There was a time when every discourse about independent radio and TV broadcasting in Nigeria revolved around DAAR Communications Plc. Back then, the company was setting the pace and holding the ace in the country’s media industry. It owned the first independent TV and radio stations in Nigeria (Africa Independent Television (AIT) and RayPower FM). Without question, it revolutionised the broadcasting industry.
But things have changed since those glorious days. Today, DAAR Communications Plc is only but a shadow of its former self. Its problems are many, due to many factors which are mostly of its own making. For instance, its failure to keep abreast with changing trends, hence the inability to stay ahead of the competition.
On that note, welcome once again to Nairametrics’ company focus for this week. As you already know, this is a column where we profile little-known companies with shares listed on the Nigerian Stock Exchange (NSE). Today, we are looking at DAAR Communications Plc.
It is interesting that though millions of Nigerians are familiar with AIT and RayPower FM, not a lot of them know that the media outlets are owned by DAAR Communications Plc. In the same vein, not many Nigerians know that the media company is also listed on the Nigerian bourse. Well, just in case you never knew, now you do. You will also get to know more about the company’s history, its operations, services, recent financial performance and more.
DAAR Communications Plc: A corporate overview
Incorporated in 1998 as a limited liability company, DAAR Communications is the foremost private broadcasting company in Nigeria. It is specifically engaged in the production of news, current affairs and entertainment programmes for both radio and television audiences. Following years of relatively steady growth, it became quoted on the Nigerian Stock Exchange in April 2007.
DAAR Communications Plc revolutionised the broadcasting industry in Nigeria, shifting focus from state-owned media organisations such as NTA and Radio Nigeria. As part of its shakeup of the media industry, it also pioneered 24-hour broadcast service in the country.
The company’s first radio station, RayPower 100.5FM, began commercial operation earlier in 1994, shortly after the Federal Government had deregularised the sector. Soon afterwards, it started its TV broadcasting arm, Africa Independent Television, which is also simply known as AIT. This was the first satellite broadcasting service in Nigeria and a thrill to many people who, until then, were only used to the Nigeria Television Authority (NTA).
In 1999, DAAR Communications Plc launched a second radio station (RayPower FM 2), which was later followed by a third station called (Faaji 106.5 FM), launched in 2012. The company also established a multi-channel direct-to-home subscription TV known as Daarsat.
A breakdown of the company’s segments and how much they contribute to revenue
AIT ‘Sharing the African Experience’: When one thinks about DAAR Communications Plc, the first thing that comes to mind is its television arm, AIT. The TV station offers various types of news shows, talk shows, political programmes, reality shows, music programmes, etc. All of these are designed to cater to various audiences, often interspersed with loads of advertising. It is, therefore, not surprising that AIT generates about 90% of the company’s total revenue. Information available in its 2017 financial report shows that the TV arm generated about N3.1 billion out of the overall total revenue of N3.7 billion.
Radio: The company’s first radio station, RayPower FM, started out with a distinct type of radio programming that was unique and exciting to many Nigerians. But a lot of new radio stations have since caught up and even surpassed RayPower, thereby leaving nothing really desirable about it. But it continues to operate, and along with the likes of recently-established Faaji FM, generates about N430 million in annual revenue.
DAAR News: This segment of the company generates an average of N140 million in annual revenue, according to the company’s 2017 financial report.
DAAR UK Operation/AIT International: This segment is concerned with the responsibility of marketing the company’s channels in the United Kingdom. It has not been successful with this venture, generating only N21 million in full-year 2017 and then zero revenue in half-year 2018.
Daarsat: Just like DAAR Communications’ UK operation, the Pay TV segment has not been successful. It generated zero revenue in half-year 2018.
About the company’s market audience
The company makes money through the provision of media services. In this sense, it caters to the needs of TV viewers and radio listeners, airing interesting programmes of assorted kinds. Related to this is the slew of advertising services which the company provides for major brands in the country.
Some key members of the company’s Board of Directors
The most famous member of the company’s Board is Dr Raymond Aleogho Dokpesi. He founded the company and currently serves as a Non-Executive Director. Dr Dopkesi is one of Nigeria’s most popular businessmen and politicians. In 2016 he contested but failed to become the Chairman of Nigeria’s opposition party, the People’s Democratic Party (PDP).
Other notable Board members are:
- Tony A. Akiotu: Group Managing Director
- Chief Raymond Paul Dokpesi Jnr: Chairman
- Chief Stanley Sagboje: Executive Director
- (Mrs) Oluwatosin Dokpesi: Executive Director, etc.
