CWG Plc release latest figures for 2016...returns to profitability

In a remarkable turn-around that is almost alien for public quoted technology companies in Nigeria, CWG Plc has pleasantly surprised its shareholders as it has returned to profitability, recording profit before tax of N142 million for the year ended December 31, 2016.

A clear departure from its drastic losses recorded since going public, a situation it attributed to exchange rate losses, reduction in margins in traditional reseller business and inability to transfer increased cost of doing business, CWG’s bottom-line in 2015 resulted in low numbers. Although the company recorded a gross profit of N2.443 billion in 2015, it ended with a loss after tax of N1.796 billion.

But with the latest figures released, the profit-before-tax margin represents 108 per cent increase from the loss before tax reported in the same period in 2015. Highlights of the audited report and accounts of the company released at the Nigerian Stock Exchange, NSE, showed that profit after tax stood at N127.68 million in 2016 against a net loss of N1.80 billion in 2015.

The company said in a note to the results that it drew on increasing operating efficiency, internal cost management and far-sighted foreign exchange risk management to reverse the loss position to profit. Further breakdown of the result showed that while turnover dropped by 34.8 per cent from N15.61 billion in 2015 to N10.17 billion in 2016, the management optimized cost of sales by reducing it by 41.6 per cent from N13.17 billion in 2015 to N7.69 billion in 2016. This resulted in N2.47 billion gross profit during the period from N2.44 billion in the previous year.

In an interview with CNBC Africa as monitored in Lagos, Mr. James Agada, Chief Executive Officer, CWG Plc, said the 2016 results reflected the continuing focus of the company on sustainable income streams, cost management and extraction of best value for the shareholders. According to him, “in the face of the tough operating environment, the Group made a strategic decision to focus on profitable IT solutions with less exposure to foreign exchange fluctuations and with predictable recurrent revenues”.

He noted that the decline in costs was as a result of several initiatives taken by the management to mitigate foreign exchange losses, reduce borrowings and improve receivable collections. Foreign exchange loss had stood at N600 million in 2015 while the company had also suffered inventory write-offs of N431 million and income reversals of N250 million in 2015.

CWG Plc is a pan-African technology company that is into systems integration, operating in Nigeria and other part of Africa.