By Modupe Gbadeyanka
Investing public has been warned by the board of directors of CWG Plc of the firm’s declining earnings.
The board, in a profit-warning released on Tuesday at the Nigerian Stock Exchange (NSE), disclosed that CWG, a tech company, has suffered decline in performance and its earnings may significantly lower than the previous reports.
According to the statement, preliminary review of its annual report and accounts for the year ended December 31, 2017 has shown that estimated earnings and year-end financial projections will be materially lower in comparison to prior year financials.
Explaining the reason for this, the board said the drop in “earnings is predominantly a result of losses incurred due to the financial cost implications of non-actualised projects which have adversely affected the company’s estimated earnings and year end projections.”
However, the firm assured that its profit margin has continued to remain stable despite the decline in earnings.
In 2015, CWG reversed a pre-tax loss of N1.75 billion to profit of N142 million in 2016 and highlights of the audited report and accounts of the firm for the year ended December 31, 2016 had shown that the information and communication technology company witnessed considerable improvement in its underlying profitability.
In spite of the macroeconomic challenges that constrained turnover, cost optimization strategies adopted by the management significantly reduced costs across the parameters, providing the headroom for the company to override 34.8 percent decline in sales and pushed back from a loss position in 2015 to a profit position in 2016.
The report showed that while turnover dropped by 34.8 percent from N15.61 billion in 2015 to N10.17 billion in 2016, the management optimized cost of sales by reducing it by 41.6 percent from N13.17 billion in 2015 to N7.69 billion in 2016. Gross profit thus rose from N2.44 billion in 2015 to N2.47 billion in 2016.
