NGX Group Unaudited Results - Q1 End March 2023

Nigerian Exchange Group Plc (“NGX Group” or “The Group”) announced its unaudited results for the period ended 31 March 2023.

Group Financial Highlights

Commenting, Mr. Oscar N. Onyema OON, the 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.

Group Financial Performance Review

• NGX Group recorded a 14.2% year-on-year (YoY) decline in gross earnings to ₦1.6 billion (Q1 2022: ₦1.8 billion), driven by a 20.5% dip in revenue following a period of high economic and socio-political uncertainty. On the other hand, other income grew by 57.7%, offsetting the drop in revenue. 
• The Group's top-line revenue fell by 20.5% to ₦1.3 billion (Q1 2022: ₦1.7 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.

o   Transaction fees, which accounted for 51.5% of revenue, dropped by 30.6% YoY to ₦685.9 million (Q1 2022: ₦988.1 million) due to reduced business activities.

o   Treasury investment income (31.1% of revenue) also dropped to ₦414.7 million in Q1 2023 (Q1 2022: ₦520.5 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.

o   The Group recorded a 44.6% listing fees growth to ₦179.2 million in Q1 2023 from ₦123.9 million in Q1 2022. Growth in listing fees was driven by increased demand for listing services by domestic firms.

o   Rental income (2.7% of revenue) earned from NGX Real Estate, lease of office floor spaces, recorded a 32.2% increase to ₦36.0 million in Q1 2023 from ₦27.2 million recorded in Q1 2022.

o   Other fees representing rent of trading floor, annual charges from brokers, dealing licenses, and membership fell by 1.2% to ₦16.5 million in Q1 2023 (Q1 2022: ₦16.9 million).

• Other income (14.9% of gross earnings) grew by 57.7% to ₦233.4 million in Q1 2023 (Q1 2022: ₦148.0 million) due to increased earnings from sundry, other sublease, and penalty fees which all combinedly accounted for 65.2% of total other income.

o   Market data income fell by 38.0% to ₦57.3 million in Q1 2023 relative to ₦92.4 million recorded in Q1 2022.

o   Technology income recorded as ₦23.9 million accounted for 10.3% of other income.

• Total expenses fell YoY by 10.0% to ₦1.7 billion from ₦1.9 billion in Q1 2022, primarily driven by reduced personnel expenses and a fall in finance costs.

o   Operating expenses grew by 13.9% YoY to ₦390.8 million in Q1 2023 (Q1 2022: ₦343.0 million), generally due to increased operational activities amidst the Group’s preparation for full physical resumption to office.

o   Personnel expenses were down by 9.95 to ₦629.0 in Q1 2023 (Q1 2022: ₦698.0 million). Salaries and other Staff Benefits (93.4% of personnel expenses) decreased by 8.7% YoY to ₦588.1 million in Q1 2023 (Q1 2022: ₦644.3 million) due to streamlined operations and improved efficiency.

• EBITDA fell by 30.3% to ₦545.8 million from ₦783.5 million recorded in Q1 2022.
• EBIT for the period was ₦456.1 million, representing a 29.8% decline from ₦649.9 million recorded in Q1 2022.
• Profit before income tax expense increased by 21.5% YoY to ₦412.2 million in Q1 2023 from ₦339.2 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% increase to ₦310.0 million in Q1 2023 from ₦148.3 billion in Q1 2022, resulting in significant growth in profit after tax margin to 23.3% in Q1 2023 from 8.9% recorded in Q1 2022.
• Total assets fell marginally by 4.2% year-to-date (YTD) to ₦54.7 billion from ₦57.1 billion as of FY 2022. Investment in associates, which accounted for 55.3% of the Group’s total assets, grew by 1.7% to ₦30.2 billion at the end of Q1 2023 (Q1 2022: ₦29.7 billion)
• Total liabilities recorded a 12.8% YTD drop to ₦17.7 billion at the end of Q1 2023 from ₦20.3 billion as of FY 2022 due to a 53.6% and 74.7% fall in other liabilities and deferred tax liabilities, respectively.
• Net assets increased marginally by 0.5%, driven by the 1.0% YTD increase in retained earnings (86.6% of Total Equity) to ₦37.0 billion at the end of Q1 2023 (Q1 2022: 36.8 billion).