@ NNs,
Tales of woe from Daar. Does anybody know what happened with the Fifa Ubder 17 rights? Why was it revoked?
"DAAR Communications: Missed Projection In Maiden, Belated 2008 Result
By Kingsley Ighomwenghian, Finance Editor
Seventeen months after the end of the financial year, and in clear violation of the post-listing rules of the Nigerian Stock (NSE), the board of DAAR Communications Plc, owners and operators of RayPower, African Independent Television and DaarSat electronic media group, submitted its 2008 audited results, which in any case, gave no cause for cheer to investors.
Before then, the company did not also meet the requirement for quarterly rendition of results necessary for investors to make timely decisions, which were made known to its company secretary when it became listed at the end of September 2008.
According to the results for the year ended December 31, 2008, the first post-listing, although turnover rose by N856 million or 30.33 per cent to N3.678 billion, from N2.822 billion at the end of 2007.
Profit before tax for the period, however, fell to N194.985 million, representing a decline of about N201.232 million or 50.78 per cent from N396.217 million in the corresponding period of 2007 to N194.985 million. The company, according to details of the result, could have closed in positive territories, but for the huge tax within the period of N576.472 million, as against a tax rebate of N199.705 million in 2007, which automatically pushed the company off the cliff, resulting in a loss of N381.487 million, compared with the N595.922 million net profit level in 2007.
The full year figures are way off from those projected for the 2008 financial year, just as there are yet no indicators that the target for 2009 and current year, all of which were provided in the offer prospectus. The company had in its initial public offering (IPO) offered for subscription- 1.829 billion ordinary shares, and 960 million shares for sale, both at N5.00 each at the same price by Daar Investment and Holding Company Limited.
The offer, fully underwritten by 10 firms including BGL Limited, Skye and Fidelity banks; the directors noted at the time, was ?being undertaken to give investors an opportunity to become part owners of DAAR, the pioneer broadcasting leader in the Nigerian broadcasting industry, which is currently 94.81 per cent owned by Daar Investment and Holding Company Limited. The offer will also enable the company meet the requirements for listing on the floor of the NSE.?
DAAR Communications had listed its entire eight billion shares at N5.00 each in 2008. Speaking at the listing exercise, chairman of the company, Dr. Raymond Dokepsi, pointed to the positive numbers for two quarters of 2008- total revenue of N1.6 billion in the second quarter ended June 30, and N2.3 billion generated in the eight months period to August 20008. Net profit grew from N286 million at the end of second quarter to N398.545 million in the eight month period.
Based on the eight-month figures, directors of DAAR Communications had forecast a turnover of N10.29 billion in 2008, and grow same to N17.66 billion by the end of 2010, while profit after tax is billed to hit N3.21 billion and N5.77 billion respectively. Of this amount, the directors hope to pay a dividend of N2.49 billion and N4.03 billion, translating to 31 kobo and 50 kobo per share respectively.
According to details of the result to be presented before shareholders whose N5.00 per unit investment has shrunk to 95 kobo each, it was not all bad news however, as fixed assets for the period soared by N13.293 billion or 136.12 per cent from N9.765 billion in 2007 to N23.058 billion, stocks stood at N581.955 million (nil in 2007). The balance sheet information provided showed that Daar reduced its amount outstanding to trade debtors from N1.767 billion to N1.034 billion, raising cash and bank balances to N374.925 million, compared with previous N67.543 million. Short term borrowings for the period however jumped to N1.085 billion, as against previous N163.07 million, in addition to other credit balances that rose from N592.071 million in 2007 to N6.263 billion. Working capital however negative at N63.659 million, compared with the positive level of N1.321 billion, while net assets also recorded robust growth at about N17.528 billion, compared with the N11.416 billion reported in 2007.
Trouble is believed to have started for the group when its multimillion Naira Pay TV platform launched by late President Umar Musa Yar A?dua in October 2008 with 50 local and International foreign channels at its take off, went off the air for some weeks over alleged debts to channel owners.
ProsharNI, a financial market newswire had some months ago reported that Daar?s auditors submitted a qualified audit report, which is was at the time being reviewed by the board and management.
?Some of the key issue of concern relate to the significant levels and utilisation of short term borrowings for long term broadcast and infrastructural projects (especially the just concluded U-17 world cup broadcast which DAAR Communications invested millions of dollars in broadcast equipment and acquisition of rights). There are reports that the broadcast right was ?withdrawn? from the company with dire financial consequences for which there has not been a clear path for recouping same.
?Some of this short term borrowings relate to Fidelity Bank plc, the leading bankers to Daar communications plc.
?As at its listing in late 2008, Daar communications Balance sheet stood at about N37 billion (assets) and another N20 billion was raised through the combined public offer and offer for sale. It thus appear that the company is broke or approaching such a situation (with the general economic and financial downturn not helping their situation).?
The biggest blow to DAAR?s balance sheet, ProshareNI reported, may have been the last minute U-17 World Cup hosting rights cancellation, a right Dokpesi was believed to have personally secured from world soccer governing body, the Federation of International Football Associations (FIFA).
?While confronting this significant shift in its financial reality, the company also has to cope with some corporate fundamentals such as allegations of fraud arising poor internal controls and weak organisational structure,? the report added.
Although the company is yet to tell investors where the annual general meeting at which this maiden result would be held to present these financials, it is expected that when the venue and date are fixed and duly communicated, shareholders will be able to first hand why Daar, which held so much promise, especially in the Nigerian spirit also missed the target or derailed.
Details of the net proceeds utilisation contained in the offer prospectus showed that N4.0 billion, representing 45.7 per cent of the net proceeds was to be invested on digital multi-channel platform within six months, besides ploughing N1.134 billion or 12.97 per cent on procurement of programme content immediately. Another N762.90 million or 8.8 per cent was earmarked for beefing up its working capital; N700 million was meant for development of mobile TV; and N607.944 million for upgrade of existing facilities. The board and management hoped to achieve the projections, using its newly acquired unified licence across the country, by establishing 12 new stations in Nigeria, in addition to the existing eight at the end of 2007. This will be in addition to strengthening its transmission to the United States and Europe, aside from commencing digital terrestrial transmission, multi-channel Direct-To-Home service, mobile TV, IPTV and internet video services, among others. Specifically, 11 new stations were to be completed in Adamawa, Borno, Benue, Cross Rivers, Katsina, Kano, Ogun, Osun, Oyo, Sokoto and Zamfara. About 5.9 per cent or N520 million is earmarked for the construction of a new film village within the next four months to provide a location for production of cultural, traditional and historical movies and television programmes; encourage the motion picture industry to contribute to national integration and development; providing a platform for professional interaction and exchange of ideas; apart from promoting tourism and Nigerian arts and culture. Also, local and international expansion is billed to gulp N459.94 million in the next four months.
At The Beginning
DAAR Communications was established in 1994 in the midst of the hoopla that greeted the annulment of the June 12, 2003 Presidential election, to promot the country?s premier private radio station (which was licensed in 1992)- RayPower 100.5FM, which soon became a household name. It added a second one- 106.5FM about five years later in April, 1999. The company?s strength was the several interactive programming format that promoted immediate feedback on sensitive socio-political, economic and cultural issues, apart from musical presentations and sports, among others. The company?s break when it became the first to begin 24-hour broadcast."
Samstone4
Alakoso...chief communicator to NNs.
