Recently, the Nigerian Exchange Group Plc (NGX Group) convened its 63rd annual general meeting at the Nigerian Exchange Group House in Lagos.
At the meeting, the Temi Popoola-led management of the NGX Group while charting the pathway towards transformational growth outlined strategies to drive listings, tackle delistings and other market challenges, while also emphasising the importance of government policy and alternative asset classes.
The meeting’s agenda included the declaration of a final dividend, ratifying the appointment of Temi Popoola as the Group Managing Director/Chief Executive Officer of NGX Group, presenting financial statements to shareholders, re-electing non-executive directors retiring by rotation, authorising, and disclosing remuneration, among other undertakings.
Last 7 Days Trades
Looking ahead, the NGX Group GMD/CEO discussed the growing importance of alternative asset classes, particularly private markets, in the face of changing market dynamics. He revealed plans to explore private markets as part of NGX’s strategy, stating, “Part of our vertical creation will be a private market entity.”
He also leveraged the meeting to highlight the role of government policy in driving listings, citing historical successes such as the indigenisation policy of the 1970s. “Policy can drive companies to list if the government wills it, and it worked during the indigenisation policy of the 70s,” he stated.
While addressing the global trend of delistings, Popoola pointed to the Johannesburg Stock Exchange’s experience, noting the significant decrease in the number of listings over the years. However, he offered a positive perspective, suggesting that a decrease in listed companies could be offset by an increase in market capitalisation.
“If you have 10 companies that delist with an aggregate value of N50billion, you can have two listings with an aggregate value of N5trillion,” he noted.
“Looking ahead, we are optimistic and well-positioned to forge a future marked by success, resilience, and prosperity. Our focus remains on driving profitability, strengthening our financial position, broadening our revenue base, and proactively pursuing innovative strategic avenues that contribute significantly to the broader capital market ecosystem. Your continued trust and partnership are invaluable. Together, we are poised to shape a bright and prosperous future for NGX Group and the industry as a whole,” Popoola said.
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Year 2023 financial performance
Year 2023 underscored NGX Group’s strategic agility and operational excellence as it witnessed an extraordinary surge in gross earnings, soaring by 57.4percent to reach N11.8 billion in FY 2023, up from N7.5 billion in the preceding year. This remarkable growth stems from its dynamic revenue streams, including a significant uptick in transaction fees by 52.6percent, driven by increased trading activities, alongside substantial increases in listing fees and rental income by 42.2percent and 41.8percent, respectively.
Furthermore, the NGX Group strategic investments yielded a 5.4percent increase in treasury investment income. A pivotal highlight of the year was the stellar performance in other income, which contributed 29.7percent of the group’s gross earnings, marking a 163.6percent increase to N3.504 billion. This was driven by a 44.1percent growth in market data income and an impressive 304.8percent surge in other operating income, underscoring the effectiveness of NGX Group diverse revenue-generating strategies.
Shareholders approve N10bn capital raise through rights issue
During the gathering, the Group concluded on ordinary and special business matters, while also unveiling plans to embark on a comprehensive digital transformation strategy to expand its business operations in line with its overarching strategy.
During the meeting, NGX Group, subject to regulatory approval, got shareholders authorisation for a rights issue to raise capital of up to N10 billion with a subjoined resolution to increase its share capital to sufficiently accommodate the rights issue. The approval by shareholders of a N10 billion capital raise underscores investor confidence in NGX Group’s strategic direction and its unwavering commitment to driving sustainable growth and value creation.
The shareholders also authorised the board to increase its share capital from N1.102billion to N1.347billion (or to otherwise increase its share capital to an amount sufficient to accommodate the Rights Issue). The shareholders also considered and thought fit that Clause 6 of the Company’s Memorandum of Association be amended to reflect the new share capital of N1,347,309,954 by the increase and addition of 490,000,000 ordinary shares of N0.50 each ranking pari passu with the Company’s existing ordinary shares bringing the Company’s total share capital to N1,347,309,954 made up of 2,694,619,907 issued ordinary shares of N0.50 each.
Following substantial authorisation across its agenda, NGX Group introduced plans to propel the markets with a digital transformation journey that includes an online platform for public offers and deep investments in its technology stack amongst others. The platform will provide a smarter and efficient way for Issuers to raise capital and enhances the subscription process and operational workflow of POs in the capital market including initial public offerings (IPOs), rights issues and other public offers.
Stakeholders speak
Umaru Kwairanga, Group Chairman, NGX Group said, “I am particularly grateful to our shareholders for their assent to the critical business we conducted… As the Board oversees the strategic direction and gives management the necessary support and guidance, we believe that the coming year will be a better one in terms of value created for our shareholders. NGX Group is positioned to capitalise on opportunities amid the positive and forward-looking reforms by the government and our stakeholders should rest assured we will deliver excellently.”
“As we step forward into an exhilarating future, we commit to keeping you informed of our progress, celebrating each milestone with transparency and integrity. Together, as we venture into the promising vistas of 2024 and beyond, we remain dedicated to maximising value for all our stakeholders, steering the NGX Group towards new heights of innovation, inclusivity, and prosperity,” Kwairanga said.
Temi Popoola, Group Managing Director/Chief Executive Officer, NGX Group said, “As we complete our 63rd AGM, I extend my sincere gratitude to our shareholders, customers, employees, regulators, and directors for their steadfast support. In a year that underscored NGX Group’s strategic agility and operational excellence, we witnessed growth stemming from our dynamic revenue streams. We are optimistic and well-positioned to forge a future marked by success, resilience, and prosperity.
