Africa Prudential Registrars: Maintaining profit growth

Africa Prudential Registrars ranks among the top growing companies in 2014. The share registration service company raised after tax profit by about 77% in the second quarter, up on the 63% full year growth in 2013. The strength to grow profit is coming from sustaining growth in revenue and improving profit margin.

Mr. Peter Ashade, managing director/chief executive officer of the company, is building wealth for shareholders while distributing wealth to other companies’ shareholders. He is converting more than one-half of revenue into profit, representing one of the highest profit margins among listed companies.

The investment baker is expanding the company’s earning capacity rapidly.  The company’s investment portfolio has more than tripled within the first six months of the year and earnings per share is expected to rise to a new peak this year after dropping last year due to the doubling of the volume of shares.

The company closed its second quarter operations with an after tax profit of N551 million, which is an increase of 76.6% year-on-year. This is an accelerated growth from the profit figure of N213 million the company reported in the first quarter.

Based on the second quarter growth rate, net profit is projected at N1.18 billion for Africa Prudential Registrars in 2014. This will be an increase of 29.1% over the net profit figure of N914 million in the preceding year.

Based on the earning pattern in the prior year, profit growth is expected to continue to accelerate in the second half of the year. The second quarter profit figure of N312 million last year was about one-third of the full year figure. The company grew profit by 62.6% to N914 million in 2013.

The company generated a turnover of N1.08 billion at the end of the second quarter, an increase of 61.8% over the corresponding figure last year and an accelerated growth from N473 million in the first quarter. If the second quarter growth rate is maintained to full year, turnover is expected to be in the region of N2.32 billion for Africa Prudential Registrars in 2014. This will be an increase of 25.4% over the revenue figure of N1.85 billion in 2013.

Turnover had grown by over 79% in 2013 and further growth acceleration is also expected in the remaining half of the year. There is a sustaining growth in revenue from N564 million in 2010.

Costs moderated generally relative to revenue for the company in the second quarter, which permitted an increase in profit margin. Total expenses, including taxation, grew by 44.4% to N527 million compared to the increase of 61.8% in turnover. Net profit margin rose from 46.8% in June 2013 to N51.1% this year. This is also better than the 49.3% net profit margin recorded at the end of last year.

The biggest event in the balance sheet during the first half of the year is the huge expansion of the investment portfolio. Financial assets held to maturity rose by 227.3% to N7.83 billion at the end of June, a major boost in the company’s earning capacity.  Also customers’ deposits have grown by 58.2% to N17.72 billion over the closing figure last December.

The company boosts of a robust cash flow with a net cash of N1.73 billion generated from operating activities at the end of the second quarter. This was more than sufficient to cover its investing and financing activities during the period and still left net cash increase of more than N1.0 billion. Cash and bank balances increased by about 11% to N10.21 billion over the opening figures for the year.

The company earned 27 kobo per share at the end of the second quarter compared to 15 kobo in the corresponding period last year. Earnings per share is expected to be in the region of 59 kobo for Africa Prudential Registrars at the end of 2014. This will be a new peak in earnings per share after a drop from 56 kobo in 2012 to 46 kobo in 2013. The drop in earnings per share last year followed a rights issue that doubled outstanding shares to 2000 million during the year.

The company paid a dividend of 35 kobo per share for its 2013 operations – the first year of operation after listing on the Nigerian Stock Exchange. The register of shareholders closed on 17th March while payment was made on 4th April 2014.

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