// 01
Why most investors
ignore the annual report.
Let's be honest. Most retail investors have never opened an annual report. They buy stocks based on what their uncle said at Christmas, a viral tweet from someone called @StockGod_NG, or a feeling that "the price looks cheap."
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"The price looks cheap" is not an investment thesis. ₦5 can be expensive. ₦500 can be cheap. What matters is what you get for the price — and that's in the annual report.
The annual report is a company's full financial confession — published once a year, audited by an independent firm, and filed with the NGX Exchange. It contains everything: how much the company earned, how much it owes, how much cash it actually has, and what management thinks will happen next.
The people who read it have an edge over the people who don't. That's not an opinion — it's arithmetic. If you know EPS is ₦21 and someone else thinks it's roughly ₦10 because they skimmed a news headline, you're not in the same trade.
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Where to find NGX Annual Reports
Every listed company must file their annual report with the NGX Exchange. You can find them at ngxgroup.com under company filings, or on the company's own investor relations page. Search: [Company Name] Annual Report 2024 PDF. GTCO, Zenith, UBA, Dangote — all published. All free.
// 02
The three financial
statements.
Every annual report contains three core financial statements. Think of them as three different X-rays of the same company. Each one shows you something different. Together they tell the full story.
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Income Statement
Shows revenue, expenses, and profit over the year. Think of it as the company's report card — did it make money?
Finds: EPS · Revenue · Net Profit · Gross Margin
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Balance Sheet
A snapshot of what the company owns (assets) vs what it owes (liabilities) at year end. Is it financially strong?
Finds: Total Assets · Debt · Equity · Book Value
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Cash Flow Statement
Shows actual cash coming in and going out. Profit can be faked. Cash is harder to fake. This is the truth test.
Finds: Operating Cash Flow · Capex · Free Cash Flow
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A company can show a profit on the income statement while simultaneously running out of cash. This is not magic — it's accrual accounting. The cash flow statement catches it. Always check the cash flow statement.
// 03
The Income Statement —
where profit lives.
The income statement answers: did the company make money this year? It runs from the top (revenue) down to the bottom (profit), deducting expenses along the way. This is where most of your calculator inputs come from.
For Nigerian banks, the income statement starts with Gross Earnings or Interest Income rather than "Revenue" — same concept, different label. Don't let the terminology intimidate you.
Revenue / Gross Earnings
Top line of the statement
Line 1
Profit Before Tax (PBT)
After all operating expenses
Key line
Profit After Tax (PAT)
PBT minus tax — the real profit
★ Most important
Earnings Per Share (EPS)
Bottom of statement or Notes
★ Goes into calculator
Dividend Per Share (DPS)
Notes to financial statements
★ Goes into calculator
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EPS — The Most Important Number
Earnings Per Share = Profit After Tax ÷ Number of Shares
This is the number that goes directly into your PE calculator. It tells you how much of the company's annual profit belongs to each share you own. For GTCO in 2024, EPS was ₦19.15 — meaning for every share you held, the company earned ₦19.15 on your behalf. At a share price of ₦117, you paid 6.1x earnings. That's the PE ratio.
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EPS is sometimes buried in the Notes to the Financial Statements rather than on the face of the income statement. Search for "earnings per share" in the PDF. It's always there — it's a required disclosure. No hiding allowed.
// 04
The Balance Sheet —
what they own vs what they owe.
The balance sheet is a photograph taken on December 31st. It freezes the company at one moment in time and asks: if we liquidated everything today, what would be left?
The fundamental equation never changes: Assets = Liabilities + Equity. Everything the company owns was paid for either by debt (liabilities) or by shareholders' money (equity). Always.
Total Assets
Top of balance sheet
Size of business
Total Liabilities / Debt
Middle section
What they owe
Shareholders' Equity
Bottom section
What belongs to you
Book Value Per Share
Equity ÷ Shares outstanding
Compare to market price
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Book Value vs Market Price
If a bank's book value per share is ₦80 and it's trading at ₦49 on the NGX — you're buying ₦80 worth of assets for ₦49. That's a Price-to-Book ratio of 0.6x. This is either a screaming bargain or a warning sign that the assets aren't worth what they claim. Context matters — dig deeper.
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For banks specifically, the balance sheet is enormous — customer deposits appear as liabilities, loans appear as assets. Don't panic when you see billions in liabilities. That's just how banking works. Focus on the equity section and whether it's growing year on year.
// 05
The Cash Flow Statement —
the one most people skip.
This is the most underrated statement in any annual report. While the income statement can be dressed up with accounting choices, the cash flow statement is brutally honest. Cash either moved or it didn't.
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Revenue is vanity. Profit is sanity. Cash is reality. A company that reports ₦10bn profit but has negative operating cash flow is waving a giant red flag. Most retail investors miss it completely because they stopped reading after the income statement.
The cash flow statement has three sections: Operating (cash from the core business), Investing (cash spent on assets and investments), and Financing (cash from debt or paid as dividends).
Net Cash from Operations
Section 1 — Operating Activities
Should be positive
Capital Expenditure (Capex)
Section 2 — Investing Activities
Investment in growth
Dividends Paid
Section 3 — Financing Activities
Confirms DPS
Free Cash Flow
Operating Cash − Capex (calculate it)
★ Quality signal
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The Simple Test
Is Net Cash from Operations positive and growing? If yes — the business is genuinely generating cash. If the income statement shows profit but operating cash flow is consistently negative — investigate before investing. Something doesn't add up.
