
Damien King, chairman of Dyoll. - File Ashford W. Meikle, Business Reporter
The cash-strapped Dyoll Group is unable to pay its staff and cannot find the money to pay for a professional audit to be done on its fourth quarter results and, by extension, its financial year, the company advised in a filing to the Jamaica Stock Exchange (JSE).
On Wednesday, a full day after investors had digested the news, selling triggered the circuit breaker on at the JSE.
"Since December 15, 2006 the company is still experiencing severe cash flow and have been unable to meet its financial obligations namely, payment of its statutory obligations - salaries - and its commercial debt," the notice read.
The release also noted "additionally the company is not in a position to finalise its unaudited financial statements for the quarter ending December 31, 2006 and also to retain its auditors to commence the audited financial statements for the year ending December 31, 2006, due to its monetary problems."
On Monday, the stock opened at 80 cents, but shed almost 20 per cent of its value by Wednesday, dropping to 68 cents, and forcing the JSE to trigger the circuit breaker rule to prevent further slide in the stock price.
Transactions
"Tomorrow, (Friday) you will see some transactions taking place at the 50 cents level and below that. I think it will reach as low as 49 cents tomorrow because there are a lot of people who want to sell it. It may even go as low as 40 cents," said a stockbroker yesterday.
"People are just now grasping the reality about Dyoll. I don't expect it to be a going concern for very long because if you can't pay your auditors, then it is just a matter of time before you are delisted."
Up to the end of its 2005 financial year, Dyoll posted a loss of almost $53 million but the most recent financials from the company, its unaudited nine months to September 30, 2006, point to a net loss of $4.5 million on operating revenue of $680,000, consisting of management fee from a subsidiary and rental income.
However, with operating expenses of $11.2 million, the company posted gross operating loss of $10.5 million for the nine-month period and a net loss of $4.5 million.
In an attempt to lower its accounts payables and increase its cash balance, Dyoll sold its 51 per cent stake in Dyoll Wataru Coffee company early last year for $25 million, but that has done little to improve its financial health. The company has approximately $4 million to $5 million of expenses each quarter.
Its unlikely that its financial woes are likely to be solved any time soon since plans to sell its major asset, Drax Hall, appear stalled.
Dyoll is hoping to get $150 million from that sale to strengthen its balance sheet, and re-outfit the company as a real estate development entity and property management company, with plans to raise capital through private placement and debt financing.
The Financial Gleaner was unable to ascertain the progress being made on the real estate transaction as efforts to speak with the chairman of the Dyoll Board, UWI lecturer, Dr. Damien King, were unsuccessful.
"The view is out there that the delisting is imminent, that the company is on its way out," said the stockbroker who spoke with the Financial Gleaner on condition of anonymity.
"Nobody knows what is Dyoll, except that it is a shell. The company is not able to meet its debt payments, which means that there is nothing left for shareholders in the company."
ashford.meikle@gleanerjm.com