Mid Year Reports: Nigerian Exchange Group (NGX Group) announces a rise in gross earnings of 138.3 percent to N4.2 billion.
Nigerian Exchange Group Plc (“NGX Group” or “The Group”) announces its unaudited results for the half year ended 30 June 2022.
Group Financial Highlights2
Commenting, Mr. Oscar N. Onyema OON, the Group Managing Director/Chief Executive Officer, said:
“In 2021, we took strategic steps to reorganise our business by laying the foundation for the rebirth of our franchise as we became a fully-fledged for-profit making company with a clear focus on maximizing resources and improving stakeholder returns. Our performance in the first half of 2022 is a testament to our ability to deliver long-term value. We recorded impressive growth in our top line to deliver a profit before tax of N1.22 billion despite the peculiar challenges inherent in our operating environment.
Our goal remains to sustain our position as a leading integrated market infrastructure group in Africa, by diversifying our revenue streams, and identifying and investing in new businesses. We remain focused on building formidable businesses through broader and deeper involvement in every sphere of the capital market value chain through informed investments in profitable verticals and enhanced risk management practices, without losing sight of emerging opportunities in unrelated businesses within the Sub-Saharan African region”.
Group Financial Performance Review
- Gross earnings recorded a significant growth of 138.3% to N22 billion from N1.77 billion as of June 2021 benefitting primarily from a 140.4% growth in revenue (91% of gross earnings), and 119.6% growth in other income (9% of gross earnings).
- Revenue growth of 140.4% (N23 billion) to N3.82 billion in June 2022 from N1.58 billion recorded in June 2021 was driven by:
- 1% growth in treasury investment income (26.6% of revenue) to N1,017.4 million in June 2022 relative to N383.7 million in the comparative period in 2021 driven largely by relatively higher yields on the Group’s treasury bills, bonds and fixed deposit investments.
- 4% growth in transaction fees (60.7% of revenue) to N2,320.7 million in June 2022 from N777.7 million recorded in June 2021 due to a significant increase in trading activities in Nigerian Exchange Limited (“NGX” or “The Exchange”).
- 6% increase in listing fees (9.5% of revenue) to N363.8 million in June 2022 from N306.8 million in June 2021 buoyed by improved listing on the Exchange in the first half of 2022 relative to the first half of 2021.
- Rental income3 (1.4% of revenue) earned from NGX Real Estate lease of office floor spaces recorded a 60.5% increase from N2 million in June 2021 to N51.7 million.
- 4% decline in other fees (1.8% of revenue) to N69.7 million in June 2022 from N82.4 million in June 2021 which represents rental income from the trading floor, annual charges from brokers, dealing license and membership fees earned by the Group.
- 6% increase in other income (9% of gross earnings) driven primarily by:
- 5% improvement in market data income (56% of other income) to N220.94 million from N46.3 million reported in June 2021 which is made up of technology income, other sub-lease income, and penalty fees.
- 99% growth in other operating income (31% of other income) from N105.6 million in June 2021 to N122.5 million in June 2022.
- Total expenses grew by 102.6% from N9 billion in June 2021 to N3.9 billion in June 2022 primarily driven by a 231.6% growth in operating expenses (59.1% of total expenses) to N2.3 billion from N702.9 million in June 2021. This was largely as a result of a finance cost (57% of operating expenses) of N1.3 billion related to a term loan taken during the period. Personnel expenses (34.4% of total expenses) also grew by 27% from N1.01 billion in June 2021 to N1.35 billion during the period under review.
- Operating profit of N2 million in June 2022 from an operating loss of N177.2 million in June 2021, as a result of 138.3% growth in gross earnings.
- Profit before income tax grew by 134.4% to N22 billion in June 2022 from N521.9 million in the corresponding period in 2021 due to an impressive growth in the top line which was more than sufficient to mitigate the impact of the increases in key expense lines.
- Despite an increase in effective tax rate to 95% relative to 13.84% in June 2021, profit after income tax grew by 82.4% to N820.2 million from N449.7 million. This resulted in a decline in profit after tax margin to 19.45% from 25.42% recorded in June 2021.
- Total assets rose by 59.9% to N8 billion from N24.9 billion in Dec. 2021, driven primarily by 91.3% growth in investment in associates to N31.99 billion from N14.8 billion in Dec. 2021, and 116.8% growth in Cash and Cash equivalent to N4.3 billion from N2.2 billion in Dec. 2021.
- Total liabilities recorded a 394.7% increase from N8 billion in Dec. 2021 to N18.6 billion as a result of a N14.5 billion term loan used to facilitate the increase in investment in select associates.
Glossary of terms
Operating profit margin is operating profit divided by total revenue EBITDA margin corresponds to EBITDA divided by total revenue
Profit before tax corresponds to EBIT minus net finance (cost)/income and plus share of profit of associates and joint venture using the equity method
Effective tax is income tax expense divided by profit before income tax Profit before tax margin corresponds to profit before tax as a % of revenue Return on equity corresponds to net profit reported to total equity
Return on assets corresponds to net profit reported to total assets
Certain statements in this document may constitute forward-looking information or forward-looking statements under applicable law (collectively “forward-looking statements”). Forward-looking statements are statements that relate to future events, including the Company’s future performance, opportunities, or business prospects. Any statements that express or involve discussions with respect to expectations, forecasts, assumptions, objectives, beliefs, projections, plans, guidance, predictions, future events or performance (often, but not always, identified by words such as “believes”, “seeks”, “anticipates”, “expects”, “continues”, “may”, “projects”, “estimates”, “forecasts”, “pending”, “intends”, “plans”, “could”, “might”, “should”, “will”, “would have” or similar words suggesting future outcomes) are not statements of historical fact and may be forward-looking statements.
By their nature, forward-looking statements involve assumptions, inherent risks, and uncertainties, many of which are difficult to predict and are usually beyond the control of management, which could cause actual results to be materially different from those expressed by these forward-looking statements. Undue reliance should not be placed on these forward-looking statements because the Company cannot assure that the forward-looking statements will prove to be correct. As forward-looking information addresses future conditions and events, they could involve risks and uncertainties including, but are not limited to, a risk with respect to general economic conditions, regulations and taxes, civil unrest, corporate restructuring and related costs, capital and operating expenses, pricing and availability of financing and currency exchange rate fluctuations. Readers are hereby cautioned to note the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements.