83.7% Payout Ratio Excites CSCS Shareholders

By Aduragbemi Omiyale

The shareholders of Central Securities Clearing System (CSCS) Plc have welcomed the decision of the company’s board of directors to pay them a cash reward for the 2021 financial year.

On Friday, May 6, 2022, at the Civic Center, Victoria Island, Lagos, CSCS shareholders gathered for the Annual General Meeting (AGM) and the Board of Directors presented them with the payment of a dividend of 3.7 billion naira for approval.

The amount translates into a payout ratio of 83.7%, reflecting the organization’s resilient profitability despite the impact of declining trading activity on most Nigerian capital market exchanges and inflationary pressures.

Investors were pleased with the payout, congratulating the board and management of CSCS for an incredible performance amid a challenging operating environment.

CSCS Chairman, Mr. Oscar Onyema, addressing shareholders at the meeting, said that “despite the volatile operating environment and subdued capital flows, as evidenced by subdued capital markets activities, your company’s earnings fundamentals have remained resilient and even stronger. than ever.

“This fact is evident in the impressive revenue growth of 39.2%, driven by soaring growth in ancillary revenue. The equity market recorded one of the weakest secondary market activities in recent years, with an average daily trade value of 3.9 billion naira, about 10% less than trading activity. recorded in the 2020 financial year, which explains the low transaction costs.

“Although ancillary services revenue recorded a significant increase, contributing N2.2 billion or 21.5% of total revenue in FY 2021, compared to N526 million or 11.3% of total revenue total in fiscal year 2020.

“This performance reinforces management’s ability to realize the outcome of the Board’s vision to diversify the business and improve the prospect of increasing shareholder value in a sustainable manner.

“Most importantly, my colleagues and I on your company’s board of directors are excited about the prospect of new offerings arising from strategic partnerships and new initiatives.

“In our watchdog role, we are working with management to invest the necessary resources to explore new frontiers of growth, especially as these initiatives are expected to drive retail investor penetration and broader capital market growth. .”

While commenting on the company’s outlook, the Chairman said, “Typical of a pre-election year, 2022 comes with unique macroeconomic challenges, but I am optimistic about our company’s earning power and overall resilience. as we hope to build on solid foundations and extract synergy opportunities with our participants and partners to maintain the company’s positive trajectory.

“Therefore, with the support of shareholders and other stakeholders, CSCS would continue to deliver superior performance and create wealth for shareholders.”

In the same vein, the Managing Director of the company, Mr. Haruna Jalo-Waziri, said; “Reflecting the ingenuity of our participants and, more importantly, the rapid adoption of new remote access technologies, the Nigerian capital market has remained active during the protracted COVID-19 crisis. The collaboration of our regulator and participants has been incredible in maintaining our operational protocols and IOSCO PFMI standards.

“Although clearing and settlement activity declined by 10.2% due to low foreign investor participation in the Nigerian stock market and a host of macroeconomic challenges, we are pleased with the growth in our assets. deposit rate of 6.1% to 23.0 trillion naira, reflecting the new listings of securities on our multiple exchange partners as well as the confidence of issuers and investors in the safety and secure accessibility of our systems.

Continuing, Mr. Jalo-Waziri said: “Despite the average inflation rate of 17.0% during the year, we maintained our profitability strategy, resulting in a 1.6% drop in expenditure on operation.

“Overall, we achieved pre-tax profit and after-tax profit of N5.8 billion and N4.4 billion respectively, which strengthens the resilience of the business and the commitment of my colleagues and I to deliver on our promise to create lasting value for shareholders and our broader ecosystem.

“This represents 25 years of meritorious service, as Nigeria’s capital market infrastructure. We have pioneered a number of initiatives and market efficiencies and enjoyed the best collaborative engagements with different stakeholders.

“As we relish our progress in working with other stakeholders in the transformation of the Nigerian capital market, we believe there is a long way to go to bridge the gap towards our aspiration to position the Nigerian capital market as the hub of securities services in Africa and one of the major capital markets globally.

“To this end, we have invigorated our strategic focus with the development of a medium-term playbook that would enhance our capabilities to execute new initiatives aimed at deepening the Nigerian capital market and strengthening our business growth frontiers for mutual prosperity. of all our stakeholders. ”

During the year under review, the organization carried out its diversification effort with the ultimate objective of creating sustainable and superior wealth for shareholders and its stakeholders at large.

Sallie R. Loera