HOPE RISING FOR AFROMEDIA PLC BUT.....
According to figures for the half year to March 2017 released recently, hope is rising for Afromedia plc will some day in the future stop residence in the loss league but how soon can that be? Soon enough to navigate the trappings of relative liquidity squeeze??
Hope is rekindled because by this March, Afromedia reported 49.7% drop in loss before tax to N175.5m compared to N356.6m loss by the same time in 2016 year. Meaning for example, compared to losing about N152.8 on each N100 it earned by 2016 half year, it was now losing only N76.8.
Not bad especially since it was brought about by greater control over some costs and great reduction in finance costs despite marginally increaqsed overdraft to N3152.3m
The key to rising hope lies not in the 0.09% increase in total income to N233.6m as other operating income dried up within the period, but in the fact that major drops in administration; other operating costs and finance charges were strong enough to make a difference.
In the first place, the cost of sale that accompanied core revenue did not help matters at all. It rose by 46.9% to N221.6m thus resulting in 84.6% dive in gross profit within the period to N12m.
Secondly, that distribution cost increased by 66.3% to N27.1m compounded issues but both were countered effectively by 39.1% decrease in administration expenses to N139m; decline in other operating expenses to N12.6m and dive in finance costs to N12.7m from N174.6m previously.
In the end, Afromedia plc showcased a glimmer of light by reporting the almost halved loss before tax.
But then, even though cash on hand rose by 9.2% to N38.2m, liquidity squeeze still paces the company with its working capital deficit rounding slightly higher at N6886.8m even as payables only eased by 0.74% to N3933.9m.
Now will the gradual change in fortune rise above red ink early enough to stop relative liquidity squeeze from causing permanent havoc? That is for the future to decide.
AFROMEDIA PLC Half year Nm
2017 2016
Total income 233.6 233.4
Core income 233.6 229.0
Cost of sale 221.6 151.0
gross profit 12.0 78.0
Administration cost 139.0 228.1
Distribution cost 27.1 16.3
Other operating expenses 12.6 19.9
Finance charges 12.7 174.6
Profit before tax (179.5) (356.6)
Profit margin % (76.8) (152.8)
Working capital (6886.8) (6867.1)
Hope is rekindled because by this March, Afromedia reported 49.7% drop in loss before tax to N175.5m compared to N356.6m loss by the same time in 2016 year. Meaning for example, compared to losing about N152.8 on each N100 it earned by 2016 half year, it was now losing only N76.8.
Not bad especially since it was brought about by greater control over some costs and great reduction in finance costs despite marginally increaqsed overdraft to N3152.3m
The key to rising hope lies not in the 0.09% increase in total income to N233.6m as other operating income dried up within the period, but in the fact that major drops in administration; other operating costs and finance charges were strong enough to make a difference.
In the first place, the cost of sale that accompanied core revenue did not help matters at all. It rose by 46.9% to N221.6m thus resulting in 84.6% dive in gross profit within the period to N12m.
Secondly, that distribution cost increased by 66.3% to N27.1m compounded issues but both were countered effectively by 39.1% decrease in administration expenses to N139m; decline in other operating expenses to N12.6m and dive in finance costs to N12.7m from N174.6m previously.
In the end, Afromedia plc showcased a glimmer of light by reporting the almost halved loss before tax.
But then, even though cash on hand rose by 9.2% to N38.2m, liquidity squeeze still paces the company with its working capital deficit rounding slightly higher at N6886.8m even as payables only eased by 0.74% to N3933.9m.
Now will the gradual change in fortune rise above red ink early enough to stop relative liquidity squeeze from causing permanent havoc? That is for the future to decide.
AFROMEDIA PLC Half year Nm
2017 2016
Total income 233.6 233.4
Core income 233.6 229.0
Cost of sale 221.6 151.0
gross profit 12.0 78.0
Administration cost 139.0 228.1
Distribution cost 27.1 16.3
Other operating expenses 12.6 19.9
Finance charges 12.7 174.6
Profit before tax (179.5) (356.6)
Profit margin % (76.8) (152.8)
Working capital (6886.8) (6867.1)
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