A look at the competition
Gone are the days when it was just DAAR Communications Plc playing in the independent broadcasting space. These days, the competition in the sector is fierce. As you may well know, so many new radio and TV stations spring up every now and then, the most notable of which include: Channels TV, TVC, Ebony Live TV, The Beat FM, Cool FM, Classic FM, etc. The effect of the competition on DAAR Communications Plc is reflected in its declining revenue and profitability. Unfortunately, the company is not doing enough to curtail this.
A look at the company’s financial performance
DAAR Communications Plc has been struggling to maintain profitability in recent years. In 2017, it reported its worst financial result yet, with profit declining to N481 million from N2.1 billion in 2016. The losing streak continued this year, according to its recently released half-year 2018 result (N412 million in June 2018 compared to N1.2 billion in June 2017). However, revenue increased to N1.9 billion in half-year 2018, compared to N1.7 billion in the comparable period.
So why is the company struggling?
It is easy to say that the company’s financial trouble is due to the growing competition; after all, it is an obvious fact. But there are other factors besides the competition, one of them being that DAAR Communications has failed to maintain its leadership position. Like many other companies which were pioneers in their respective industries, its disposition to change and restructuring has been lackadaisical.
This is such that while the likes of Channels TV and TVC are improving their service delivery, AIT continues to bask in the glory of its former days. For instance, there are so many technical glitches one would experience while watching AIT, which would seldom be experienced when watching TVC. Hence, it has become imperative for the company to improve the quality of its service delivery.
The company may also consider concentrating its focus, resources and efforts only on business ventures that are profitable. In view of this, divesting from Daarsat and AIT International would not be a bad idea. Those two ventures have failed to ensure profitability, so there is no justification for continued investment in them.
In conclusion, DAAR Communications Plc still has a lot of potentials. All it needs is a slight refocusing in business strategy, some improvements in its corporate governance, and a reinvigoration of the initial drive which instigated a transformation of Nigeria’s broadcast media space in the 1990s.
Dangote Cement to extend clinker export to other African countries
Dangote is on course to sell more clinker across West Africa and commence shipment to Central Africa in H2 2020.
The Management of Africa’s largest cement producer, Dangote Cement Plc (DCP), disclosed during a virtual event yesterday, that the cement producer is set to commence clinker export to other African countries within the next few weeks.
The Acting Group CFO, Guillaume Moyen, made this known in his presentation at the joint virtual event with NSE, tagged “Facts Behind the Figures and Sustainability report’’ on Wednesday, 24th September, 2020.
Backstory: In its half-year report, the Management of Dangote disclosed that on 12 June 2020, the maiden shipment of 27.8Kt of clinker from Nigeria to Senegal left the Apapa Export Terminal.
The Management reiterated that the company is on course to sell more clinker across West Africa, and commence shipment to Central Africa in H2 2020. As it is in line with the Group’s vision of making West and Central Africa, cement and clinker independent, with Nigeria the main export hub.
The absence of limestone in much of West Africa, especially those in the coastal states, forces those countries to import bulk cement and clinker from Asia and Europe, and this is quite expensive.
However, Dangote Cement plans an ‘export–to–import’ strategy, positioning Nigeria as the main export hub of the continent, in a bid to serve West and Central Africa countries from Nigerian factories, making the region cement and clinker independent.
This is consistent with the Group’s vision of cementing Africa’s economic independence, as this would lead to lower clinker cost for pan-African operations, due to the proximity of Nigeria to these countries, as clinker landing cost will be cheaper.
The Management emphasized that this is possible, as Nigeria can serve a potential market of 15 countries, with over 350 million people, given the county’s relative abundance of quality limestone, especially in key Southern regions.
It is important to note that DCP’s clinker volume, according to figures contained in its H1 2020 results, has increased to 60Kt from 12kt in H1 2019, which translates to 400% increase.
The benefits of DCP’s export strategy
It is noteworthy that the innovative strategy of Dangote Cement Plc is expected to;
- Cement Africa’s economic independence, and contribute to the improvement of continental, regional, and intra-regional trade, as the company seeks to make regional and continental free trade agreement a reality.
- Ensure that the increase in production due to exports, leads to increase in capacity utilization in the Nigerian operation, and in turn, reduces fixed cost per tonnes.
- Increase foreign revenue exchange for the Nigerian operation, and offset foreign exchange risks.
- Reduce clinker landing cost, by leveraging on the proximity of Nigeria to other African countries.
