Africa Prudential Plc Records 10.41% PAT decline in Q1 2020 Unaudited Results

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Africa Prudential Plc (NSE Ticker: AFRIPRUD, Bloomberg Ticker: AFRIPRUD: NL, Financial Times Ticker: AFRIPRUD: LAG) announced its Unaudited Financial Statements for the period ended March 31st, 2020, with a Gross Earnings of N0.74 Billion and Profit Before Tax of N0.41 Billion. The Company delivered an Earnings
Per Share of 17Kobo

However, the company recorded a 10.4% decline in its Profit After Tax of N0.34 Billion, compared to N0.38 Billion in Q1 2019.

Brand Spur reports that Africa Prudential Plc also recorded a 17% decline in profit after tax in Q1 2018 from N0.46 Billion compared to N0.38 Billion in Q1 2019.

Commenting on the result, The Managing Director/CEO of Africa Prudential, Mr. Obong Idiong, had this to say:

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“Globally, this year had kicked off on an unprecedented note, with the unanticipated spread of the coronavirus disrupting economic activities all across the globe, Nigeria inclusive. The COVID19 pandemic had threatened the smooth operations of our business and that of our clients’ mounting enormous pressure on our revenue sources particularly the Revenue from contract with customers, the resultant effect was the reduction recorded in our gross earnings for Q1 2020.

However, the over 900% surge in our digital consultancy revenue attests to the fact that we have a lot of opportunities to harness the potential inherent in our digital technology business to boost our revenue whilst upscaling our diversification strategy.

The period under review tested our commitment to delivering value to our stakeholders while ensuring that we communicate truthfully, calmly and with resolve. As an organization, we prioritize the welfare and safety of our employees and have responded proactively by implementing our Business Continuity Plan (BCP) which involves the work-from-home protocol for all our departments and business segments whilst attending to all shareholders’ request through our electronic channels. Further, we have commenced the full end-to-end automation of AGMs while providing technology-driven solutions for the corporate action activities of our clients. We will continue to offer services through our various cloud-based digital platforms, sustain ongoing technological projects and adequately position for post-crisis continuity of our business operations.”

Mr. Obong Idiong MD/CEO further remarked that:

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“Our focus at Africa Prudential is still driven by our digital transformation strategies, achieving world-class superior value for all our stakeholders as we continue to pursue our diversification strategies.”

Income Statement:

  • Revenue from contracts with customers: N0.13 Billion, compared to N0.27Billion in Q1 2019 (52% YoY Decline)
  • Interest Income: N0.61 Billion, compared to N0.60 Billion in Q1 2019 (3% YoY Increase);
  • Gross Earnings: N0.74 Billion, compared to N0.87 Billion in Q1 2019 (14% YoY Decline);
  • Profit Before Tax: N0.41 Billion, compared to N0.45 Billion in Q1 2019 (9% YoY Decline);
  • Profit After Tax: N0.34 Billion, compared to N0.38 Billion in Q1 2019 (10% YoY Decline);
  • Earnings Per Share: 17 Kobo.

Balance Sheet:

  • Total Assets: N18.09 Billion, compared to N18.65Billion as at FY 2019 (3% YTD Decline);
  • Total Liabilities: N9.52 Billion, compared to N10.37 Billion as at FY 2019 (8% YTD Decline);
  • Shareholders’ Fund stood at N8.57 Billion, surging by 3% YoY from N8.28 Billion as of FY 2019.

Comparing Q1 2020 to Q1 2019, we observed the following key items worthy of note:

  • Revenue from contracts with customers: During the period under review, Revenue from contracts with customers reduced by 52% year-on-year on the back of the drop in retainership fee during the first quarter coupled with a significant reduction in fee from corporate actions as a result of the postponement of clients’ AGMs and dividend payment in response to the spread of the novel coronavirus in Nigeria. The company was, however, able to increase its revenue from digital consultancy by more than 900%, thereby emphasizing the positive result from the company’s diversification strategy into digital technology.
  • Interest income: On the other hand, the company recorded a 3% Year-on-Year increase in interest income driven by a 23% surge in the interest realized from loans and advances, thereby overriding the drop from other interest income sources
  • Profit After Tax: This reduced by 9% Year-on-Year, due to the 25% decline in profit before finance costs and tax as well as an increase in the company’s operating expenses amidst the mounting pressure on gross earnings brought about by the coronavirus-induced disruption to the company’s operations.
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Comparing Q1 2020 to FY 2019, the following were observed in the Balance Sheet:

  • Total Assets: In the first quarter of 2020, the total assets shed 3% in spite of the 40% surge in cash and cash equivalents as well as an 11% increase in trade receivables.
  • Total Liabilities: The company recorded gains on creditors claim over its assets as the total liabilities declined by 8% Year-till-date driven by a 9% decline in customers’ deposits which accounted for about 90% of the company’s liabilities.
  • Shareholder’s Wealth: Similarly, the company grew its total equity by 3% Year-till-date on the back of 5% Year-till-date increase in retained earnings.
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