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CWG slips into loss position

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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.

Financials

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.

Profit deflators

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.

Way forward

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.

Last line

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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HuCaPAN seeks laws to regulate employment agencies

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Human Capital Providers Association of Nigeria (HuCaPAN),an umbrella organisation of registered/licensed recruiters, has called on the Federal Government to make effective regulatory laws to regulate the activities of recruitment agencies in the country.

The Association’s President and former Executive Secretary of the Association of Food, Beverage and Tobacco Employers, Mr. Aderemi Adegboyega made this call while speaking at the Association’s 7th Annual General Meeting (AGM) held recently in Lagos.

He said the association has made several efforts at ensuring that the Nigerian workforce was treated with respect and dignity, noting that the quest for labour flexibility led to the current manpower structure in most companies where over 60 per cent of the workforce has paled into informal and agency employment.

He cited the case of a Nigerian telecommunications giant that does not employ any staff directly. He pointed out that though agency work and outsourcing in Nigeria is a legal and approved business model, the Federal Ministry of Labour and Employment insists that such activities must follow laid down regulations to ensure and fair labour practice to the citizens.

He further said that as part of the Association’s efforts towards ensuring that Nigerian workers are engaged in decent work and properly treated in their workplace, it has collaborated with International Labour Organisation (ILO), Nigeria Employers Consultative Association (NECA) and the Federal Ministry of Labour and Employment to embark on a project which gave birth to the Code of Conduct for PEAs that has become the standard practice for Employment Agencies in the country.

Established as an employment providing professional organisation, HuCaPAN aims to develop and promote standards and ethical practices n recruitment, deployment and management of outsourced personnel among Service Providers in the country, among other numerous objectives.

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U.S. stocks drop on tech sell-off

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US stocks pared a weekly gain as a selloff in chipmakers entered a third day, with investors concerned there’s been a slowdown in smartphone demand. The dollar extended its weekly gain and treasury yields marched toward 2.95 per cent. Makers of computer chips and hardware tumbled, with Apple Inc., headed for its biggest rout since early February following a downgrade based on its deteriorating outlook in China.

The Nasdaq 100 Index was off more than 1.5 per cent. General Electric Co. rose on solid results. U.S. Treasury yields pushed to session highs as inflation worries persisted. American crude bounced back from a decline sparked by Donald Trump’s complaint that prices kept artificially very high by OPEC will not be accepted.

The rally in metals markets stuttered, pushing the Bloomberg Commodity Index down for a second day. According to Bloomberg, the late-week selloff in equities damped the mood among investors looking to earnings season to break stocks out of a two-month range. While companies that have beaten estimates pushed higher, those that missed were punished far more severely.

The chipmaker selloff also highlighted market risks, from a potential slowdown in global growth to the implications of the ongoing trade dust-up between the U.S. and major economies. While investors debate the cause of the decline in sovereign debt, bond market gauges showed an increase in expectations for U.S. inflation after the recent torrid gains in metals from aluminum to nickel.

Trade remains in focus with the US Treasury Department considering using an emergency law to curb Chinese investments in sensitive technologies. In Europe, a miss by Reckitt Benckiser Group Plc, the maker of Durex, dragged down personal and household-goods stocks in the Stoxx Europe 600 Index. Telecoms advanced as Ericsson AB surged after first-quarter earnings beat estimates. U.K. shares outperformed as the pound weakened after Bank of England Governor Mark Carney dampened expectations for a rate hike next month

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Business

Group hires pioneer executive secretary

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Women in Successful Careers (WISCAR) have appointed Mrs. Fabia Ogunmekan as its pioneer executive secretary. WISCAR is a non-profit organisation focused on empowering and developing professional women to contribute to economic development and nation building in Nigeria and Africa. As the group’s executive secretary, Ogunmekanwouldoversee thedayto dayadministrationof WISCAR’sstrategyimplementationand programmes management. Prior to joining WISCAR, she served as alumni engagement manager at the Tony Elumelu Foundation.

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