// 06
The 6 numbers you actually
need for your calculator.
You don't need to understand every line in a 200-page annual report to run a PE valuation. You need exactly six numbers. Here's where to find each one.
1. EPS — Earnings Per Share
Income Statement or Notes
Goes into PE calc
2. DPS — Dividend Per Share
Notes to Financial Statements
Goes into Div calc
3. Revenue / Gross Earnings
Income Statement — top line
Growth trend check
4. Net Profit After Tax
Income Statement — bottom line
Profitability check
5. Shareholders' Equity
Balance Sheet
Book value check
6. Operating Cash Flow
Cash Flow Statement
Quality check
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Pro tip: search the PDF for "per share" and you'll land exactly where EPS and DPS are disclosed. Works 100% of the time. You're welcome.
// 07
Green flags and red flags —
what to look for.
Numbers tell you what happened. The trend tells you where it's going. Here's what separates a company worth investing in from one worth avoiding.
✓ Green Flags
EPS growing consistently for 3+ years
Revenue growing faster than expenses
Operating cash flow positive and growing
Dividend maintained or growing annually
Shareholders' equity increasing year on year
Payout ratio below 60% — room to keep paying
Auditor's report is clean — no qualifications
✗ Red Flags
EPS declining for 2+ consecutive years
Revenue flat but profit growing — unsustainable
Profit positive but operating cash flow negative
Dividend cut or skipped with no explanation
Debt growing faster than equity
Payout ratio above 100% — paying more than earned
Qualified audit opinion — something is wrong
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The Qualified Audit Opinion
If the auditor's report contains the word "qualified" or says anything other than a clean opinion — stop. Read it carefully. This means the auditor found something they couldn't verify or disagree with. It's rare but it happens. Never ignore it.
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The most common red flag retail investors miss: a company that pays dividends it hasn't earned. Payout ratio above 100% means they're paying dividends from reserves or debt — not from profit. That party ends eventually.
// 08
Step-by-step: find EPS
in 5 minutes.
Let's make this practical. Here's the exact sequence to go from zero to calculator-ready inputs for any NGX company in under 5 minutes.
01
Download the annual report PDF
Go to ngxgroup.com → Company Filings, or search "[Company] Annual Report 2024 PDF". Download the most recent one. For major NGX companies it's usually 100–250 pages — don't panic, you're not reading all of it.
02
Open and Ctrl+F → search "earnings per share"
This finds EPS instantly. You'll land on either the face of the income statement or a note. The number will be in kobo or naira. If it says "860 kobo" — that's ₦8.60. If it says "₦21.73" — that's already naira. Write it down.
03
Search "dividend per share" or "dividend declared"
Find the total dividend per share declared for the year. This is usually in the Notes section under "Dividends" or in the Directors' Report. For the Dividend Calculator you need this number.
04
Find last year's EPS and calculate growth
Most income statements show two years side by side. Find EPS for both years. Growth = (This Year − Last Year) ÷ Last Year × 100. This is your base growth rate for the calculator. If it's been volatile, average the last 3 years.
05
Check operating cash flow — quick sanity check
Go to the Cash Flow Statement. Find "Net Cash from Operating Activities." Is it positive? If yes — the profit is real cash. If negative while profit is positive — dig deeper before investing. This check takes 30 seconds.
06
Open the PE calculator and plug in the numbers
Go to ConvictionLog → PE Fair Value Calculator. Enter EPS, current share price, your PE scenarios, and growth rate. The calculator does the rest. Bull, Base, Bear — in seconds. No Excel. No Bloomberg.
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Realistic Time Estimate
First time doing this for a new company: 15–20 minutes. Second time with the same company: 5 minutes. After you've read 5 annual reports: under 3 minutes to extract the numbers you need. It gets faster every time.
// Glossary
The terms you'll see —
plain English.
EPS
Earnings Per Share — profit after tax divided by number of shares. The most important number for valuation.
DPS
Dividend Per Share — the cash paid to each shareholder from profits. Find it in the Notes.
PAT
Profit After Tax — the bottom line. What's left after revenue, expenses, and tax. EPS is derived from this.
PBT
Profit Before Tax — profit before the government takes its share. Compare PBT to PAT to see the effective tax rate.
Payout Ratio
DPS ÷ EPS × 100. What percentage of earnings is paid as dividends. Above 80% raises sustainability questions.
Book Value
Shareholders' equity ÷ shares outstanding. What each share is theoretically worth if the company liquidated today.
P/B Ratio
Price-to-Book — share price ÷ book value per share. Below 1x means the market values the company less than its assets.
Capex
Capital Expenditure — money spent on physical assets like equipment, buildings, or tech infrastructure. Found in Cash Flow.
Free Cash Flow
Operating Cash Flow minus Capex. The cash truly available to pay dividends, buy back shares, or grow the business.
Retained Earnings
Cumulative profits kept in the business rather than paid as dividends. Found in the equity section of the balance sheet.
You have the numbers.
Now build conviction.
Find the EPS from the annual report, plug it into the PE calculator, model your Bull, Base and Bear scenarios — then log your reason for buying before you deploy a single naira.
Open PE Calculator →