FALL

NSE half-year profit drops 30 per cent

Net profit was Sh77.4 million compared to Sh110.7 million last year.

In Summary

•Revenue decreased by five per cent from Sh292.4 million in the six months ended 2020 to Sh276.5 million this year.

•This was mainly driven by a 16 per cent drop in equity turnover which declined from Sh83 billion to Sh70 billion.

NSE chief executive Geoffrey Odundo monitors daily trading at the Nairobi Bourse/
NSE: NSE chief executive Geoffrey Odundo monitors daily trading at the Nairobi Bourse/
Image: FILE

The Nairobi Securities Exchange (Group) has reported a 30.1 per cent drop in profit after for the year to June 30, as equity turnover dropped.

Its net profit was Sh77.4 million, a drop compared to Sh110.7 million recorded in a similar period last year.

Revenue decreased by five per cent from Sh292.4 million in the six months ended 2020 to Sh276.5 million this year.

This was mainly driven by a 16 per cent drop in equity turnover which declined from Sh83 billion to Sh70 billion, which in turn led to a reduction in equity trading levies by 16 per cent from Sh199.8 million fto Sh167.3 million.

"The decline in the equity turnover was as a result of increased allocation of capital towards the fixed income asset class during the period," CEO Geoffrey Odundo notes.

Bonds turnover however increased by 60 per cent to settle at Sh470 billion for the six months ended 30 June 2021, as compared to the same period in 2020.

Interest income increased by 28 per cent from Sh36.7 million in 2020 to Sh46.9 million for a similar period in 2021, "due to active management off investable funds."

Administrative expenses however  increased by 9.6 per cent from Sh 236.1 million to Sh 258.8 million in the period under review.

"This was mainly driven by additional costs on system enhancements to enhance cyber resilience of the business occasioned by the virtualization of our trading infrastructure,"Odundo says in the financial statement.

 Share of profit of associate decreased by 96 per cent to Sh0.6 million in 2021 from Sh13.8 million in 2020 as a result of decline in trading activity in the equity market.

Total assets however increased, albeit marginally to Sh 2.44 billion from Sh2.31 billion,  an increase in retained earnings resulting from the Group’s improved performance in 2020 as well as Sh50 million dividend receivable from investments.

 Non-current liabilities as at 30 June 2021 includes Sh 11.75 million received from a Clearing Member in 2019 towards the NSE derivatives Settlement Guarantee Fund.

Current liabilities stood at Sh270.6 million as at 30 June 2021 and includes Sh169.6 million dividend payable and Sh23.5 million contribution refundable to a Clearing Member.•

During the period under review, net cash from operating activities decreased compared to same period last year as a result of a reduced market performance.

OUTLOOK

Management on Friday said it continues to engage with "prospective issuers" to tap into the capital markets to fund their businesses.

"Our engagements with various corporates indicates a growing demand for capital and opportunities available in the capital markets post a pandemic recovery," said Odundo.

He said NSE is keen to strengthen the supply side of the equity market to accommodate the rapidly growing demand side.

It will continue to lay focus on the corporate debt market which provides an ideal opportunity for companies to raise medium term funding, he said.

"We will continue to support the government of Kenya domestic debt program during the upcoming period. The successful debt raised in H1 2021 is a testament of the growing demand for this asset class," Odundo said.

NSE is currently engaging the government for the potential listing of more state owned enterprises.

The board of directors does not recommend the payment of an interim dividend for the first half of the year 2021.