Revenue crash, weak liquidity deepen Ronchess Global’s losses to N5.98bn

RONCHESS Global Resources Plc, a provider of traffic solutions, construction and procurement services in Nigeria, posted a significantly weaker financial performance in 2025, with losses more than doubling as revenue collapsed and liquidity pressures intensified, according to its audited financial statement seen by Economy Post.

The company reported a loss of N5.969 billion in 2025, compared to a loss of N2.304 billion in 2024. This deterioration was driven largely by a sharp 54.89 percent decline in revenue to N3.031 billion from N6.721 billion, highlighting weakened business activity and possible contract flow disruptions during the year.

Although direct expenses declined by 14.09 percent to N4.644 billion from N5.406 billion, the reduction was not sufficient to offset the steep revenue drop. Combined with administrative expenses of N2.081 billion, the cost structure remained heavy relative to earnings capacity, resulting in a loss before tax of N5.969 billion, despite a modest N26.046 million in other income. After accounting for additional expenses of N15.158 million, the company’s loss after tax widened slightly to N5.984 billion.

Despite the deepening losses, the company remains technically solvent, with total assets exceeding liabilities. Ronchess Global reported a positive shareholders’ fund of N2.045 billion at the end of 2025, indicating that it still maintains a net asset cushion. However, this balance sheet strength appears increasingly fragile when viewed alongside its liquidity position.

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Cash reserves declined sharply to N42.089 million from N178.268 million in 2024, underscoring tightening cash flow conditions. More concerning is the company’s current ratio of 0.36, which signals severe short-term liquidity risk. At this level, the firm has only 36 kobo in current assets to cover every N1 of current liabilities, raising concerns about its ability to meet near-term obligations without external financing or asset liquidation.

Leverage also remains elevated. The adjusted net-debt-to-equity ratio stood at 4, indicating a heavy reliance on debt financing relative to its equity base. Long-term debt (obligations above 365 days) was reported at N2.44 billion, further adding to financial pressure in a high interest rate environment.

Asset quality concerns are also evident. The company recognised an impairment allowance of N122.09 million, reflecting expected credit losses on receivaNotably, Ronchess Global applied a 100 percent impairment on all receivables outstanding beyond 365 days, based on historical evidence that such debts are largely unrecoverable. This conservative stance suggests persistent challenges in collections and counterparty risk, likely exacerbated by broader economic conditions.

The impairment losses were charged to administrative expenses and relate to customers deemed at risk of defaulting on outstanding balances, reinforcing concerns around revenue quality and cash conversion.

With no dividend declared for the year, investors are left facing both earnings erosion and rising financial risk. While the company’s positive equity position provides some buffer, its weak revenue base, strained liquidity, and high leverage point to a challenging near-term outlook unless operational performance improves significantly.

The number of Ronchess Global staff members stood at 143, the same as 2024, but its wages declined to N746.398 million from N865.70 million in the previous year, meaning that salaries might have been slashed in the face of the company’s declining earnings.