Adswitch Records N11.7m Loss in 9 Months
By Uche Obike
Adswitch Plc announced N11.7 million loss after tax during its nine months ended January 31, 2004, compared with profit after tax of N4.6 million recorded in 2003.
The Nigerian Stock Exchange (NSE) at the weekend released to the market operators the company's unaudited financial results for the third quarter which showed a turnover of N 14.3 million as against N31.8 million in the comparable period of 2003.
It could be recalled that despite the harsh and unfavourable business climate, Adswitch recently expressed confidence that the future is promising.
"The future of the sector in which this company operates is promising," said the Chairman, Engineer Ajulu Uzodike.
The company's performance during its financial year ended April 30, 2003, showed a declining profile.
The company's turnover was down by 63 per cent from N97.4 million in 2002 to N36.6 million, while profit before tax was also down by 82 per cent from N19.2 million in 2002 to N3.5 million.
Uzodike attributed the poor performance of the company during the financial year under review to the absence of patronage from the Federal Ministry of Power and Steel, National Electric Power Authority (NEPA) and Rural Electricity Boards that remain the major buyers of its major product.
He said that the company had earlier hoped to receive some patronage from the Federal Ministry of Power and Steel in the year just ended, but did not materialise as it could not be followed through as expected.
The result, according to him, was "that genuine manufacturers like us did not receive the job, as they were mainly reserved for non- manufacturers. We complained to the appropriate ministry who told us that it was an oversight. The Organised Private Sector (OPS) and the Federal Ministry of Industry lent credence to our complaint and we are hopeful that our relationships with them will improve."
He disclosed that the company is not committing much fund in the factory project even with the final receipt of NEPA's payment.
"This is due to the other competing demands on our cash position and the harshness of our business environment, which has made it imperative for caution, and the consequent rescheduling of the projects," Uzodike said.
He explained further that "our dividend policy is based on adding value to shareholders and on retaining some reserve to sustain growth. In view of current performance and the need for balance between shareholder value and reserve for growth, the directors are not recommending any dividend for the year."
Consequently, the company is embarking on a new product development - an industrial product that may increase its dependence on government but will give it a comparative advantage.
He disclosed further that the company is embarking on outdoor advertising to improve its visibility.
He announced that "we also have a website now where information about our company can easily be reached worldwide."
He said that the company will continue to invest appropriately in human capital development, technology and machinery for its existing and new products.
He observed that businesses were yet to benefit from dividends of democracy as government plans were yet to be adequately implemented, and economic growth continued to be sluggish with no noticeable improvements in the areas of high cost of production caused by epileptic power supply, continued infrastructural decay, high cost of funds and continuous naira depreciation.
In assessing the economy further, Uzodike noted that "when the performance of the economy is put side-by-side with the general performance of macro economic indicators there is no significant progress in the economy. The environment of business has deteriorated and is harsh on operators. You will note that the 2003 Appropriation Bill presented in November 2002 is yet to be passed into law. This delay in releasing the budget has continued to slow down economic activities. The result is that Government at all levels are unable to embark on major capital projects. As for the Government ministries, agencies or parastatals, which are supposed to handle certain private-sector-performance enhancing projects, they do not have the funds."
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