Hike in management expenses denies NGX Group profit, dividend
By Philemon Adedeji
Nigerian Exchange Group Plc, (NGX Group) a leading integrated market infrastructure provider in Africa, in its audited financial statement for the period ended December 31, 2022, the group Profit before Income Tax recorded declined to N823.0 million in FY 2022 from N2.4 billion in the corresponding period in 2021.
The decline in Profit caused by hike in management expenses which denies NGX group Profit and dividend.
From the profit and loss figures, the group Profit after Income tax decreased by 68.9 per cent from N2.2 billion in FY 2021 resulting in significant decline in Profit after tax margin to 9.3 per cent from 33.1 per cent recorded in FY 2021
The group revenue reported increased by 6.8 per cent to N6.2 billion in 2022 from N5.8 billion recorded in the preceding year.
The growth in revenue was largely driven by the 51.2 per cent growth in treasury investment income to N2. 0 billion in FY 2022 from N1.3 billion in FY 2021.
The breakdown of the revenue generated from transaction fee revealed that the group accounted nearly 51.2 per cent of revenue also increased by 9.0 per cent Year-on-Year to N3.2 billion in FY 2022 from N2.9 billion in FY 2021.
As the revenue generated from treasury investment income rose marginally by 32.9 per cent to N2.0 billion in FY 2022 relative to N1.3 billion in FY 2021 was driven largely by relatively higher yields on the Group’s treasury investment portfolio owing to improved yields on treasury bills, bonds and fixed deposit instruments.
The group recorded 9.0 per cent growth in transaction fees (51.2 per cent of revenue) to N3.2 billion in FY 2022 from N2.9 billion recorded in FY 2021 was driven by improved trading activities in Nigeria Exchange Limite
While, revenue generated from Listing fees grew by 1.3 per cent to N774.7 million in FY 2022 from N754.9 million in FY 2021 driven primarily by a relatively higher listing of corporates on the Exchange in the year ended 2022 compared to the same period in 2021.
The revenue generated from rental income (1.6 per cent of revenue) earned from NGX Real Estate lease of office floor spaces recorded a 19.8 per cent increase to N99.2 million in FY 2022 from N82.8 million recorded in FY 2021.
Other fees which represent rent of trading floor, annual charges from brokers, dealing licences and membership fell by 84.2 per cent to N109.0 million from N689.9 million.
Growth recorded by the Group in other income was driven by a 47.2 per cent increase in market data income to N581.4 million from N395.0 million:
The Income of N93.7 million from technology accounted for 7.1 per cent of other income.
The growth in other operating income made up of sublease income and penalty fees resulted to N635.4 million in FY 2022 from N625.5 million in FY 2021, representing a marginal increase of 1.6 per cent
Total expenses grew marginally by 35.5 per cent to N8.8 billion in FY 2022 from N6.5 billion in FY 2021 primarily driven by interest expense on borrowings recorded as N2.1 billion.
Personnel expenses (41.5 per cent of total expenses) also grew by 13.1 per cent to N3.7 billion FY 2021: N3.2 billion) while operating expenses which accounted for 28.4 per cent of total expenses fell by 7.7 per cent to N2.5 billion in FY 2022 from N2.7 billion in FY 2021.
Operating loss of N1.3 billion in FY 2022 relative to N281.8 million operating profit recorded in FY 2021 was due to the greater growth in total expenses (35.5 per cent YoY) relative to gross earnings growth of 10.3 per cent YoY.
Overall, the group closed 2022 with negative N0.35 Earnings Per Share (EPS) as against N1.13 in FY 2021, reflecting a significant decrease of 69 per cent.
PROFITABILITY RATIO
Earnings Before Income Tax Depreciation and Amortisation (EBITDA) grew by 70.6 per cent to N1.3 billion from N775.9 million recorded in FY 2021.
This emanated from the 7.8 per cent marginal growth in gross earnings over operating costs.
Earnings Before Income Tax (EBIT) for FY 2022 amounted to N772.7 million, a 174.2 per cent growth from N281.8 million recorded in FY 2021.
Return on Assets Equity (ROAE) came in at (-2.0) in 2022 from 6.6 per cent in 2021, as Return on Average Assets stood at 1.6 per cent in 2022 from 0.7 per cent in 2021.
While, Operating Profit margin declined to 17.7 per cent in 2022 from 4.1 per cent in 2021. As Profit after tax margin dropped to 9.3 per cent in 2022 from 33.1 per cent in 2021, reflecting a marginal loss of 71.8 per cent
ANALYSIS ON BALANCE SHEET
The group total assets expanded by 50.7 per cent to N57.1 billion from N37.9 billion as at year end 2021, driven primarily by 101.4 per cent growth in investment in associates to N29.7 billion from N14.8 billion in December 2021 and a 57.4 per cent growth in long-term investment securities to N16.3 billion from N10.4 billion in December 2021.
As total current assets depreciated by 15.9 per cent to 7.028 billion in Full Year 2022 from N8.4 billion accounted in FY 2021, while total non-current assets gained an impressive 69.5 per cent from N29.5 billion in twelve months of 2021 from N50.0 billion on twelve months of 2022.
However, Total Liabilities recorded gained a 439.5 per cent increase from N3.8 billion as at FY 2021 to N20.3 billion as a result of N14.1 billion increased borrowings used to facilitate the increase in investment in select associates.
As total current liabilities grew significantly by 572.4 per cent to N19.5 billion in FY 2022 from N2.9 billion in FY 2021, while total non-current liabilities declined by 4.7 per cent to N770.3 million in FY 2022 from N808.6 million in FY 2021.
In addition, the group total equity gained a decent 7.9 per cent to N36.8 billion in twelve months of 2022 from N34.1 billion achieved in the preceding year.
Commenting on the results, the Group Managing Director/Chief Executive Officer, Mr. Oscar N. Onyema OON, said, “NGX Group continued to bed-down its operations post demutualization and restructuring.
“Despite the economic headwinds affecting the country, as demonstrated by our year end results, we have continued to create lasting value. Our top-line expansion drove a 70.6 per cent increase in Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA) in 2022.
“In the same year, the Group leveraged its strong equity position and strategically increased its investment in an associate company in order to drive growth, boost efficiency and further maximize overall shareholder value.
“However, the bottom-line operating performance slipped mainly due to the interest expenses resulting from borrowing to fulfil the strategic acquisition mentioned above.
“Our growth will be driven by deepening value creation in subsidiaries and expansion into adjacent businesses.
“As an organisation, we remain committed to becoming Africa’s preeminent integrated market infrastructure group.”
