United Capital Plc reported significant increase in profits in the half-year ended June 30, 2021 and is headed for another outstanding growth this year. The financial and investment services group established new peaks in revenue and profit in 2020 – its best earnings season in many years.
The high growth records of the preceding financial year are accelerating in the current year for United Capital.
The company’s half-year earnings records show a gross income of N6.8 billion, which is a 54 per cent increase year-on-year.
This is an accelerated growth from a 50 per cent rise in gross earnings at the end of 2020.
The strong revenue growth came from two main earning lines of investment income and fee and commission income while net trading income dropped at the end of the period.
Investment income is the company’s main revenue source, which grew by 26.5 per cent year-on-year to N3.6 billion at the end of June. This is notwithstanding a sharp drop of 44 per cent in the company’s
financial asset portfolio from the closing figure last year to N81.6 billion at the end of June.
Fee and commission income led the growth in revenue at an increase of 128 per cent year-on-year (YoY) to N3.1 billion.
However net trading income that led to revenue growth in the preceding year dropped by over 60 per cent to N38 million over the same period. Other income is maintaining the path of decline for the second year with a drop of 44 per cent to N57 million at the end of half-year operations.
The strong revenue growth was reinforced by limited cost increases – leading to a decline in the cost to income ratio. This improved further the company’s already impressive profit margin.
Total operating cost grew well below gross income at less than 43 per cent to close at N3.1 billion at the end of half-year trading. Personnel expenses are again leading cost moderation for the second year at an increase of less than 6 per cent. On the other hand, impairment charges for credit losses led to cost increases at an increase of close to 86 per cent year-on-year.
Net profit margin increased from 43 per cent in the same period in 2020 to 45.8 per cent at the end of June 2021. This is one of the highest profit margins among Nigeria’s listed companies.
The gain in profit margin with the strong revenue growth is the unique strength of United Capital on profit performance so far this year. That enabled the company to grow profit well ahead of revenue during the period.
The company posted an after-tax profit of N3.1 billion at the end of half-year operations. Outstanding profit growth is happening for the company for the second year. It closed last year’s operations with an after-tax profit of N7.8 billion.
Profit growth is accelerating for the company for the second year from 14.6 per cent in 2019 to 57 per cent in 2020 and further to 64 per cent year-on-year at the end of half-year operations in June 2021.
The company’s critical earning period lies in the second half, which is expected to contribute more to revenue and profit than the first half. Last year, up to 45 per cent of the full-year revenue figure was generated in the fourth quarter. Also, the final quarter accounted for as much as 55 per cent of the full-year profit figure in 2020.
United Capital closed the half-year operations with earnings per share of N1.05, an increase from 64 kobo per share in the same period last year. The company paid a cash dividend of 70 kobo Investing per share to shareholders for the 2020 operations.
However, total Assets grew by 44 year-to-date to N320.23billion as at June 30, 2021 from N222.75billion in 2020, driven majorly by a significant 366 per cent increase in cash and cash equivalents and nine per cent growth in trade and other receivables.
However, its total Liabilities also grew by 49.60 per cent to N296.68billion driven majorly by 82.92per cent year-to-date increase in manage funds.
United Capital’s Shareholders’ funds declined 3.57per cent to N23.55billion as at June 30, 2021 from N24.42billion reported in 2020 FY, with retained earnings down 4.90per cent due to dividend payout during the period under review.
The Group Chief Executive Officer, United Capital Plc, Mr Peter Ashade said the company ended the first half of the year upbeat, in spite of the challenging operating environment.
According to him, “I am excited to inform our stakeholders that United Capital Plc recorded a very impressive half-year 2021 result, following a record year performance in 2020. We ended the first half of the year on a very high note as reflected in our earnings growth and strong financial performance.”
“United Capital is in a growth phase and I must say that our strong financial performance is a testament of our unwavering commitment to increasing value creation amid the harsh socio-economic environment and effects of the pandemic,” he said.
Speaking to the Company’s outlook for the 2021 financial year, Ashade said, “Our financial performance, in what was a year of protracted disruptions, is a testament of our unwavering commitment to our clients’ needs, come what may.
He added, “For us at United Capital, we are optimistic about the year 2021 as it presents greater opportunities for innovation, growth, and expansion beyond our current ecosystem.”
In addition to its outstanding financial performance, United Capital Plc also recorded landmark achievements during the year. The company’s corporate ratings improved from BBB+ to A- with a stable short-term and long-term outlook reflective of an investment-grade institution. Its flagship digital platform, InvestNow, recorded over N1billion in processed investors’ assets with its newly commissioned consumer finance business line disbursing 64,536 instant loans valued at N3.14billion, leveraging a 100per cent on digital model.
Major contributors to the company’s overall performance are its subsidiary businesses – Investment Banking, Asset Management, Securities and Trustees.
This was highlighted in the company’s emergence as the top 3 largest Fund Manager from 10th position in 2019 with its Mutual Fund Assets Under Management exceeding N162billion at the end of 2020 from N39billion as at year-end 2019.
Culled from ThisDay Newspaper