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NGX Group boosts revenue from transaction fees, treasury investment income

Nigerian Exchange Group Plc reported revenue of N6.799 billion for the full year ended December 31, 2021, as against N6.019 billion in 2020 representing a 12.9% increase amidst a challenging macro-economic environment, rising inflation, and depreciation of the naira against the U.S. dollar.

The revenue was enhanced on the back of transaction fees and treasury investment income despite inflationary pressure.

Checks at the Group’s Annual Report by Naijaonpoint showed that transaction fees contributed 42.59% growth of the revenue to N2.896 billion from N2.836 billion in 2021 while treasury investment income followed with 19.76% of the revenue with N1.343 billion from N1.279 billion in 2020.

Transaction fees or charges represent a basic cost of investing and they are typically charged anytime a bid or offer goes through. All charges are a percentage of the purchase or sales consideration.

Treasury investment income includes income from bonds, treasury bills, and fixed deposits with banks.

With the decision of the Central Bank of Nigeria (CBN) to increase the interest rate by 15.5%, it is expected that the NGX and other investment institutions reap more income from treasury investment.

The MPC had voted to increase interest rates to a 15.5% as the apex bank fights rising inflation.

The Central Bank, during its last two MPC meetings, increased the interest rate from 11.5% to 14%, and subsequently to 15.5% to fight rising inflation, which has shot above 20%.

According to investment experts, when the interest rate is low, speculators tend to move their funds from money market instruments to the stock market for higher yield, just as they move from stocks to other asset classes, especially money market instruments when the interest rate is high.

Key financial highlight

  • The Group recorded improved performance across its revenue and income lines, which resulted in growth in operating profit to N281.8 million from an operating loss of N93.96 million recorded in the full year 2020 on the back of 13% (N779.5 million) growth in total expenses.
  • EBITDA increased by 16% to N2.89 billion from N2.5 billion with a margin of 42.6%. Profit for the period was up 22% to N2.2 billion from N2 billion in 2020.
  • The group recorded a growth in total assets of 7.9% in 2021 to N37. 9 billion, driven by a 41.0% increase in investment securities to N14.4 billion from N10. 2 billion in 2020and 18.7% growth in associates from N12.4 billion to N14.8 billion in 2021.

In case you missed it

  • The Nigerian Exchange Group recently stepped down plans to raise N35 billion Naira proposed for business expansion.
  • The resolution was passed at the NGX 61st Annual General Meeting (AGM), which was held in Lagos.
  • The reason put forward by shareholders for suspending the capital raising, “was to allow for wider consultations and further engagement with shareholders”, a release by the NGX said.
  • The Shareholders also accepted the voluntary retirement from the board of the group’s chairman, Otunba Abimbola Ogunbanjo, who was due for re-election and was eligible to stay on until the next AGM in 2023.
  • The resignation and stepping down the equity raise might not be unconnected with the legal tussle rocking the Exchange over the validity of the AGM.
  • The controversy surrounding the planned Annual General Meeting of the Nigerian Exchange Group, took another turn Thursday as some of its shareholders applied for a court injunction to stop the AGM from holding over sundry disagreements between some shareholders and the NGX.
  • The group had part of a special business intended to seek shareholders’ approval at the AGM to raise additional capital of up to N35 billion to fund the business expansion; the growth phase for existing business lines/investments; and investments in identified and carefully curated new targets, in line with the Company’s and NGX Group’s strategy.
  • “As captured in the notice of the AGM, the company does not intend to raise the entire amount in USD. NGX Group had also identified viable investment opportunities in line with its strategic expansion plans, including deepening investments in the existing portfolio companies to ensure high and steady dividend returns.
  • However, the shareholders at the AGM, as part of special business approved the cancellation of all of the unissued shares of the company in compliance with section 124 of the Companies and Allied Matters, Act 2020 (as amended) and regulation 13 of the companies’ regulation 2021.
  • The AGM also saw Mr. Apollos Ikpobe and Dr. Okechukwu Itanyi retired by rotation and were re-elected as non-executive directors. Professor Enase Okonedo’s resignation was earlier approved by the board and as such, she was not presented for re-election.
  • Other resolutions adopted at the AGM include the appointment of Ernst & Young as NGX Group’s external auditors; the Board’s authority to fix the Audit Company’s remuneration; the disclosure of NGX Group’s executive remuneration; and the re-election of the Statutory Audit Committee.
  • Four non-executive directors of the board were also re-elected, including Mrs. Fatimah Bintah Bello-Ismail, Mr. Oluwole Adeosun, Mr. Chidi Agbapu, and Mr. Patrick Ajayi.

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