United Capital Beats the Odds

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Goddy Egene writes that amidst the challenging operating environment, United Capital Plc reported impressive figures for the nine months ending September 30, 2016, thus raising shareholders’ hopes for a bumper harvest at the end of the year

When United Capital Plc was listed in January 2013, as the first and only investment banking firms on the Nigerian Stock Exchange (NSE), very few stakeholders gave it a chance of giving good returns to investors.

In the first place, as a company that operates mainly in the financial services sector, many observers thought the tough operating environment would not be conducive enough for the firm to record good results and put smiles on the faces of its shareholders.

However, United Capital has not only recorded improved performance beyond market expectations but has also been delivering significant returns to shareholders in form dividends and capital appreciation. In the midst of the headwinds in the economy generally and financial sector particularly leading lower profitability by some companies, United Capital has maintained a positive performance.

For instance, in the first half of 2016 to June 30, the firm recorded an unprecedented growth of over 100 per cent in profit after tax. Last week, United Capital followed its impressive H1 run with another reassuring performance for the nine months ended September 30, 2016. The company posted significant growth in all performance indicators.

Corporate background
The company was incorporated in Nigeria on March 14, 2002 under the Companies and Allied Matters Act, Cap C20, Laws of the Federation of Nigeria 2004. It was listed on NSE in January 2013 after a successful spin-off from United Bank for Africa Plc. United Capital is first investment bank in Nigeria to be listed on the NSE and it is a holding company with three subsidiaries: United Capital Trustees Limited, United Capital Asset Management Limited and United Capital Securities Limited. The company is engaged in the business of investment banking and provides issuing house, corporate investment advisory services, project finance, debt restructuring, mergers and acquisitions, debt capital markets.

Through its subsidiaries, it provides additional services such as trusteeship, asset management, securities, trading and insurance. United Capital’s vision is to be the leading financial and investment services group in Africa, while its mission is to be the financial and investment role model across Africa, deploying innovation, technology, and specialist skills to exceed client expectations, whilst creating superior value for all stakeholders.

United Capital has Mr. Chika Mordi as chairman and Mrs. Oluwatoyin Sanni as group chief executive officer. Other directors include: Adim Jibunoh, J. K. Shinkaiye, Yoro Mohammed Diallo and Emmanuel Nnorom.
Nine months results

The company, which released its nine months ended September 30, 2016, beat the odds and recorded growth in top line and bottom line. Gross earnings and profit after tax (PAT) rose by 39 per cent and 66 per cent respectively.

An analysis of the results showed that gross earnings stood at N5.689 billion in 2016, up from N4.088 billion in the corresponding period of 2015. Investment income soared from N491 million to N2.612 billion, while net operating income settled at N5.132 billion compared with N3.722 billion in 2015.
An analysis of the investment income showed that investment securities accounted for 73 per cent of the income, indicating market knowledge and understanding.

Fee and commission income also rose from N1.008 billion in 2015 to N1.428 billion in 2016. Out of the income, financial advisory fees accounted for N889 million or 62 per cent.
With the spike in inflation, the cost of running businesses has risen as well. But in spite of the inflationary trend, the management of United Capital adopted cost curtailing strategies that led to a decline of 2.7 per cent in total expenses, reducing from N1.774 billion to N1.726 billion.

As a result, profit before tax grew by 65 per cent to N3.962 billion in 2016 from N2.397 billon, while profit after tax rose from N1.910 billion to N3.170 billion.
Shareholders’ funds improved from N10.421 billion to N12.349 billion, while total assets grew from N144.1 billion to N191.6 billion.

Strong foundation
United Capital laid a strong foundation and adopted strategies that led to the delivery of the results. The GCEO, Oluwatoyin Sanni had informed stakeholders of the readiness of the company to post improved performance going forward.

She said as the company commenced 2016, it remained committed to achieving its goal of building Africa’s leading investment and financial services group and to work hard to accomplish our strategic objective set out in 2015 & 2016.

Sanni said: “Our priorities include: driving effectiveness and efficiency initiatives to improve productivity whilst optimising costs. Further improving our brand awareness, corporate image and brand value to achieve market-wide recognition and appreciation of our corporate identity.”

She added that the company would renew focus on service excellence and execution to drive client growth and retention, expand its footprint, develop innovative product lines, driving growth in its market share along core areas of product coverage and expertise, increase focus on developing human capital and strengthening our staff.

“These initiatives should see us successfully enhance the group’s productivity, revenue growth and profitability. I have great confidence in the highly dedicated staff and the management team of United Capital Plc, whose superior pedigree and expertise, led by a strong and highly supportive board of directors, make us supremely equipped to build on our strong performance in 2015 to take on 2016, ensuring delivery of excellent value to our shareholders,” she said.
The GCEO said she was confident in company’s ability to consistently deliver value to stakeholders in the current year.

“I have no doubt in my mind that the strategies we have put in place in light of our expectations of market scenarios in the coming year will prove effective in delivering much better results. I must thank all of you for your constant support in our task of building a leading financial services firm in Africa. I am confident that with the dedication of our resourceful staff and your unalloyed support, we will continue to delight you with superior return in every line of business we are involved,” she declared.

According to Sanni, the company advanced its Pan- African strategy to generate revenues from beyond the shores of Nigeria by executing on key mandates, and also deepened its play in fixed income services to meet the clear needs of investors to “flee to safety.”

“We continued to play a dominant role in providing critical advisory and capital raising and trustee services to sub-sovereign and corporate issuers as our contribution to helping them navigate the stormy economic conditions,” she said.

The company recently won ‘Most Innovative Investment Bank in Nigeria’ by BusinessDay.
United Capital said the award further solidified its drive to fulfill its mission to be the financial and investment role model across Africa, deploying innovation, technology and specialist skills to exceed client expectations, whilst creating superior value for all stakeholders.

The company got the award based on its listing on the NSE, growth in gross earnings, execution of deals in countries across Africa and a robust research and media unit demonstrated by latest news on its website and publications on topical economic issues.