Computer Warehouse Group Plc has reported revenue of N12.32 billion for the nine months ended September 30, 2015, showing an increase of nine per cent compared to N11.2billion in the corresponding period of 2014.
However, the various economic challenges including unstable foreign exchange market, increasing inflation and interest rate made the company to end the period with a loss after tax of N516 million as against a profit of N153 million in 2014.
According to the company, given the company’s dependence on foreign inputs, the volatility in the foreign exchange market impacted negatively on its bottom line.
“The growth in exchange differences coupled with the squeeze in dollar liquidity exacerbated as the value of the naira continued to fluctuate, leading to an increase in operational expenses by 11 per cent to close at N2.15 billion compared to N1.9 billion in 2014. In addition, an income reversal of N103 million due to the cancellation of a transaction duly recognised in Q4 2014 also impacted negatively on the bottom line,” the company said.
CWG explained that a combination of Central Bank of Nigeria (CBN) policies around foreign trade increased the company’s borrowing cost, which led to growth in interest and finance charges by 77 per cent to N123 million, up from N69 million recorded in 2014.
“ Asides from the high interest rate charges during the period, other factors such as transaction volumes, use of financial instruments for hedging foreign exchange risks in Q1 2015 and borrowings in Q1 to confirm Letters of Credit contributed to the growth in charges. The above factors affected the YTD Q3 2015 profitability, resulting in a loss of N516 million compared to a profit of N153 million for the same period in 2014,” the company said.
However, the company disclosed that with the ongoing changes in the global ICT space, it is taking proactive measures to improve its growth indices through its cloud and subscription based business in addition to its traditional reseller business.
“The company has begun to roll out the new initiatives under the subscription business and subscribers are gradually growing on these platforms which are designed to empower and improve businesses across Africa,” the company said.
CWG said it has made significant in-road with the Electricity Theft Detection & Prevention Systems as purchase of about 3,000 units of its anti-theft solutions has been received from a leading electricity distribution company (Disco).
CWG further said that its multi-wallet mobile solution (VERiCASH) in partnership with CIT VERiCASH is driving the emergence of a new ecosystem of collaborative mobile financial services that enables financial inclusion in emerging markets.
It noted that this solution has now been deployed in one of the largest banks in Nigeria and significant transaction revenue is expected as the number of users and transactions grow in the coming months.
“The company’s combined strategy of growing the traditional business, albeit at lower margins, aggressively rolling out its subscription business at better margins and restructuring its cost profile would ensure profitable operations in 2016 and beyond.
Management is confident of increased subscription penetration in 2016, especially on the back of her FinEdge Platform, which is being white labelled by MTN Nigeria to provide Mobile Banking for Banks. Within a year of launching Diamond Y’ello Account in conjunction with Diamond Bank and MTN, the number of accounts on-boarded onto the platform has soured to about six million.
