The Acting Group, Chief Executive Officer of CWG Plc, Mr. Adewale Adeyipo, in a recent discourse, explained that the recent increase in the company’s operating cost from N401,554 million in Q1 2018 to N549,048 million in Q1 2019 was due to a ‘one-time’ business investment that was needed to position the ICT firm for growth.
According to the Ag. Group CEO, the investment was necessary to drive functional efficiencies, with reassurance that there were plans in place aimed at reducing the operating expenses by 30% before the end of Q3 2019.
“ONE VERY IMPORTANT THING TO VOICE IN 2019, WE ARE LOOKING AT OVER 30% REDUCTION IN OUR OPERATING EXPENSES AND WE HAVE A CLEAR ROADMAP ON HOW TO ACHIEVE THAT. THERE WILL BE LITTLE REDUCTION IN Q2, but by Q3, I CAN ASSURE YOU THERE WILL BE A MAJOR REDUCTION IN TERMS OF OUR OPERATING EXPENSES.”
How CWG intends to achieve this: The company is looking to tap into its various portfolios to achieve this cut. Nairametrics learned that some major operating costs will be significantly reduced; ranging from administrative to professional service consumption fees and everything else in-between. The company’s intent is to pursue more cost-effective services.
Another aspect to this cost saving for CWG Plc, will be to ensure staff optimization. Tapping into staff resources, flexibility, and their potentials which before now, had not been adequately nurtured. This might result in the training some staff members to brush up their knowledge and skills for company engagement.
Impact of non-actualised projects: The company had explained that it did not meet projected revenue for 2018 financial year due to the non-actualization of some projects that were initially factored in.
Adeyipo said CWG used to factor all projects into its financials but has learned from the experience and the strategy to curb non-actualization of projects that hit the financials were being deployed. While explaining the impact of non-actualised projects, Adeyipo cited an example; of a technology-driven IGR contract with a state, which had to be paused due to an internal shakeup within the state. Saying re-negotiations and presentations had to be embarked on before conclusions were achieved this year.
“SO, WE HAD TO GO BACK TO THE NEW ENTITY, THE Contacts AND WE HAD TO REPRESENT. ensuring they had THE PROPOSAL, appreciated the solution and were ON BOARD WITH it. WE haVE LEARNT A LOT FROM THAT.”
CWG’s revenue driver for Q1 2019: The ICT company recorded N1.9 billion in Q1, 2019. This is a significant growth when compared to the corresponding period where CWG posted N1.2 billion. According to Adeyipo, the following were the drivers of the recorded growth;
Platform business: This contributed 29% of the revenue, making it the all-time highest.
Metering business: CWG has signed three new mining services with big multinationals.
Managed services business
Mining services: CWG plans to sign with two major oil and gas.
Reasons CWG recorded Growth in Q1: Speaking on the positive financial result for Q1, 2019, and the impact of the new management on the result; Adeyipo said such achievement was not a day’s work. According to him, the long term investment and groundwork executed in the past contributed to the Q1 revenue growth for 2019.
To buttress his point, he gave an example of CWG‘s platform business, BillsnPay, which generated about N400 million in the first quarter of 2019; which was more than the platform had made in collective years since its creation 2015. Though CWG gets a fractional percentage of the transactional value, it was a big leap from where it started.
“WE have RECORDED OVER N400 MILLION WORTH OF TRANSACTION BETWEEN JANUARY TILL DATE. WE DID NoT GET Close to half of that, FROM 2015 when we CREATED BILLSnPAY Till 2018. then iN FOUR MONTHS, WE HAD 400 MILLION worth of transactions, MORE THAN WHAT WE haVE ACTUALLY RECORDED FROM INCEPTION TILL THE END OF 2018.
“SO, THE GOOD NEWS FOR US IS THAT WE BEGINNING TO SEE THE REWARD OF SOME OF THESE INVESTMENT. WE DO NoT HAVE A PROBLEM OF BUSINESS NOW; WE HAVE THE PROBLEM OF GETTING THE RIGHT OPERATIONAL PROCESSES IN PLACE TO BE ABLE TO DELIVER on stakeholders expectations.
I MEAN, AN ORGANIZATION THAT WILL DELIVER OVER FIVE HUNDRED THOUSAND METERS IN A YEAR, THAT’S A BIT SUBSTANTIAL. “WE ARE NOT GETTING THAT FIVE HUNDRED METERS IN A YEAR BECAUSE OF WHAT WE DID THIS year, IT’S COMING OUT OF THE MAIN ENGAGEMENT WE haVE HAD IN THE PAST. THE FIRST METERING ENGAGEMENT WE HAD WAS IN 2015, AND IF I TELL YOU WHAT WE haVE EARNED FROM 2015 TILL NOW, it will surprise you that it was NOTHING SUBSTANTIAL.
“SO, WITHOUT TAKING ALL THE CREDIT, THAT IT iS BECAUSE OF THE NEW MANAGEMENT, I CAN ALSO TELL THAT WE are BEGINNING TO SEE THE REWARD OF THE MANY ENGAGEMENTS AND MANY ACTIVITIES THAT WE had DONE IN THE PAST. THE ONLY THING I COULD SAY COULD CHANGE IS, AS WE BUILDING NEW PLATFORMS, THERE iS FOCUS ON THE EXISTING PLATFORMS ALSO TO PRODUCING THE NECESSARY REVENUE OR GENERATING THE NECESSARY REVENUE.”
Issues concerning dividend payments: Adeyipo said CWG Plc takes the payment of dividend seriously. This is why dividend is part of CWG‘s five major pillars which includes: liquidity, growth, profit, and brand. He said while the company has not paid dividends to shareholders, CWG Plc is making profitable investments that will eventually give shareholders their expected earnings.
“THE QUESTION IS, HAS THEIR MONEY (Investors funds) BEEN WELL MANAGED? I would say, YES; i THINK IT HAS BEEN WELL INVESTED. THE next QUESTION THEN IS, AT WHAT POINT DO I GET THE REWARD OF MY INVESTMENT? HOW WAS IT INVESTED? WE FELT A PARTICULAR KIND OF BUSINESS WILL DO VERY WELL, WE WILL STAY IN IT, BUT WE COULD RAISE SOME OTHER STREAMS OF INCOME THAT COULD GIVE YOU THE KIND OF EXPECTED EARNINGS THAT YOU are LOOKING AT;
THAT’S WHERE THE MONEY HAS BEEN INVESTED.”
CWG’s future plans: The company is strategically looking to make its portfolios standalone businesses. With their individual resources and financial capability, they are at the level each can operate as separate entities from the parent body, CWG Plc.
Meanwhile, Adeyipo said part of CWG‘s goals is to make banks give up ATM businesses across Nigeria. The company currently runs deployment and management of ATMs for some banks in Nigeria. The strategic leverage of technology competence places the company in a position to deploy ATMs across Nigeria, reducing physical customers visit to banks for withdrawals or transfers. The rates for these might come at a premium; though, Adeyipo, told Nairametrics that CWG does not intend to place the cost burden on customers.