CHRIS UGWU writes that due to financial cost implications Computer Warehouse Group Plc which has maintained positive financial outlook has slipped into loss position.
ICT sector like any other sectors is relatively not successful because of harsh operating environment. In spite that Nigeria is developing in the area of ICT, there are still some loopholes, which are affecting its total advancement. One the major challenges is that the use of computer, access to internet and other tools of ICT are limited greatly to the urban areas as most people in the rural areas are yet to know how to use the computer.
Some other challenges facing the full ICT deployment in the country include bad road infrastructure in Nigeria which has remains a key problem for ICT providers in the country. Inconsistent government policies in form of multiple taxation, conflicts of interest from government agencies as regulators and operators, duplicity of functions, among others also remained as serious challenge to the sector.
There are also no doubt that the security challenges in the Northern part of the country with the attendance consequences of loss of lives and properties, domestic constraints such as depletion of fiscal buffers, dwindling foreign reserves, erratic supply of public electricity have also remained a thorn to the business operating environment. Computer Warehouse Group Plc (CWG) which weathered the storm during recession surprisingly returned on the loss position last seen in 2015. The company commenced the year 2017 on the positive note ended the year in the red.
The poor performance according to the company occurred on the back of a challenging and uncertain macroeconomic environment including predominantly as a result of losses incurred, due to the financial cost implications of non-actualized projects which have adversely affected the Company’s estimated earnings. Despite the recent upsurge in share prices, market sentiments for the shares of the company have remained stagnate at N2.54 per share year to date.
Computer Warehouse Group (CWG) ended the year 2016 in a positive note with profit after tax of N127.675 million for the full year ended December 31, 2016 as against a loss after tax of N1.795 billion in 2015. According to a report obtained from the Nigerian Stock Exchange (NSE), the group’s profit before tax stood at N142.004 million from a loss before tax of N1.746 billion. However, the group’s revenue dropped by 34.88 per cent to N10.166 billion from N15.613 billion in 2015. The group also began 2017 financial year on an impressive note with 94 per cent growth in profit after tax to N22.735 million at the close of business in March 31, 2017 from N11.748 million reported a year earlier.
Profit before tax for the period stood at N27.066 million in contrast to N14.008 million in 2016, accounting for a growth of 93 per cent. Revenue however declined by 16 per cent, from N2.719 billion in 2016 to N2.272 billion in 2017. Computer Warehouse Group maintained growth profile during the half year as it recorded profit after tax of N41.555 million for the half year ended June 30, 2017 as against a profit after tax of N37.705 million in 2016 representing an increase of 10.21 per cent. In a filing with the Nigerian Stock Exchange (NSE), the group’s profit before tax however stood at N49.470 million from a profit before tax of N53.865 million, accounting for a drop of 8.15 per cent.
The group’s revenue dropped by 9.57 per cent from N5.203 billion to N4.703 billion in 2016. The CWG equally returned with higher profit margin during the nine months ended September 2017 as it posted 822.1 per cent increase in profit after tax to close the third quarter at N36. 618 million as against N3.971 million reported in 2016. The group’s revenue equally dropped by 13.1 per cent from N7.469 billion in 2016 in contrast to N6.494 billion post in 2017.
Due to operational challenges, Computer Warehouse Group slipped into loss position during the 2017 full year. The group recorded loss after tax of N1.576 billion for the financial year ended December 31, 2017 as against a profit after tax of N127.675 million profit after tax in 2016 representing a percentage change of 1,334.4. According to report obtained from the Nigerian Stock Exchange (NSE), the group’s loss before tax stood at N1.511 million from a profit before tax of N142.004 million, accounting for a 1,164.1 percentage change. The group’s revenue dropped by 13.2 per cent from N10.166 billion to N8.827 billion in 2016.
The group had following the preliminary review of its financial statements for the year ended 31 December 2017, said that it was expected that the estimated earnings and year-end financial projections will be materially lower in comparison to the prior year financials, the company’s management has said. The company in a notice to the Nigerian Stock Exchange (NSE) said: “The reduction in earnings is predominantly a result of losses incurred, due to the financial cost implications of non-actualized projects which have adversely affected the Company’s estimated 51 earnings and year end projections. “Although there is a decline in earnings, CWG Plc profit margins have continued to remain stable, for the financial year ended 2017 and are expected to relatively stay the same. Further details pertaining to the company’s financial performance is disclosed in the audited Financial Statements.
“Notwithstanding the foregoing, from the preliminary forecast undertaken, the Board of CWG Plc. continues to remain positive about the strategic direction of the company and in restructuring if both its business and management models to ensure that the Company maintains its leadership position,” the company noted. It added that the Board was highly optimistic about the new initiatives due to the launching of a number 55 of technology platforms that are currently in the developmental stage and the strategic partnerships that have been concluded, which are expected to translate to increased transactional numbers. The company reiterated its commitment towards excellence and maintaining its position as a market a leader.
The Chief Executive Officer of CWG Plc, Mr. James Agada said that the company’s decision to shun businesses worth billions of naira that require foreign exchange, helped it to remain buoyant during the economic recession that forced most businesses and organisations to go under. Agada who narrated the challenges and prospects of CWG Plc in the last 25 years, during the company’s 25th anniversary in Lagos recently, said the company would have gone under during the period of recession, but for the difficult but gainful decision taken by the management of the company to reject all businesses that would make the company to seeking for hard currencies to purchase and import equipment and machines from foreign countries. According to him, “During the period of recession, we realised that over 30 per cent of its losses was linked to high foreign exchange, because we were busy looking for hard currencies at exorbitant rates, just to service businesses that had to do with the purchase and supply of foreign equipment. So we decided as a company to cutdown on any business that was tied to foreign exchange.”
Speaking during the official opening of the company’s hub Agada, said the facility was significant to the company’s growth and overall development. Agada said since CWG develops its own technological solutions, it was paramount for the company to have a facility that would guarantee the speedy delivery of these solutions to its numerous clients. Also speaking at the launch was the Chief Operating Officer, CWG, Mr. Kunle Ayodeji, who said the building of the facility was necessitated by the needs of its developers and the realities of economic effect on operations, reiterated that it is also in the long run more cost effective for the company to build its own facility instead of renting one.
With the continuing deterioration in Nigeria’s macro-economic conditions which has resulted in drop of earnings of many firms including Computer Warehouse Group it is important for the company to focus on developing homegrown solutions that will address the business needs of people and organisations.
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