By Kehinde Ibrahim, Lagos
JAPAUL Gold & Ventures Plc’s 2025 financial performance has highlighted growing pressure on the company’s profitability, as a sharp rise in operating expenses and finance costs offset robust revenue growth and weakened returns for shareholders.
Despite recording higher sales during the year, the company ended 2025 with lower pre-tax and after-tax profits, declining earnings per share and shrinking operating margins, raising concerns about its ability to convert revenue growth into sustainable earnings.
The audited financial statements for the year ended December 31, 2025, showed that pre-tax profit fell by 13.19 per cent to N1.30 billion from N1.50 billion in 2024, while profit after tax declined by 11.09 per cent to N1.22 billion from N1.38 billion.
The decline came even as revenue climbed by 28.07 per cent to N5.25 billion from N4.10 billion, suggesting that the increase in business activity failed to translate into improved profitability.
Although gross profit rose by 39.30 per cent to N2.98 billion from N2.14 billion, the gains were largely eroded by escalating operating costs. Administrative expenses surged by 87.68 per cent to N1.66 billion from N885.31 million, significantly outpacing revenue growth and reducing the benefits of stronger sales.
The company also suffered a sharp drop in other income, which fell by 58.81 per cent to N100.05 million, further weakening operating performance. Consequently, operating profit declined by 5.16 per cent to N1.42 billion, while the operating profit margin narrowed substantially to 27.06 per cent from 36.54 per cent a year earlier.
Finance costs added another layer of pressure on earnings. Unlike the previous year when no finance costs were recorded, the company incurred net finance costs of N120.33 million in 2025, contributing to a decline in its pre-tax profit margin from 36.54 per cent to 24.77 per cent.
The weaker earnings also affected shareholders, with earnings per share falling by 30.77 per cent to nine kobo from 13 kobo in 2024, indicating a significant reduction in returns despite higher revenue.
A closer review of the company’s revenue composition also points to limited diversification. Equipment rental generated N5.17 billion, accounting for more than 98 per cent of total revenue, underscoring the group’s heavy reliance on a single business segment.
Meanwhile, revenue from the chippings and crushing business declined by 38.55 per cent to N89.57 million from N145.77 million, while the company reported no revenue from dredging operations for the second consecutive year.
Although total assets expanded by 66.08 per cent to N38.05 billion, much of the increase reflected higher investments and capital restructuring rather than stronger earnings performance.
Exploration and evaluation assets rose to N11.40 billion, while trade and other receivables increased to N7.08 billion. The financial statements also disclosed N8.74 billion in call-in arrears, a balance that was absent in the previous financial year and which may warrant close monitoring.
The company’s liquidity position improved during the year, with current assets exceeding current liabilities by N3.38 billion, reversing the net current liability position recorded in 2024. Cash and cash equivalents also increased significantly to N427.44 million from N21.62 million, while borrowings declined marginally to N2.23 billion.
However, the sharp increase in shareholders’ funds was driven primarily by capital raising rather than stronger operational performance. Total equity rose by 158.44 per cent to N20.61 billion following the issuance of four billion ordinary shares through a private placement involving a promissory note and debt-swap transaction.
While the capital injection strengthened the balance sheet and reduced accumulated losses to N17.87 billion from N19.00 billion, the company’s declining profitability, rising operating costs and weaker shareholder returns suggested that stronger revenue alone was insufficient to improve overall financial performance during the year.
