Africa Prudential Plc has turned each Naira invested in revenue into higher profit, thanks to income from treasury bills as the company is optimistic an improving economy will bolster future earnings.
An increase at the top lines (sales) flows through to the bottom line (profit), which paved the way for the Registrar to reward the owners of the business in form of cash dividend.
For the year ended December 2017, Africa Prudential net profit margin increased to 52.67 percent from 42.23 percent the previous year.
A 52 percent profit margin, then, means the company has a net income of N0.52 for each Naira of total revenue earned.
Profit margin is a profitability ratios calculated as net income divided by revenue, or net profits divided by sales.
Any increase in profit margin is an improvement in profitability.
The African Prudential net income spiked by 69.30 percent to N1.71 billion in December 2017 from N1.01 billion the previous year.
The Nigerian Registrar’s 37.34 percent surge in gross earnings to N3.31 billion in the period under review was underpinned by an increase in interest in short term government securities.
Interest income on treasury bills increased to 121.64 percent to N1.41 billion in the period under review as against N629.15 million as at December 2016.
Yields on 30 days, 60 days and 365 days short-term paper stood at 14.50 percent, 15.30 percent and 15.40 percent on Tuesday, according to data from FMDQ Website.
Africa Prudential also attributed the stellar performance to economic recovery as the country existed its first recession in 25 years in 2017.
The Nigerian capital market ended 2017 as one of the best performing stock globally after a six month bearish trend as total market capitalization increased by 47 percent to close at N4.30 trillion.
The gradual recovery from the bearish trend was due to a positive half year 2017 results by corporates and increased foreign direct investment as the introduction of a flexible exchange rate regime gave impetus to investor confidence.
Africa Prudential’s return on equity (ROE) increased to 24.67 percent to 24.67 percent in December 2017 from 22.19 percent the previous year.
In other words, the management of the Registrar has utilized the resources of shareholders in generating higher profit.
Eniola Fadayomi, chairman of Africa Prudential said that the company will surpass 2017 performance as government expansionary budget plan, election spending and improve oil price will result see more companies tap the capital market to raise mote funds.
“With the relentless determination of the Federal Government to improve Nigeria’s rating on the international Ease of Doing Business Index to facilitate inflow of foreign investments, the outlook for new registrar mandates from companies going public is very bright,” said Fadayomi.
“We are optimistic that your company will rightfully position itself in 20 18 to maximize all the business opportunities that will arise from the budget implementation by seeking appointment as registrars from those companies that would be seeking public listing on the Nigeria Stock Exchange,” said Fadayomi summed.
The company’s share price closed at N4.70 as of Tuesday, valuing it at N9.40 billion.
BALA AUGIE
