Nigerian Exchange Group Plc (“NGX Group” or “The Group”) announces its unaudited results for the nine months year ended 30 September 2022.
| Thousands of Naira (N) | 9M 2022 | 9M 2021 | % ? |
| Revenue | 4,974,717 | 4,387,791 | 13.38% |
| Other income | 733,620 | 471,829 | 55.48% |
| Gross earnings | 5,708,337 | 4,859,620 | 17.46% |
| Personnel expenses | (2,864,156) | (2,403,390) | 19.17% |
| Operating expenses | (1,650,418) | (1,325,426) | 24.52% |
| EBITDA | 1,193,763 | 1,130,804 | 5.57% |
| EBITDA margin | 20.9% | 23.3% | n/m |
| Depreciation and amortisation | (395,200) | (420,498) | -6.02% |
| Total expenses | (4,909,774) | (4,149,314) | 18.33% |
| Expenses (% of gross earnings) | -86.01% | -85.38% | n/m |
| Operating profit/(loss) | 798,563 | 710,306 | 12.4% |
| Operating profit/loss margin | 13.99% | 14.62% | n/m |
| Finance Cost | (1,689,347) | – | |
| Profit/(loss) before Investee Income | (890,784) | 710,306 | -225.41% |
| Share of profit-equity accounted investees | 1,355,163 | 1,017,287 | 33.21% |
| Profit before minimum tax | 464,379 | 1,727,593 | -73.12% |
| Minimum tax | – | – | |
| Profit before income tax | 464,379 | 1,727,593 | -73.12% |
| Profit before income tax margin | 8.14% | 35.55% | n/m |
| Income tax expense | (291,718) | (217,830) | -33.9% |
| Effective tax rate | 62.82% | 12.61% | n/m |
| Profit for the year | 172,661 | 1,509,763 | -88.56% |
| Profit after tax margin | 3.02% | 31.07% | n/m |
| Total assets | 55,552,415 | 37,868,940 | 46.70% |
| Total equity | 37,428,217 | 34,114,354 | 9.71% |
| Total liabilities | 18,124,198 | 3,754,586 | 382.72% |
| Return on equity (%) | 0.46% | 4.43% | -397 bps |
| Return on assets (%) | 0.31% | 3.99% | -368 bps |
n/m: not meaningful
Commenting, Mr. Oscar N. Onyema OON, the Group Managing Director/Chief Executive Officer, said:
“Last year, we executed strategic measures to rejig our business, repositioning it for profitability with ultimate concentration on maximising value for shareholders. We continue to exhibit operational efficiency with earnings before interest and taxes (EBIT) rising year-on-year by 12.4% to N798.56m, ensuring we are positioned for long-term sustainability and success in spite of broader economic headwinds. Even as expense growth rate slightly outpaced income growth rate within the period, our long term focus remains on maximising operating leverage to boost earnings.
“By diversifying our revenue streams and identifying and investing in new businesses, we aim to maintain our position as Africa’s leading integrated market infrastructure group. We continue to focus on building antifragile businesses through wider and extensive participation along the capital market value chain, including informed investments in profitable verticals and optimised risk management practices, whilst keeping an eye out for emerging opportunities in unrelated businesses in the Sub-Saharan African region”.
Group Financial Performance Review
- Gross earnings recorded a growth of 17.5% to N71 billion from N4.86 billion as of September 2021 benefitting primarily from a 13.4% growth in revenue (87% of gross earnings), and 55.5% growth in other income (13% of gross earnings).
- Revenue growth of 13.4% (N587 billion) to N4.97 billion in September 2022 from N4.39 billion recorded in September 2021 was driven by:
- 8% growth in treasury investment income (30.8% of revenue) to N1,533.1 million in September 2022 relative to N887.1 million in September 2021 driven largely by relatively higher yields on the Group’s treasury investment portfolio buoyed by improved yields on treasury bills, bonds and fixed deposit instruments.
- 2% growth in transaction fees (54.6% of revenue) to N2.71 billion in September 2022 from N1.79 billion recorded in September 2021 driven by improved trading activities in Nigerian Exchange Limited (“NGX” or “The Exchange”).
- 8% increase in listing fees (11.3% of revenue) to N562.3 million in September 2022 from N423.3 million in September 2021 driven primarily by relatively higher listing of corporates on the Exchange in the first nine months of 2022 compared to the same period in 2021.
- Rental income[1] (1.4% of revenue) earned from NGX Real Estate lease of office floor spaces recorded a 7.2% increase from N5 million in September 2021 to N77.8 million in September 2022.
- A significant increase in other fees (1.8% of revenue) to N5 million in September 2022 from N1.24 million in September 2021 which represents rental income from the trading floor, annual charges from brokers, dealing license and membership fees earned by the Group.
- 5% increase in other income (13% of gross earnings) driven primarily by:
- 8% improvement in market data income (53% of other income) to N387.8 million in September 2022 from N253.8 million reported in September 2021 which is made up of technology income, other sub-lease income, and penalty fees.
- The Group reported other operating income of N1 million which represents 37% of other income for the nine months ending September 30, 2022.
- An income of N2 million was recorded from net gain on disposal of property & equipment in September 2022 compared to September 2021 when no income was reported under this line.
- Total expenses grew by 18.3% from N15 billion in September 2021 to N4.91 billion in September 2022 primarily driven by a 24.5% growth in operating expenses (33.6% of total expenses) to N1.65 billion from N1.33 billion in September 2021. This was largely as a result of an increase in repairs and maintenance cost[2] (N578.3 million), diesel expenses (N111.4 million), travelling expense (N62.37 million), general expenses (N320.6 million), directors expenses (N208.8 million) etc. Personnel expenses (58.3% of total expenses) also grew by 19.2% from N2.40 billion in September 2021 to N2.86 billion for the period under review.
- Operating profit of N6 million in September 2022 relative to N710.3 million reported in September 2021 while EBITDA grew by 5.6% from N1.13 billion in September 2021 to N1.19 billion as of September 2022, as a result of the 17.5% growth in gross earnings.
- Profit before income tax shrunk by 73.1% to N4 million in September 2022 from N1.73 billion in the corresponding period in 2021 due to a finance cost of N1.69 billion related to a term loan taken during the period.
- Profit after income tax declined by 88.6% to N7 million from N1.51 billion in September 2021 despite the relatively flat Income tax expense for the period. This resulted in a significant decline in profit after tax margin to 3.02% from 31.07% recorded in September 2021.
- Total assets rose by 46.7% to N6 billion from N37.9 billion in Dec. 2021, driven primarily by 119.6% growth in investment in associates to N32.4 billion from N14.8 billion in Dec. 2021, and 44.2% growth in investment securities to N14.96 billion from N10.4 billion in Dec. 2021.
- Total liabilities recorded a 383% increase from N8 billion in Dec. 2021 to N18.1 billion as a result of a N13.7 billion term loan used to facilitate the increase in investment in select associates.
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[1] In 2021 and in preceding years, it was classified as Other Operating Income whilst in 2022 it is classified as Revenue after the elimination of inter-group rentals