Half-year profit of Africa Prudential Plc, a Lagos-based registration service provider, grew to N1.03 billion in 2019, its highest in the last seven years, thanks to transformation in the company’s digital technology unit and tangible decline in borrowing cost.
Proceeds from the digital technology business spiked to N73.7 million in the first six months of 2019, compared to N457, 000 in the preceding comparable period, and helped contract income surge 47 percent.
“This quarter is one of a promise delivered. In our digital technology strategic business unit, we are strategically positioning ourselves to deliver best-in-class experience to our clients through our array of innovative business offering” Obong Idiong, Managing Director of the firm said in a note to investors.
Idiong added that the initiative is trickling down into the company’s number as 16, 035 percent growth was recorded in income from digital technology business, positing that company would unveil two new innovative products in subsequent quarters to deliver value to clients in and out of the capital market space.
Despite receipts from contracts with clients nearly doubled to N870 million in the review period; gross earnings of the firm declined 7 percent as interest income, which accounted for 57 percent of earnings, dipped 28 percent to N1.14 billion.
Breakdown of interest income showed that interest earned on three of four investment securities fell.
While cash earned on loans & advances, treasury bills and bonds dipped 7 percent, 60 percent and 64 percent respectively, interest on short-term deposits nearly doubled.
Between April and June 2019, the firm’s interest income tanked 35 percent to N544 million, while contract income soared 61 percent, to weaken total earnings by 6 percent.
This is a recurrence of its first-quarter performance when interest income, which constituted almost 70 percent of its earnings, declined 18 percent, pushed by a 51 percent and 64 percent cut in cash earned on treasury bills and bonds, which the company’s chief attributed to declining yield environment last quarter.
Meanwhile, the rout on the Nigerian Stock Exchange (NSE) has pushed a number of stocks to fresh lows, and Africa Prudential is no exception, as its shares are trading at their lowest price of N3.40 since September 2017.
Year-long, its shares have lost 12 percent, slightly underperforming the equity index that is down 11 percent.
Operating profit of the service provider shed 17 percent to N1.3 billion as indirect expenses jumped and other income tanked.
However, pre and post-tax profit managed to up 6 percent and 5 percent respectively, partly attributable to finance cost which dipped 76 percent to
The company’s total assets appreciated marginally by 0.92 percent or N7 million to N21.9 billion compared to N21.7 billion as at December 31, 2018.
Going forward, the Obong stated the company would continue to explore the numerous opportunities in the digital technology space while deepening its position in registrar business.
He reaffirmed that the company is committed to creating optimal value to clients and stakeholders amid fragile economic growth which has slowed business activities and global headwinds such as trade tensions.
Africa Prudential’s business model involves creating client-company registers of shareholders, maintaining the register, dividend and interest payment, issuing shares and debentures certificates, attending to shareholders enquiries and handling of scrip and right issues.
Israel Odubola
