Central Securities Pays N3.7bn Dividends To Shareholders As Revenue Grows By 39.2%

The Board of Central Securities Clearing System (CSCS) Plc has proposed to pay a total dividend of N3.7 billion to its shareholders, reinforcing the value accretion to its equity owners, who have seen a notable rise in the share price of the company over the past year.

The dividend proposal was announced at the Company’s 28th Annual General Meeting which was held on Friday at Civic Centre, Victoria Island, Lagos.

A statement from the company said it was unanimously approved by the shareholders who commended the company’s executive management for an incredible performance, despite the challenging operating environment.

The N3.7 billion dividend, which translates to 83.7 per cent payout ratio, reflects the resilient profitability of the company, notwithstanding the impact of lower trading activity on most Exchanges in the Nigerian capital market and inflationary pressures.

Consolidating on its diligent earnings diversification drive, the Company grew revenue from core operations and ancillary services by 39.2 per cent to N6.4 billion from N4.6 billion in 2020, as it almost quadrupled earnings from ancillary services from N526 million in 2020 financial year to N2.2 billion in 2021 financial year.

Notably, income from ancillary services contributed 33.3 per cent and 21.5 per cent of operating revenue and total income for the year respectively, underpinning Management’s strategy towards diversifying and strengthening the earnings fundamentals of the Company, with the ultimate objective of creating sustainable and superior wealth for shareholders and its broader stakeholders.

Addressing shareholders, Mr. Oscar Onyema OON, Chairman, Board of Directors of CSCS Plc said; “Notwithstanding the volatile operating environment and moderated capital flows, as reflected in the subdued capital market activities, the earnings fundamentals of your Company remained resilient and indeed stronger than ever. This fact is evident in the impressive revenue growth of 39.2 per cent, driven by stellar growth in ancillary income. The equity market recorded one of the weakest secondary market activities in the past few years, with the average daily trade value of N3.9 billion, some 10 per cent below the trading activity recorded in the 2020 financial year, explaining the tepid transaction fees.

“Albeit income from ancillary services recorded a significant boost, contributing N2.2 billion or 21.5 per cent of total income in 2021 FY (Fiscal Year), from N526 million or 11.3 per cent of total income in 2020 FY. This performance reinforces the capacity of the Management in delivering on the Board’s vision result of diversifying the business and enhancing the value accretion prospect to shareholders in a sustainable manner. More importantly, my colleagues and I on the Board of your Company, are excited at the prospect for new offerings arising from strategic partnerships and new initiatives. In our oversight role, we are working with the Management to invest relevant resources towards exploring new frontiers for growth, especially as these initiatives are expected to foster retail investor penetration and broader capital market growth.”

While commenting on the outlook for the business, the Chairman noted: “typical of a pre-election year, 2022 comes with its unique macro challenges but I am optimistic on the earnings capacity and overall resilience of our business, as we hope to consolidate on the strong foundations and extract synergies opportunities with our participants and partners in sustaining the positive trajectory of the business. Hence, with the support of shareholders and other stakeholders, CSCS would continue to deliver superior performance and create wealth for shareholders.”

In the same vein, Mr. Haruna Jalo-Waziri, the Chief Executive Officer, CSCS Plc said; “Reflecting the ingenuity of our participants and more importantly quick adoption of new remote access technologies, the Nigerian capital market remained active through the prolonged COVID-19 crisis. The collaboration of our regulator and participants has been incredible in sustaining our operational protocols and IOSCO PFMI standards.”

“Though clearing and settlement activity waned by 10.2 per cent due to lower participation of foreign investors in the Nigerian equity market and a host of macro challenges, we are excited at the growth in our depository assets by 6.1 per cent to N23.0 trillion, reflecting new listings of securities across our multiple Exchange partners as well as issuers’ and investors’ confidence in the safety and secured accessibility of our systems.

Continuing, Mr. Jalo-Waziri said: “Despite the average inflation rate of 17.0% during the year, we sustained our cost efficiency strategy, leading to a 1.6% decline in operating expenses. Overall, we achieved N5.8 billion and N4.4 billion Profit Before Tax and Profit After Tax respectively, underpinning the resilience of the business and commitment of my colleagues and I, in delivering on our pledge to sustainably create value for shareholders and our broader ecosystem.

“It has been twenty-five years of meritorious service, as the infrastructure for the Nigerian capital market. We have pioneered a number of initiatives and efficiencies in the market and have enjoyed the best collaborative engagements with different stakeholders. Whilst we relish our progress working with other stakeholders in transforming the Nigerian capital market, we reckon there is a long way to go in bridging the gap towards our aspiration of positioning the Nigerian capital market as the hub of securities services in Africa and one of the leading capital markets, globally. To this end, we have reinvigorated our strategic thrust with the development of a medium-term playbook that would enhance our capabilities in executing new initiatives towards deepening the Nigerian capital market and strengthening our business growth frontiers for the mutual prosperity of all our stakeholders.”

CSCS is a public limited company with a diversified shareholder base including the Nigerian Exchange Group, banks, private equity firms and other corporate and individual shareholders.

It is licensed and regulated by the Securities and Exchange Commission