After three straight first quarters of losses, Daar Communications Plc, owners of African Independent Television (AIT) and RayPower FM, came out of the woods with a N2.43 million after-tax profit in the first three months of 2019.
The media firm grew its net income by more than 100 percent in the first quarter of this year from a N199.63 million loss recorded in the corresponding period of 2018. The unimpressive performance followed N691.98 million and N691.17 million losses posted in the first quarters of 2017 and 2016, respectively.
An analysis of the company’s financial results for the three months to March 2019 reveals that the impressive performance recorded by the media firm for the period was driven by increased sales in its television and radio services as well as lower cost of goods sold.
As a result, the gross margin, which is the amount of sales revenue retained by the firm after incurring the cost of production, surged to 42 percent from 20 percent recorded in the same period in 2018. This implies the firm had more money from sales to cover its operating expenses after taking into account the cost of goods sold.
Daar Communications saw some increases in its operating activities within the first quarter of this year. Selling expenses rose by 16.5 percent to N26.39 million from N22.66 million, administrative expenses increased by 30.9 percent to N443.78 million as against N338.98 million recorded in the first quarter of 2018.
However, a 24 percent reduction in the company finance charges to N13.34 million was not enough to offset the costs expended on operating activities, bringing both its pre-tax and after-tax profits to N2.43 million as there was no tax deduction for the period.
But in spite of this, Daar Communications Plc still had more than N1.4 billion in accrued salaries yet unsettled, and N246.65 million to pay as charges to the National Broadcasting Commission (NBS). The accrued salaries represent a N98.6 million increase from its level in the first quarter of 2018.
After the close of business on the Nigerian Stock Exchange for the first half of the year, shares of Daar Communications, the only listed media firm at the bourse, remained unchanged at 40 kobo. This indicates the firm delivered no value for investors who bought into the company at the start of the year.
Oluwasegun Olakoyenikan
