CWG Explains Loss, Refocuses Business Strategy
Goddy Egene
Exchange rate losses, reduction in margins in traditional reseller business and inability to transfer increased cost of doing business to customers combine to affect the bottom-line of Computer Warehouse Group (CWG) for 2015.
The company, which is into systems integration, operating in Nigeria and other part of Africa, had sent a profit warning to the capital market community that it would end the 2015 year with a loss.
Although the company recorded a gross profit of N2.443 billion, it ended with a loss after tax of N1.796 billion. According to CWG, foreign exchange loss to the tune of N600 million was recognised arising from the fluctuations in the exchange rate, the decline in United States dollars availability and the dearth of hedging options.
“This significantly impacted CWG’s traditional business which is in most part vulnerable to foreign exchange risks (payments from customers are in naira while the corresponding payments to Original Equipment Manufacturers and other partners are in dollars),” it said.
The company added that it wrote off N431 million following technology changes and ongoing business model changes which made some previous investments such as the investments in Very Small Aperture Terminal(VSAT)) and Multiprotocol Label Switching (MPLS) network obsolete.
“This performance occurred on the back of a challenging and uncertain macroeconomic environment including the general elections of 2015 and the subsequent takeover by a new administration which caused significant delays in investments by our traditional customers,” the company noted.
Looking ahead, CWG said despite the many challenges of 2015, it has stayed focused on re-inventing itself to be in better control of its costs, margins and product offering, saying it is in the last stages of transition from a reseller of technology to being a provider of technology platforms that enable growth across a broad spectrum of the economy.
“The company is accelerating her strategic focus from the resale of technology to the provision of platforms and services sold on subscription basis or revenue share basis which are more predictable and guarantee annuity income. This is evident in a slew of new products and services including the Smart Utility Solution (SUS) provides a theft prevention solution, Energy audit, Demand Side Management, Real Time Billing Efficiency and Network Asset Management. SUS is offered to power companies in order to efficiently manage and monitor energy flow to end users.”
It added that there is the SMERP solution, which is a business management tool that provides functionalities such as accounting management, inventory management, sales, and order tracking amongst others and BillsnPay, which is a platform that provides a robust electronic bills presentment and payment service that can be carried out via channels such as mobile, web, bank branches, ATM or banking kiosks.
US Firm to Assist SMEs Leverage $10bn Credit Line
In a bid to ease indigenous entrepreneurs access to funds in the country, a financial consulting firm, King Solomon Capital Empire, has said it is set to assist them (entrepreneurs ) secure alternative funding solutions outside the local banks.
Speaking last week ahead of an impending business finance seminar billed for Lagos on Saturday, the Chief Executive of King Solomon Capital Empire, Dr. Wilson Christson, said the firm would help entrepreneurs and financial institutions with consultancy services on how to access loans and financial instruments to the tune of $1 million to $10 billion. Christson said: “Local banks do not have enough cash flow to fund redundant projects littered across the country,”, adding, “Nigeria banks, governments, entrepreneurs, importers and exporters should not have any issue raising funds to execute any kind of project.”
Speaking on the seminar being organised by the firm tagged: ‘Africa Business Opportunity Seminar’, which he said is a means to achieving the target, Christson said: “This is aimed at increasing business and investment opportunities in Nigeria and Africa at large, and also to provide for business owners, alternative funding solutions outside the local banks. Our aim also is to ensure that businesses we fund succeed.”
While acknowledging that Nigeria provides the highest return on investment than any other country in the world, the US-based businessman and financial analyst said, “for the seminar, we are expecting bankers, business owners, financial institutions, project owners, among others.
We’re ready to teach them how to understand and leverage financial instruments to generate funds so that they won’t be relying heavily on customers’ deposit. We are capable and ready to assist SMEs in Nigeria.”
Christson urged participants to come with their proposals and business partners for a one on one interaction with the firm to enable it know how best to assist them in starting up or expanding their businesses.
