Struggling Chams posts N3.40 billion loss in FY15

Struggling Chams Plc, an indigenous firm in Nigeria, has posted a loss after tax of N3.40 billion to end 2015 financial year, as the company shut down a cash cow on the back of low patronage.

The loss position was a result of a 60.82 percent fall in revenue to N1.61 billion in December 2015 from N4.11 billion as at December 2014.

Analysts say the faltering performance was due to the company closing down loss makers tied to its concession on the national identity projects.

Such strategic decisions however are not a threat to the going concern of the Nigerian ICT firms.

Last year, Chams announced the shutdown of the Ikeja ChamsCity digital Mall, due to lack of use of its digital citizen registration and mass enrolments infrastructure, losing about N9.2 billion.

ChamsCity was built in 2009 after its parent company; Chams Plc got a concession agreement from the Federal Government under the administration of Chief Olusegun Obasanjo to deliver the National Identity project for the country.

ChamsCity malls in Lagos, Abuja, Benin and Port Harcourt were established as Nigeria’s pioneer digital mall to provide enormous capital-intensive resources which will accelerate citizen enrolment and registration for National identity management system and for large scale data management in a conducive, serene, and secured environment.

Further analysis of Chams’s financial statement showed cost of sales reduced by 52.34 percent to N1.22 billion in December 2015 as against N2.56 billion as at December 2014. The lower cost of sales didn’t stop gross profit from falling a 74.10 percent to N388.95 million in 2015, compared with N1.55 billion as at December 2014.

The company is spending more on operating expenses to produce each unit of products as administrative expenses spiked by 175.18 percent to N3.77 billion in the period under review as against N1.37 billion in December 2014. Operating expenses ratio (OPEX ratio) increased to 234.16 percent in December 2015 from 33.09 percent as at December 2014.

Chams has negative retained earnings of N5.0 billion, signalling the company has been recording losses than profit throughout its existence.

The debit balance in the balance sheet led to a 51.09 percent drop in shareholders fund to N3.35 billion in December 2015 from N6.85 billion as at December 2014.

Experts say the company should introduce innovative products that will help bolster sales and increase market share. A diversified investment base will enable it tap into the Nigeria’s robust telecommunication market.

Chams share price closed at N0.50 on the floor of the exchange while market capitalization was N2.34 billion.

 

BALA AUGIE