Africa Prudential Plc, a registrar and investor relations service company gained operating momentum in the second quarter that made up for much of the slacken performance records of the first quarter. Revenue strengthened up from a 14 percent drop in the first quarter to a marginal decline quarter-on-quarter in the second quarter. That lowered the year-on-year revenue drop to 7 percent at half-year.
The strength gained in revenue performance in the second quarter was enough to cause a rebound in profit from a 10 percent drop in the first quarter to a 5 percent improvement at half-year ended June 2020.
The company built an after-tax profit of N835 million in the second quarter, an increase of 31 percent quarter-on-quarter – nearing two and half times the first-quarter profit figure of N342 million. The reduced margin of decline in revenue and the ability to grow profit from the persisting revenue weakness represents the upturn in operating performance that Africa Prudential registered in the second quarter.
The strength in profit performance continues to reflect management’s effort to keep costs in check. Three expense lines that amounted to N339 million or 19 percent of total costs at the end of last year were completely off the books at half-year.
The cost management made a difference in turning the drop in gross earnings into flat growth in pre-tax profit. A drop of 26 percent in tax expense delivered the increase in profit at the end of half-year operations.
The company’s revenue weakness continues to reflect a complete loss of retainers fees that contributed 24 percent of gross income at the end of 2019. However, fees from corporate actions, which fell by 86 percent in the first quarter, grew by more than one and half times quarter-on-quarter to achieve a 35 percent increase to over N305 million at half-year.
Further reinforcement of earning came from a digital consultancy fee, which grew by over 94 percent at half-year to N143 million and register maintenance fee that rose by 33 percent to N142 million over the same period.
Interest earnings from treasury bills remain the weak point on revenue performance this year with a drop of 45 percent year-on-year to N139 million at the end of June 2020.
The company closed half year operations with a balance sheet size of nearly N23 billion. The principal assets are debt instruments amounting to over N17 billion that accounts for 74 percent of total assets. The company held customer deposits of over N14 billion at half-year with which over 61 percent of assets are built.
Africa Prudential closed the half-year operations with gross earnings of N1.87 billion, which is a drop of 7 percent year-on-year. This is a step up however from the drop of 14.5 percent in revenue at the end of the first quarter.
The improvement came from the main earning source – interest income, which grew by 23 percent quarter-on-quarter to N670 million. That raised interest income by 12.4 percent to almost N1.3 billion at half-year while non-interest earnings dropped by 32 percent to N590.7 million over the period.
Management kept operating expenses in check, which enabled it to convert the improvement in incomes into profit. This enabled a turnaround from a drop of 25 percent in pre-tax profit in the first quarter to a slight gain to N1.2 billion at half-year.
Cost-saving continued in finance expenses, which remained completely absent compared to N101 million incurred in the same period last year. The company’s balance sheet remained entirely free of interest-bearing debts.
At N1.08 billion at half-year, after-tax profit recovered from a drop of over 10 percent at the end of the first quarter and improved by 5 percent year-on-year at the end of half-year operations. Profit boost happened in the second quarter – that contributed N835 million or 77 percent of the after-tax profit at half-year.
The company earned 54 kobo per share at the end of the first quarter, up from 51 kobo per share in the same period in the previous year. The company earned 84 kobo per share at the end of 2019 and gave out a cash dividend of 70 kobo per share to shareholders.
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