Some of the benefits of our export strategy are Higher capacity utilization of our facilities; Ecowas benefits; Foreign exchange; and Lower clinker cost for Pan-Africa operations – @guillaumemoyen
#NSEhostsDangote https://t.co/TGd2N6JGZw pic.twitter.com/TvPGHunsb0
— The Nigerian Stock Exchange (@nsenigeria) September 23, 2020
Fidelity Bank to raise N50 billion in bonds in Q4 to refinance existing debts
The new issue will be made to redeem the existing N30 billion bond which was issued at 16.48%.
One of Nigeria’s second-tier commercial banks, Fidelity Bank Plc, has concluded plans to issue up to N50 billion ($131.3 million) in local bonds by the fourth quarter of 2020, in order to refinance existing debts as the yields drop.
The disclosure was made by the Chief Operations and Information Officer, Gbolahan Joshua, during an analyst call on Tuesday, September 8, 2020.
The crash of crude oil price globally, which was triggered by the novel coronavirus pandemic, has led to a decline in bond yields on the local debt market. This has made foreign investors to dump their local assets, leaving excess liquidity in the money market. This has also put a lot of pressure on the foreign exchange market as they look for dollars to repatriate their funds.
The Fidelity Bank top executive disclosed that the new issue will be made to redeem the existing N30 billion bond which was issued at 16.48%.
The global economic situation has seen yields in the debt market drop from as high as 18% about 3 years ago to less than 5% for the one-year treasury bill.
Fidelity Bank had revealed that it expected to see a 15% drop in profit this year when compared to 2019 result due to the coronavirus pandemic. Its profit after tax increased by 21.9% to N12 billion for the half-year 2020.
The second-tier bank also disclosed that its income declined in the second quarter due to a downward review of lending rates on loans as a result of the economic downturn.
Heineken buys more units of Nigerian Breweries Plc
The Dutch firm has invested N276 million in NB since August, to increase its stake in the Brewer by 0.10%.
The major shareholder of the largest brewer in Nigeria, Heineken Brouwerijen B.V, has increased its stake in Nigerian Breweries, with the purchase of 233,110 additional units of Nigerian Breweries shares. This was disclosed by the company in a notification sent to the Nigerian Stock Exchange, which was seen by Nairametrics.
According to the notification, which was signed by the Company’s Secretary, Uaboi G. Agbebaku, the purchase was made on the bourse over two transactions on the 2nd and 3rd of September.
This disclosure is a regulatory requirement that must be reported to the Nigerian Stock Exchange, especially when a major shareholder or director of a publicly quoted company purchases shares in the company they own.
The analysis of these transactions indicates that the purchase consideration for the 233,110 additional units of Nigeria Breweries shares at an average price of N39.94 is put at N9.3 million.
This purchase and previous purchases further cement Heineken Brouwerijen B.V’s status as a major shareholder; the company has accumulated a total of 7,720,236 since 30th June.
As of June 30th, when Nigerian Breweries released its Half-year financial results and reviewed its shareholding pattern, the company had exactly 7,996,902,051 outstanding shares, with Heineken Brouwerijen B.V being the majority shareholder with 3,019,363,804 units, which amount to 37.76% of the total shares of the company outstanding.
Hence, with the current purchase of 233,110 additional units, and previous purchases in August and September 1, which amount to 7,487,126 units, Heineken’s ownership percentage of Nigeria Breweries is now put at 37.85%.
Insider transactions, both sales and purchases, are often an indication of how shareholders perceive a company’s valuation. It could also mean a possible capital raise or that the majority shareholders are strengthening their existing holdings.
In like manners, the purchase of the shares of Nigerian Breweries by Heineken and other majority shareholder has mopped up stray volumes on the bourse, and pushed the stock price higher by 29% or N9, from N31 it closed at on the 3rd of August to its current value of N40 with 38.2x earnings.
About the company
Nigerian breweries is the largest brewing company in Nigeria. It engages in the brewing and marketing of lager beer, stout and non-alcoholic malt drinks, and the bottling of the Schweppes range of soft drinks and Crush Orange. Its brands include Star, Gulder, Legend, Heineken, Maltina, Amstel Malta, Fayrouz, Climax, Goldberg, Malta Gold, and Life. These products are mainly sold in Nigeria and other neighbouring countries.
Key takes on NB’s financials
Nigerian Breweries was affected by the disruption in the global and domestic demand and supply chain, as profit after tax of the largest brewer dropped by as much as 58%, at the back of the adverse impact of the sharp contraction in economic activities.
The knock-on effect of the COVID-19 lockdown, which affected the trade segment of the business, affected the company sales and this triggered the 11% drop in revenue in the first half of the year.