CWG Escape 2019 Q3 Loss, But Still Struggling To Meet NSE Listing Requirements

ICT company, CWG Plc, has released its third-quarter (Q3) financial statement. While the company recorded revenue growth, CWG is also at risk of getting delisted as it's currently trading below free float standard and struggling to meet the Nigerian Stock Exchange (NSE) listing requirements.

CWG recorded a 29.7% growth in its 2020 Q3 revenue when compared to the corresponding period of 2019 third quarter. CWG's revenue grew to NGN3.42 billion during this year's third quarter, surpassing the NGN2.64 billion generated in the same period of 2019; this reflected a growth rate of 29.7% during the period under review. The company's Gross Profit also took the same path.

AllNews gathered that despite an increase in Cost of Sales in Q3 this year, CWG's gross profit rose by 56.3% to hit NGN676.1 million in Q3 2020, rising above the NGN432.3 million the company managed to record during the corresponding period of last year third quarter.

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The Cost of Sales rose to NGN2.75 billion within the third quarter of 2020, surpassing the NGN2.21 billion recorded as cost of sales for the same period in 2019 Q3. This year's third quarter proved to be a better period as CWG escaped loss in its Profit Before Tax.

CWG recorded NGN176.1 million as its Profit Before Tax in 2020 Q3, compared to the NGN119.02 million the ICT company reported as loss for PBT during the corresponding period of 2019 third quarter.

Also, the company's Profit After Tax rose from the NGN119.02 million loss recorded last year third quarter, to hit NGN158.96 million.

CWG Struggling To Meet NSE Floating Rules, Risk Delisting From Exchange

AllNews gathered that CWG has not complied with the Nigerian Stock Exchange's free float requirements for companies listed on the Main Board. According to NSE, free float means "the number of shares that an Issuer has outstanding and available to be traded on The Exchange.

"It includes all shares held by the investing public, and excludes shares held directly or indirectly by promoters, directors and their close relatives; strategic investors holding five percent (5%) and above of the issued share capital; or government."

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CWG is not compliant with the NSE free float requirements as the company has a free float percentage of 15.97% as of 30 September 2020, with a free float value of N1,024,021,749.26 as of the same period. This is below the listing requirements which could attract sanction from NSE.

CWG has until August 2021 (NSE gave CWG 2-years to meet the listing standard) to meet the NSE free float requirements, which is; "free float of twenty percent (20%) of the Issuer’s issued share capital made available to the public and held by not less than three hundred (300) shareholders; or valued at Twenty Billion Naira (N20 Billion) or more." AllNews findings showed.

There is pressure on CWG's management to meet the requirements before August 2021, in order to avoid being identified as "Below Listing Standard'. This tag is a red flag or risk warning for existing investors and prospective investors. Companies avoid the "Below Listing Standard' list, as NSE discloses them to the public, thereby, affecting investors' confidence towards such a company. Also, if the company fails to meet the listing standard requirements, such a company could be delisted by the NSE.

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