Q1 2023: NGX Group announces 14.2% decline in gross earnings to N1.6bn
By Philemon Adedeji
Nigerian Exchange Group Plc (NGX Group) has announced its unaudited results for the period ending 31 March 2023, the Group announced a 14.2 per cent year-on-year (YoY) decline in gross earnings to N1.6 billion from N1.8 billion posted in Q1 2022.
The decline in gross earnings was driven by a 20.5 per cent dip in revenue, following a period of high economic and socio-political uncertainty.
The Group explained that the Group’s top-line revenue fell by 20.5 per cent to N1.3 billion as against N1.7 billion posted in Q1 2022, driven primarily by reduced business transactions and consumer spending that resulted from the recently concluded general election and the CBN’s attempt to phase out Nigeria’s old higher denomination of banknotes.
Transaction fees, which accounted for 51.5 per cent of revenue, dropped by 30.6 per cent YoY to N685.9 million (Q1 2022: N988.1 million) due to reduced business activities.
The group noted that treasury investment income (31.1 per cent of revenue) also dropped to N414.7 million in Q1 2023 (Q1 2022: N520.5 million), primarily driven by lower yields on the Group’s treasury investment portfolio owing to the unfavourable market conditions and uncertainties during the general election period.
The Group recorded a 44.6 per cent listing fees growth to N179.2 million in Q1 2023 from N123.9 million in Q1 2022. Growth in listing fees was driven by increased demand for listing services by domestic firms.
Rental income (2.7 per cent of revenue) earned from NGX Real Estate, lease of office floor spaces, recorded a 32.2 per cent increase to N36.0 million in Q1 2023 from N27.2 million recorded in Q1 2022.
Other fees representing rent of the trading floor, annual charges from brokers, dealing licenses, and membership fell by 1.2 per cent to N16.5 million in Q1 2023 from N16.9 million in Q1 2022
Profit before income tax expense increased by 21.5 per cent YoY to N412.2 million in Q1 2023 from N339.2 million in the corresponding period in 2022. Market data income fell by 38.0 per cent to N57.3 million in Q1 2023 relative to N92.4 million recorded in Q1 2022.
Other income 14.9 per cent of gross earnings grew by 57.7 per cent to N233.4 million in Q1 2023 from N148.0 million in Q1 2022 due to increased earnings from sundry, other sublease, and penalty fees which all combined accounted for 65.2 per. cent of total other income.
Total expenses fell YoY by 10.0 per cent to N1.7 billion from N1.9 billion in Q1 2022, primarily driven by reduced personnel expenses and a fall in finance costs.
Operating expenses grew by 13.9 per cent YoY to N390.8 million in Q1 2023 (Q1 2022: N343.0 million), generally due to increased operational activities amidst the Group’s preparation for full physical resumption to office.
Personnel expenses were down by 9.95 per cent to N629.0 in Q1 2023 (Q1 2022: N698.0 million). Salaries and other Staff Benefits (93.4 per cent of personnel expenses) decreased by 8.7 per cent YoY to N588.1 million in Q1 2023 from N644.3 million Q1 2022 due to streamlined operations and improved efficiency.
According to the Group, profit before income tax expense increased by 21.5 per cent YoY to N412.2 million in Q1 2023 from N339.2 million in the corresponding period in 2022 due to an improved share of profit-equity accounted investees and a fall in finance cost.
Profit for the period recorded a 109.0 per cent increase to N310.0 million in Q1 2023 from N148.3 billion in Q1 2022, resulting in significant growth in profit after tax margin to 23.3 per cent in Q1 2023 from 8.9 per cent recorded in Q1 2022.
Total assets fell marginally by 4.2 per cent year-to-date (YTD) to N54.7 billion from N57.1 billion as of FY 2022. Investment in associates, which accounted for 55.3 per cent of the Group’s total assets, grew by 1.7 per cent to N30.2 billion at the end of Q1 2023 (Q1 2022: N29.7 billion)
Total liabilities recorded a 12.8 per cent YTD drop to N17.7 billion at the end of Q1 2023 from N20.3 billion as of FY 2022 due to a 53.6 per cent and 74.7 per cent fall in other liabilities and deferred tax liabilities, respectively.
Net assets increased marginally by 0.5 per cent, driven by the 1.0 per cent YTD increase in retained earnings (86.6 per cent of Total Equity) to N37.0 billion at the end of Q1 2023 (Q1 2022: 36.8 billion).
Commenting on the results, the Group Managing Director/Chief Executive Officer, Mr. Oscar Onyema, said despite the challenging macroeconomic environment during the quarter amidst cash and energy scarcity, and political tension from the 2023 elections, the Group remained resilient.
“We are pleased to announce a 109 per cent increase in net profit, achieved through the implementation of cost-saving measures that minimised the impact of revenue reduction, just as we are exploring new and innovative ways to capture more market share and appeal to a broader demographic.
“The Group will continue investing in innovative marketing strategies to appeal to the changing consumer preferences, as well as explore opportunities to expand the product line, portfolio mix, and penetrate new markets. We stay committed to our long-term growth strategy and are confident in our ability to navigate the current challenging environment and create value for our stakeholders,” the Group noted.
