Chams plc, a Nigerian company that specialises in Computer Maintenance and Identity Management (CMIM), has had huge operating expenses compound its woes as it posted a loss of N225.68 million in the first quarter (Q1) of the year 2015.
For the first three months through March 2015, Chams recorded a loss after tax of N225.68 million, up from the loss of N109.65 million it recorded the same period of the corresponding year (Q1) 2014.
Chams Plc, a company that deals in transactional card-based services, e-commerce and mobile payment system has capitulated to the tough macro-economic environment evidenced in its faltering performance in the last three years.
BusinessDay analysis showed the technology giant has been unable to tap into the Nigerian market due to its inability to control costs that swallowed operating profits.
Chams isn’t cost efficient as operating expenses grew by 18.62 percent to N383.24 million as against N323.07 million in 2014.
Operating expenses overwhelmed sales as operating expenses (OPEX) ratio spiked to 112.23 percent in 2015 compared with 66.0 percent in 2014. It means the company is spending N1.12k on Opex to generate every N1 in sales.
Chams is also incurring huge production costs as cost of sales ratio increased to 72.24 percent in 2015 as against 49.55 percent in 2014.
The spiralling production costs means the company isn’t efficient in managing direct costs attributable to projects as gross profit dipped by 61.33 percent to a record N94.80 million.
Analysts say the management of the company should put in place an effective cost-control mechanism that will enable it cut costs while increasing profit.
They added that the company will have to seek both organic and inorganic growth strategies as a way of maximizing the wealth of shareholders as these strategies will also place the company on a growth trajectory.
Floundering performances in the last three years by Chams means the IT solutions giant is not tapping into the country’s burgeoning ICT industry that contributed significantly to the country’s rebased GDP.
The company’s revenue fell by 29.72 percent to N341.54 million as against N486.02 million in 2014.
Total assets were down by 16.90 percent to N10.65 billion in 2015 from N9.11 billion 2014.
Incorporated in 1985 as a private limited liability company, Chams converted to a public limited company in 2007 and listed its shares on the Nigerian Stock Exchange (NSE) in 2008 by way of introduction.
Chams Plc and its subsidiaries offer complete end-to-end solutions to small and large projects in the areas of identity management, payments, collection and transactional systems, as well as providing digital platform and ICT trainings.
Chams Plc announced the founding Managing Director, Demola Aladekomo, who has served the company in this capacity for almost 30 years, would be retiring effective 18 September 2015 and the Board has approved the appointments of Olufemi Williams as Managing Director and Luqman Balogun as Deputy Managing Director, respectively.
Aladekomo will proceed on leave in April 2015, handing over to Olufemi Williams as the Group Managing Director and Chief Executive Officer. Williams takes over from Aladekomo in alignment with the board of director’s ratified succession planning which emphasises promoting capable internal candidates to leadership positions.
The company’s share price closed at N0.50 on the floor of the exchange while market capitalization was N2.34 billion.
BALA AUGIE
