Japaul Gold’s profit falls 11% as rising costs offset revenue growth

Japaul Gold & Ventures Plc, the Oil and Gas giant, recorded an 11 percent decline in profit for the 2025 financial year as surging administrative and finance costs outweighed stronger revenue growth.

According to the company’s audited financials for the year ended December 31, 2025, revenue rose 28 percent to N5.25 billion from N4.10 billion in 2024. It is the highest turnover Japaul has posted in at least five years, and it is largely driven by the “Equipment rental” which accounts for 98 percent of the total turnover for the company.

This feat also continues a run of top-line growth stretching back to 2021, when the company’s revenue was ₦434 million.

But the growth did not translate to Net profit, which moved in the opposite direction. Operating profit dipped to N1.42 billion from N1.50 billion in 2024, while net profit fell 11 percent to N1.22 billion from N1.38 billion, even though gross profit actually improved, rising to N2.98 billion from N2.14 billion, and gross margin widened to 57 percent from 52 percent.

In other words, Japaul is making more money on every naira of sales than it did a year ago, and it is also losing that gain.

The culprit of the loss is administrative expenses, which jumped 94 percent in 2025 to N1.66 billion from N855 million in 2024, large enough on its own to account for the drop in profit despite record revenue and an improved gross margin.

Finance costs further weighed on earnings. Net finance expenses stood at N120.3 million, compared with virtually no finance costs in 2024.

A stronger balance sheet, even with profit under pressure

Total equity rose to N20.61 billion at year-end, up from ₦7.98 billion in 2024, driven largely by a private placement and share premium. Total assets grew to ₦38.05 billion, and the company’s debt-to-capital ratio improved to 0.83 from 1.87 the previous year, which shows that Japaul is funding its growth increasingly with equity rather than debt, and carries markedly less financial risk than it did twelve months earlier.

That capital appears to be funding an active pipeline of projects. Japaul is executing a dredging and land reclamation contract worth over N30 billion in the Lekki and Ikoyi axis of Lagos State for Gravitas Investment Limited and has consolidated its acquisition of H&H Mines Limited, which comes with a mining licence capitalised at N11.4 billion.

The company has also set a target of the third quarter of 2026 to begin gold mining operations at its Libeli site in Kontagora, Niger State, which shows the sign of its shift from oil and maritime services toward solid minerals and large-scale reclamation work.

Despite the profit dip, Japaul’s share price has continued to climb. The stock opened the year at N2.31 and now trades at N3.03, a gain of about 31 percent compared to last year, when it opened at N2.05 and N2.31, which is a 13 percent rise all year, suggesting investors are looking past the near-term cost pressure toward the balance sheet repair and the growth projects underway, rather than selling on the earnings miss.

Japaul burns cash from operations but liquidity positive

Japaul Gold & Ventures generated negative operating cash flow, indicating that accounting profits did not translate into cash generation during the year as higher working capital requirements absorbed liquidity.

The group recorded a negative net cash outflow from operating activities of N4.29 billion, reversing from a positive N2.79 billion inflow in 2024. The decline was largely driven by a sharp rise in cash payments to suppliers and employees, which surged to N8.26 billion from N1.47 billion, while cash receipts from customers declined slightly to N4.19 billion from N4.31 billion. This left the business with a cash deficit from operations of N4.07 billion, compared with a N2.84 billion cash surplus a year earlier. Employee benefit payments of N35.7 million and income tax payments of N186.4 million further deepened the operating cash outflow.

The cash deficit from operations and investing was financed almost entirely through capital raising activities.

Net cash generated from financing activities increased to N8.69 billion, from N6.75 billion in the previous year. The inflow was supported by a N2.0 billion increase in share capital and a N9.51 billion increase in share premium following the issuance of new shares under its recapitalisation programme. These inflows more than offset N2.25 billion in loan repayments and N570.5 million paid as dividends to shareholders.

As a result, the group ended the year with a net increase in cash and cash equivalents of N405.8 million, reversing the N114.5 million decline recorded in 2024. Cash balances rose sharply to N427.4 million at year-end from N21.6 million twelve months earlier.