On the digital transformation agenda, Popoola stated, “The future of our business and the capital markets hinges on technology. That is why we are driving this digital transformation journey across our subsidiaries through the Group. NGX Group’s digital transformation will democratize access to public issuances for every Nigerian with a mobile phone, supporting capital-raising efforts for companies. Additionally, we aim to commercialize our technology solutions and expand our footprint across Africa”.
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Associates and other equity investments
At the core of NGX Group’s investment philosophy lies a commitment to diversification and strategic alignment, aimed at bolstering its ability to generate sustainable revenue streams while exerting a significant influence within the capital market.
By fostering synergistic relationships and positioning itself strategically, the Group not only reinforces its leadership but also creates enduring value for all stakeholders.
This proactive stance, exemplified by the Group’s performance in 2023, demonstrates its agility in navigating market complexities while seizing opportunities for growth and innovation, ultimately driving the evolution of the capital market ecosystem.
NGX Group’s strategic roadmap is underpinned by a robust investment strategy that leverages equity stakes in key associates and entities operating within the capital market ecosystem. This approach not only broadens the Group’s market impact but also diversifies its revenue streams, fostering sustainable growth and reinforcing its position as a leading player in the exchange landscape.
A cornerstone of this strategy is the Group’s 43.5percent ownership in CSCS Plc, a critical player in the Nigerian capital market ecosystem, serving as the central depository, clearing, and settlement agency for all securities transactions. Equally significant is its 27.7percent stake in NG Clearing, an entity pivotal in managing clearing houses essential for the clearance and settlement of financial securities and derivatives transactions. This infrastructure plays a vital role in maintaining the market’s integrity and smooth functioning. Additionally, NGX Group’s diversified portfolio includes a 10.9percent interest in NASD and a 6.42percent stake in FMDQ, two entities that play instrumental roles in the capital market ecosystem. These strategic investments not only broaden the Group’s sphere of influence but also facilitate its active participation in shaping the future of the Nigerian capital market.
Rewarding shareholders
The board got shareholders approval for payment of 75 kobo dividend per every 50 kobo ordinary share. The dividend was paid on Monday April 29, 2024 to shareholders whose names appear in the Register of Members at the close of business on Tuesday, March 26, 2024. Shareholders who have completed the e-dividend mandate forms received direct credit of the dividend into their bank accounts on that payment date.
The NGX Group currently has 1,964,115,918 shares outstanding. The Group’s share price at N22.5 per share as at May 6 nears its 52-week high of N29.55 compared to a 52-week low of N19.5.
Read also: NGX shareholders approve N10bn capital raise through rights issue
Optimising operations post-AGM
In a bid to secure long-term sustainability and drive growth, NGX Group implemented a strategic optimisation initiative. This comprehensive plan encompasses a strategic reduction in workforce size, accompanied by significant salary increases for retained staff. The initiative aims to streamline operations, enhance efficiency, and optimize resources, fostering a more competitive and agile organisation. The exercise followed a thorough review of the group’s operations, which revealed opportunities for optimisation and improved competitiveness.
Strategic investment in Ethiopian Securities Exchange
Recently, Nigerian Exchange Group Plc made a significant investment in the Ethiopian Securities Exchange (ESX). This pivotal move not only marks NGX Group’s entry into East Africa but also underscores its commitment to driving growth and innovation in the African capital markets, while strategically positioning itself as the largest foreign institutional investor in the ESX.
NGX Group is among the top institutional investors that have injected capital into the operationalisation of the bourse alongside FSD Africa, a UK-backed non-profit financial institution, and Trade and Development Bank Group (TDB), the financial arm of the Common Market for Eastern and Southern Africa (COMESA) trade block.
With the investment, Temi Popoola joined the board of ESX as a nominee of NGX Group. The investment demonstrates NGX Group’s commitment to driving regional integration and collaboration within the African capital markets.
The investment in the Ethiopian Stock Exchange reflects NGX Group’s confidence in the potential of Ethiopia’s rapidly growing economy and capital market. By partnering with ESX, NGX Group aims to support the development of a vibrant and resilient financial ecosystem in Ethiopia, fostering increased investor participation and capital formation.
Through strategic partnerships and investments, NGX Group aims to facilitate cross-border investment flows, enhance liquidity, and promote economic development across the continent.
ESX significantly surpassed its initial target by raising close to 1.3 billion Ethiopian Birr (ETB) from the private sector, reflecting investors’ robust confidence in Ethiopia’s capital market and economic prospects. The Government of Ethiopia will retain 25 percent of the exchange whilst private sector players hold 75 percent.
Through this investment, NGX Group aims to contribute to robust regulatory frameworks and foster best practices within the ESX ecosystem. The Group remains dedicated to providing ongoing technical assistance and capability enhancements to support the successful operations and growth of the ESX.
Q1 performance underscores group’s unwavering commitment to excellence
In the first quarter (Q1) ended March 31, 2024, NGX Group reported Profit After Tax (PAT) of N1.3 billion. The record profit represents a remarkable 332 percent increase from the N310 million recorded in Q1 2023. It also recorded N2billion in Profit before Tax, bolstered by robust growth in operating margins and operational efficiencies. The Q1 performance underscores the group’s unwavering commitment to excellence and strategic growth initiatives.
