Reduced finance costs responsible for Omatek Ventures profit growth

Reduced finance costs is responsible for Omatek Ventures profit growth as the Nigeria indigenous Information and Telecommunications (ICT) firm continues to push for the full implementation of the local content policy in a sector that is pivotal to the economy.

The 2014 audited financial statements of Omatek Ventures showed net income increased by 56.22 percent to N284.76 million as against N182.28 million the same period of the corresponding year (FY) 2013.

Pretax profit followed the same growth trajectory as it surged by 104.15 percent to N320.83 million in December 2014 as against N157.22 percent last year. Sales moved by 11.76 percent to N1.14 billion as the company’s expansion plans are contributing to top lines.

-The computer manufacturer’s stellar performance at the bottom lines was as result of a remarkable reduction in finance costs by 93.95 percent to N10.81 million from N178.96 million the previous year.

Analysts say Omatek’s performance is commendable given the tough operating environments ICT firms operate in.

Despite its impressive contribution to the Nigeria GDP in the last rebasing exercise, ICT are grappling with human capital deficit, inaccessible funding, infrastructure and insufficient awareness on the benefits of their products and services.

An Information Service provider said the most difficult challenge the ICT faced in the past is that they couldn’t get the banks to support because lenders don’t see IT has very important then, all they fund is a container, which is tangible and visible.

Telecommunications manufacturers say the speedy implementation of the local content act by regulators will help boost local technologies and spur the sector to growth in an environment abound with opportunities.

The implementation of the local content policy in the ICT will enable government to achieve its aspiration for a knowledge-based economy, according to Florence Seriki, Group Managing Director of Omatek Ventures.

“Technology is a key alternative in diversifying the nation’s economy which can help the federal government to amass wealth and reduce unemployment,” said Seriki.

She urged the new administration to adopt the road map of former president Olusegun Obasanjo who created Public Private Patnership (PPP) in the ICT sector which growned indigenous IT firms.

Further analysis of Omatek’s financial statement shows net margin a measure of profitability and efficiency increased to 24.84 percent in 2014 from 17.0 percent in 2013.

The company’s cost of sales jumped by 39.79 percent to N575.06 million in 2014 compared with N411.35 million in 2013 as huge energy costs, bad roads spiral production. Cost of sales ratio, which measures the relationship between production cost and sales increased to 50.43 percent in 2014 from 40.43 percent the previous year.

The above cost structure means Omatek is spending more to produce each unit of products.

Omatek has utilized the resources of the owner of the business in generating higher profit as return on equity (ROE) increased to 7.61 percent in the review period from 5.36 percent in 2013. Return on assets (ROA) moved to 3.33 percent in 2014 as against 2.11 percent in 2013.

The company’s share price closed at N0.50 on the floor of the exchange while market capitalization stood at N1.41 billion.