Nigerian Exchange Group Plc (NGX Group) has announced its unaudited results for the first-quarter (Q1) period ended March 31, 2023. Profit before income tax (PBT) expense increased by 21.5percent year-on-year (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 109percent increase to N310 million in Q1 2023 from N148.3 billion in Q1 2022, resulting in significant growth in profit after tax margin to 23.3percent in Q1 2023 from 8.9percent recorded in Q1 2022.
NGX Group recorded a 14.2percent year-on-year (YoY) decline in gross earnings to N1.6 billion (Q1 2022: N1.8 billion), driven by a 20.5percent dip in revenue following a period of high economic and socio-political uncertainty. On the other hand, other income grew by 57.7percent, offsetting the drop in revenue.
The Group’s top-line revenue fell by 20.5percent to N1.3 billion (Q1 2022: N1.7 billion), 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 51.5percent of revenue, dropped by 30.6percent YoY to N685.9 million (Q1 2022: N988.1 million) due to reduced business activities.
Treasury investment income (31.1percent of revenue) also dropped to N414.7 million in Q1 2023 (Q1 2022: N520.5 million), primarily driven by relatively 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 44.6percent 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 (2.7percent of revenue) earned from NGX Real Estate, lease of office floor spaces, recorded a 32.2percent increase to N36 million in Q1 2023 from N27.2 million recorded in Q1 2022. Other fees representing rent of trading floor, annual charges from brokers, dealing licenses, and membership fell by 1.2percent to N16.5 million in Q1 2023 (Q1 2022: N16.9 million).
Other income (14.9percent of gross earnings) grew by 57.7percent to N233.4 million in Q1 2023 (Q1 2022: N148million) due to increased earnings from sundry, other sublease, and penalty fees which all combinedly accounted for 65.2percent of total other income.
Market data income fell by 38percent to N57.3 million in Q1 2023 relative to N92.4 million recorded in Q1 2022. Technology income recorded as N23.9 million accounted for 10.3percent of other income. Total expenses fell YoY by 10percent 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 13.9percent year-on-year (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 to N629 in Q1 2023 (Q1 2022: N698 million). Salaries and other Staff Benefits (93.4percent of personnel expenses) decreased by 8.7percent YoY to N588.1 million in Q1 2023 (Q1 2022: N644.3 million) due to streamlined operations and improved efficiency. EBITDA fell by 30.3percent to N545.8 million from N783.5 million recorded in Q1 2022.
EBIT for the period was N456.1 million, representing a 29.8percent decline from N649.9 million recorded in Q1 2022. Total assets fell marginally by 4.2percent year-to-date (YTD) to N54.7 billion from N57.1 billion as of FY 2022. Investment in associates, which accounted for 55.3percent of the Group’s total assets, grew by 1.7percent to N30.2 billion at the end of Q1 2023 (Q1 2022: N29.7 billion) Total liabilities recorded a 12.8percent year-to-date (YtD) drop to N17.7 billion at the end of Q1 2023 from N20.3 billion as of FY 2022 due to a 53.6percent and 74.7percent fall in other liabilities and deferred tax liabilities, respectively. Net assets increased marginally by 0.5percent, driven by the 1percent YtD increase in retained earnings (86.6percent of Total Equity) to N37billion at the end of Q1 2023 (Q1 2022: 36.8 billion).
Commenting on the result, Oscar N. Onyema, Group Managing Director/Chief Executive Officer 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% 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 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”.