NGX Group Reports 109% Increase in Net Profit Despite 14.2% YoY Decline in Gross Earnings

Nigerian Exchange Group Plc (NGX Group) has announced its unaudited results for the period ending 31 March 2023, as the Group was said to have recorded a 14.2% year-on-year (YoY) decline in gross earnings to N1.6 billion from N1.8 billion posted in Q1 2022.

Take a look at what the NGX said 

“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 the 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,”

Despite the difficult macroeconomic conditions during the quarter, including cash and energy scarcity, as well as political tension from the 2023 elections, the Group Managing Director/Chief Executive Officer, Mr. Oscar Onyema, stated that the Group remained resilient

According to a statement by the Group, the decline in gross earnings was driven by a 20.5% dip in revenue, following a period of high economic and socio-political uncertainty.

The Group explained that the Group’s top-line revenue fell by 20.5% to N1.3 billion as against N1.7 billion posted in Q1 2022, 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.

The fees charged for transactions, which made up over half of the revenue at 51.5%, decreased by 30.6% compared to the previous year to N685.9 million. This was caused by a reduction in business activities.

Here Are a few Important Details

•Operating expenses grew by 13.9% 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 N629.0 in Q1 2023 (Q1 2022: N698.0 million). Salaries and other Staff Benefits (93.4% of personnel expenses) decreased by 8.7% YoY to N588.1 million in Q1 2023 (Q1 2022: N644.3 million) due to streamlined operations and improved efficiency.

•Rental income (2.7% of revenue) earned from NGX Real Estate, lease of office floor spaces, recorded a 32.2% increase to N36.0 million in Q1 2023 from N27.2 million recorded in Q1 2022

•Total expenses fell YoY by 10.0% to N1.7 billion from N1.9 billion in Q1 2022, primarily driven by reduced personnel expenses and a fall in finance costs

The Group's total liabilities decreased by 12.8% to N17.7 billion in Q1 2023 from N20.3 billion in the previous year. The decline was mainly due to a significant fall in other liabilities and deferred tax liabilities by 53.6% and 74.7%, respectively.

During the same period, the Group's net assets slightly increased by 0.5%. The increase was driven by a 1.0% year-to-date increase in retained earnings, which accounted for 86.6% of the total equity, bringing the value to N37.0 billion at the end of Q1 2023. This was up from N36.8 billion in Q1 2022.