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Naira Gains at P2P, Stable at I&E, Crumbles at Parallel Market

By Adedapo Adesanya

Nigerian Exchange (NGX) Group Plc has recorded an 82.4 per cent growth in profit in the first six months of the year, rising to N820.167 million from N449.658 million in H1 2021.

This information was contained in the NGX group’s unaudited results for the half-year ended June 30, 2022, which noted that revenue rose by 140.4 per cent to N3.823 billion during the period from N1.59 billion in 2021.

Highlights of the result included gross earnings of 138.3 per cent improvement to N4.22 billion from N1.77 billion, driven by 165.1 per cent growth in treasury investment income (26.6 per cent 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.

There was a 198.4 per cent growth in transaction fees (60.7 per cent of revenue) to N2.3 billion in June 2022 from N777.7 million recorded in June 2021 due to a significant increase in trading activities in the Exchange.

The company also saw an 18.6 per cent increase in listing fees (9.5 per cent 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 income (1.4 per cent of revenue) earned from NGX Real Estate lease of office floor spaces recorded a 60.5 per cent increase from N32.2 million in June 2021 to N51.7 million.

However, there was a 15.4 per cent decline in other fees (1.8 per cent 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.

There was a 119.6 per cent increase in other income (9 per cent of gross earnings) driven primarily by a 376.5 per cent improvement in market data income (56 per cent 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.

There was a 15.99 per cent growth in other operating income (31 per cent of other income) from N105.6 million in June 2021 to N122.5 million in June 2022.

Also, total expenses grew by 102.6 per cent from N1.9 billion in June 2021 to N3.9 billion in June 2022 primarily driven by a 231.6 per cent growth in operating expenses (59.1 per cent 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 per cent of operating expenses) of N1.3 billion related to a term loan taken during the period. Personnel expenses (34.4 per cent of total expenses) also grew by 27 per cent from N1.01 billion in June 2021 to N1.35 billion during the period under review.

The exchange’s made an operating profit of N273.2 million in June 2022 compared to an operating loss of N177.2 million in June 2021, as a result of 138.3 per cent growth in gross earnings.

Profit before income tax grew by 134.4 per cent to N1.22 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 32.9 per cent relative to 13.8 per cent in June 2021, profit after income tax grew by 82.4 per cent to N820.2 million from N449.7 million. This resulted in a decline in profit after tax margin to 19.5 per cent from 25.4 per cent recorded in June 2021.

Total assets rose by 59.9 per cent to N39.8 billion from N24.9 billion in December 2021, driven primarily by 91.3 per cent growth in investment in associates to N31.99 billion from N14.8 billion in Dec. 2021, and 116.8 per cent growth in Cash and Cash equivalent to N4.3 billion from N2.2 billion in December 2021.

Total liabilities recorded a 394.7 per cent increase from N3.8 billion in December 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.

Speaking on the result, the Group Managing Director/Chief Executive Officer, Mr Oscar Onyema 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.”

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