African Prudential Offers N0.70 Dividend, Despite 14% Net Profit Slide

The board of African Prudential Plc, on Tuesday, presented its audited financials for the full-year ended December 31, 2019, with such highlights as a drop in gross earnings, as operating expenses climbed relative to the prior year, while net profit fell by 13.92%. The drop in net profit arose from the N266.586m or 60.33% increase in income tax expenses for the period under review.
That notwithstanding, the directors are proposing a dividend of N1.4bn, translating into 70 kobo per share, subject to the approval of shareholders at the annual general meeting; as against the previous N800m distributed in the preceding year.
Specifically, gross earnings for the period declined from N4.485bn in 2018 to N3.902bn; of which N1.699bn went into operating expenses, up from N1.471bn. A breakdown of the revenue showed that N1.502bn was earned from the ordinary course of business, which was slightly above the previous year’s N1.416bn; while the bulk of N2.399bn came from interest income calculated based on the effective interest rate, which fell from N3.068bn.
A further breakdown shows that interest on loans and advances stood at N1.923bn from N1.918bn; interest on treasury bills, N437.372m, down from N1.078bn, possibly arising from recent restrictions on trading in money market instruments by the Central Bank of Nigeria (CBN). Interest on short-term deposits fell from N49.149m to N34.754m, and interest on bonds from N22.149m in 2018 to N4.631m.
Other income dropped by a significant 89.47% from N532.251m in 2018, to N56.035m; while credit loss reversal stood at N245.991m, from an expense of N153.821m. There was nil impairment on goodwill, as against the previous N98.693m; personnel expenses grew from N565.193m to N624.567m; even as other operating expenses jumped to N1.002bn, from N832.866m; among others.
Profit before income tax dropped to N2.389bn from N3.394bn; and after-tax from N1.952bn to N1.681bn; representing earnings per share of 84 kobo, up from 98 kobo.
A statement to the Nigerian Stock Exchange by Olufemi Adenuga, the Chief Financial Officer, quoted Obong Idiong, managing director and CEO of the company as describing the 2019 operating year as challenging for operators in the money and capital market.
During the period, he said “businesses struggled to deliver positive results due to the drastic reduction in interest rates on treasury bills and other money market instruments.
“We were also affected by this decline which caused our gross earnings to fall by 13% year-on-year, we were, however, able to increase our revenue from contracts through a strategic increase in our retainership fee by 21%. We remain dedicated to delivering quality registrar business to our clients while we slowly transition into digital technology.
“During the period under review, our Innovation Lab introduced a number of innovative products to the market, some of which include a new version of EasyCoop an enterprise resource solution for cooperative societies and EasyMall a cooperative market place. We have also continuously strived to improve how we currently serve our clients as evident in the recent upgrade of our Customer Experience Center and the introduction of new customer channels. Our Digital Transformation journey on course as we change the way we create, deliver and capture value,” he added.
Idiong further reiterated that “Africa Prudential, the future is digital technology-driven which is why we are integrating all our processes into a seamless system that offers world-class solutions to our customers and creating new revenue lines.
“In the long-run, this would reduce our huge exposure to capital market activities which has been on a decline of late. Our company would continue to innovate not only to improve capital market interactions but also to improve our top line in order to deliver superior value to all stakeholders,” he stressed.