A significant reduction in income from personal paid advertisement has dealt a harsh blow on Daar Communications Plc as the company’s losses continue to pile up.
For the year ended December 2016, Daar Communications recorded a loss after tax of N2.39 billion, 58.28 per cent shrinkage from a loss position of N1.51 billion the corresponding period of (FY) 2015.
The company suffered a huge drop in revenue from personal paid advert that plunged by 979 per cent, deepening the financial cesspit for a firm that last recorded a profit in 2012.
Daar Communications’ revenues from television adverts dipped by 48.87 per cent to N3.17 billion in the period under review.
Experts say the N2.10 billion loss is equivalent to the sum of money credited to the company’s owner and Chairman, Raymond Dokpesi, by the Office of National Security Adviser (ONSA) under Sambo Dasuki.
Dokpesi is being prosecuted by the Economic and Financial Crimes Commission (EFCC) on a six-count charge alongside his firm, DAAR Investment Holdings Ltd, for his alleged involvement in the diversion of billions of naira meant for the purchase of arms to fight insurgency in the North-East, according to the Sahara Reporters.
While the company has been recording recurring losses, its liquidity positions are favourable, which means its ability to honour obligations as at when due is not under threat.
Daar Communications’ current ratio, a measure of liquidity, was 0.48 times in December 2016 from 0.47 times as at December 2015. This was lower than the 2.10 times industry average.
Capital ratio otherwise known as gearing ratio increased to 37.70 per cent in December 2017 as against 47 per cent as at December 2015.
In spite of the favourable liquidity position, the company does not have the necessary earnings to service interest payment on loans taken from bank.
Perhaps the most daunting challenge is the poor cash position. Cash and cash equivalent to total assets stood at 0.32 per cent in the period under review, validating the company’s precarious situation.
Daar Communications share price has been trading at below N1 since 2013.
BALA AUGIE
