CWG Computer Warehouse Group said it 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.
The company in a notice to the Nigerian Stock Exchange yesterday explained that the foreign exchange losses was principally driven by exchange rate volatility, following the significant drop in oil prices.
On the inventory write-offs, the company said that changes in technology and business model have made some previous investments.
It stressed that due to a significant amount of income reversal from the previous year as a result of the cancellation of earlier agreed contracts, the company made bad write-offs.
“In addition, the group 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 which caused significant delays in investments by our traditional customers,” the company stated.
The company had reported a revenue of N12.32 billion for the nine months ended September 30, 2015, showing an increase of nine per cent compared to N11.2 billion in the corresponding period of 2014.
However, the various economic challenges including unstable foreign exchange market, increasing inflation and interest rate made the company to end the period with a loss after tax of N516 million as against a profit of N153 million in 2014.
According to the company, given its dependence on foreign inputs, the volatility in the foreign exchange market impacted negatively on its bottom line.
CWG explained that a combination of negative Central Bank of Nigeria, CBN, policies around foreign trade increased the company’s borrowing cost, which led to growth in interest and finance charges by 77 per cent to N123 million, up from N69 million recorded in 2014.