a dividend 

Chances of a dividend being paid by the firm are quite low. The group and company both had negative retained earnings as at 9M 2024. Chams Group had negative retained earnings of N816 million. Chams (the company) had negative retained earnings of N344 million.

The last dividend payment occurred in 2019. Chams (the company) paid a 3 kobo dividend from its 7 kobo earnings.

Stock performance year to date

As of the time of writing this, the stock is up 2.44% underperforming the All Share Index which is up over 30%. In the last two years, the stock is up 813%. 

Any questions/comments/observations, please send an email to onome@greentickertales.com