Logo of Computer Warehouse Group
Computer Warehouse Group (CWG) Plc on Tuesday said it would record a loss for the year ended December 31, 2015. In a profit warning to stock market operators, CWG said following the preliminary review of the group’s management account, the company expects to incur a number of significant one-off charges that will contribute to an overall loss for the financial year ended December 31, 2015.
CWG had ended the nine months to September 31, 2015 with a loss of N516 million. However, it said stakeholders should expect loss for the full year that will be driven by foreign exchange losses,inventory and bad debt write-offs.
“Foreign exchange losses – principally driven by significant exchange rate volatility. The exchange rate which had been largely stable within a narrow band suddenly plummeted and remained uncertain from the first quarter of 2015, following the significant drop in Oil prices. Inventory write-offs – following technology and business model changes which made some previous investments such as the investments in VSAT and MPLS network obsolete. Bad debt write-offs – due to a significant amount of income reversal from the previous year as a result of the cancellation of earlier agreed contracts, for which cancellation penalties are yet to be secured,” the company explained.
According to the company, apart from the loss from the above write-offs, it expects to report an operational loss stemming from a combination of a reduction in margins in her erstwhile traditional reseller business, and inability to transfer increased cost of doing business to customers due to already existing contracts.
“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,” CWG said.
However, the company said the board has taken steps to reposition it for an improved performance in the New Year, driven by its recent investments in cloud and subscription based business, increased efforts in making its traditional reseller business more efficient and a restructuring of operations for more focus on profitability.
Meanwhile, the Nigerian equities market ended an 8-day gaining streak as profit-taking set in. After rising by 8.4 per cent in eight days, the depreciated by 0.5 per cent to close at 25,755.01 yesterday. Market capitalisation also shed N46.8 billion to close at N8.9 trillion.