DAAR Communications Plc H1/Q2 Result – Structural Asset Strength Overshadowed by Persistent Operating Losses

DAAR Communications Plc’s H1 2025 financial results continue to reflect a structurally weak operational model with persistent bottom-line losses, eroding investor confidence despite the company’s large asset base and historical significance in Nigeria’s media industry. While revenue showed modest growth year-on-year, rising costs, weak cost controls, and negative retained earnings reinforce a bearish investment outlook.

Key Strengths

1. Revenue Recovery:
   • H1 2025 revenue rose 5.3% YoY to ₦2.06 billion from ₦1.95 billion, indicating slight market traction and stabilization in content monetization.
2. Robust Asset Base:
   • Property, plant & equipment (PPE) remains substantial at ₦23.48 billion, reinforcing the company’s infrastructure and technical capacity to operate across Nigeria.
   • Total assets of ₦26.72 billion support long-term solvency, backed by investment in platforms like MTS and AITNews24.
3. Stable Shareholder Equity:
   • Total equity stood at ₦15.66 billion, supported by high share premium (₦13.41 billion) and revaluation surplus (₦17.94 billion), offering a strong buffer.

Key Weaknesses

1. Sustained Losses:
   • The company recorded a loss before tax of ₦519.24 million in H1 2025 and ₦427.82 million in Q2 alone, though narrower than the ₦1.33 billion loss in H1 2024.
   • Negative earnings per share (EPS) of -6 kobo in H1 2025 and -5 kobo in Q2 2025 reflect value erosion for shareholders.
2. Weak Operational Efficiency:
   • Gross profit margin remains thin (21.8%), and administration expenses (₦1.12 billion) are more than twice the gross profit, showing poor overhead control.
   • Selling expenses, though reduced YoY, still weigh on operating efficiency.
3. No Tax Shield or Deferred Gains:
   • Despite heavy losses, no tax credits or deferred tax assets are recorded, implying no recovery mechanism through tax loss carryforward or deductions.
4. Negative Retained Earnings:
   • Retained losses deepened to ₦19.69 billion as of June 2025, eroding distributable profit and weakening the case for future dividends.
5. Liquidity Concerns:
   • Cash and cash equivalents remain low at ₦187.78 million. Trade and other payables total ₦9.5 billion, suggesting tight working capital conditions.
6. Heavy Short-term Obligations:
   • Current liabilities (₦10.31 billion) far outweigh current assets (₦3.11 billion), indicating a potential liquidity crunch unless short-term financing is sourced.

Although DAAR Communications boasts a substantial asset base and brand heritage in the Nigerian media landscape, its recurring losses, weak liquidity position, and lack of turnaround evidence raise serious red flags. The gap between top-line recovery and bottom-line delivery indicates poor operational leverage and high fixed costs.

Until the company:

• Demonstrates consistent profitability,
• Implements visible cost rationalization, and
• Reverses its negative earnings trend,

we recommend avoiding equity exposure. The risk of shareholder value erosion outweighs the upside potential in its current form.

Catalysts to Watch:

• Strategic partnerships or content monetization breakthroughs,
• Asset sales or debt restructuring to free up liquidity,
• Shift in media consumption and digital pivot (if monetized effectively).