BY BAMIDELE FAMOOFO
The Nigerian Exchange Group reported an increase of 102.6 percent in total expenses in the half year unaudited period ended June 30, 2022. The figure rose from N1.9 billion in June 2021 to N3.9 billion, representing about 93 percent of gross earnings in the review period.
The Group explained that total expenses were primarily driven by a 231.6 percent 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,” it said.
Gross earnings increased from N1.77 billion as of June 2021 to N4.2 billion in June 2022, benefitting primarily from a 140.4 percent growth in revenue (91% of gross earnings), and 119.6% growth in other income (9% of gross earnings).
According to the Group, revenue growth of 140.4 percent (N2.23 billion) to N3.82 billion in June 2022 from N1.58 billion recorded in June 2021 was driven by 165.1 percent 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.
The financial result shows a 198.4 percent 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.
The group recorded an 18.6 percent 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 income (1.4% of revenue) earned from NGX Real Estate lease of office floor spaces recorded a 60.5 percent increase from N32.2 million in June 2021 to N51.7 million.
There was a 15.4 percent 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.
Profit before income tax grew by 134.4 percent 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 32.95 percent relative to 13.84 percent in June 2021, profit after income tax grew by 82.4 percent to N820.2 million from N449.7 million. This resulted in a decline in profit after tax margin to 19.45 percent from 25.42 percent recorded in June 2021.
Total assets rose by 59.9 percent to N39.8 billion from N24.9 billion in Dec. 2021, driven primarily by 91.3 percent growth in investment in associates to N31.99 billion from N14.8 billion in Dec. 2021, and 116.8 percent growth in Cash and Cash equivalent to N4.3 billion from N2.2 billion in Dec. 2021. Total liabilities recorded a 394.7 percent increase from N3.8 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.
Commenting, Oscar N. Onyema, 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,” he explained.
