United Capital Plc recorded a growth in profit of 133 per cent and raised dividend payment by 42 per cent for the year ended December 31, 2016, despite the challenging business environment, writes Goddy Egene
The year 2016 was a tough one for businesses, given the challenges of rising inflation, foreign exchange scarcity, high energy cost and poor infrastructure. The headwinds brought by these challenges affected the performance of many companies in the real sector for most part of 2016, as shown by their quarterly results. The financial services sector was not spared in the poor performance engendered by the difficult operating environment.
Many of the banks and other firms operating in the financial services sector ended with the lower bottom-line. However, United Capital Plc, an investment banking company has maintained a positive trajectory amidst the headwinds. The company had surprised stakeholders with an impressive nine months performance to September last year. It had recorded 66 per cent in profit after tax (PAT) for the nine months.
Just when apprehensions were high among stakeholders as to what their fate would be for the full year, United Capital Plc last week gave a pleasant surprise to stakeholders and shareholders in particular with a performance that is above expectations.
The company recorded an unprecedented growth of 133 per cent in bottom-line and raised dividend payment by over 40 per cent, a development that has been hailed by market operators.
United Capital Plc was incorporated in Nigeria on March 14, 2002 under the Companies and Allied Matters Act, Cap C20, Laws of the Federation of Nigeria 2004. After a successful spin-off from United Bank for Africa Plc, the company got listed on NSE in January 2013. 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. 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.
2016 financial performance
United Capital Plc ended the year with gross earnings of N9 billion in 2016, showing an increase of 50 per cent from N6 billion posted in 2015. Investment income rose from N3 billion to N4 billion, while fee and commission income grew from N1.612 billion to N1.979 billion.
Despite high inflation in 2016, the management of the company was able to reduce its total expenses by 19 per cent from N3.238 billion to N2.634 billion. Consequently, profit before tax (PBT) grew by 95 per cent from N3.264 billion to N6.366 billion, while PAT soared from N2.57 billion to N6 billion.
Also, shareholders’ funds rose to N14.231 billion, from N10.420 billion, just as total assets improved from N144 billion to N161 billion. Earnings per share jumped from 43 kobo in 2015 to 115 kobo in 2016. Given the impressive performance, the directors of the United Capital have recommended a dividend of 50 per share, which is higher than the 35 kobo paid in 2015.
Achieving the results
No doubt achieving these positive results is not an easy task, considering the numerous headwinds. However, the company was well prepared to achieve this feat.
According to the Group Chief Executive Officer of United Capital Plc, Mrs. Oluwatoyin Sanni at the beginning of 2016, the company was more committed to achieving its goal of building Africa’s leading investment and financial services group and to work hard to accomplish its strategic objective set out in 2015 & 2016.
“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 explained that the company renewed focus on service excellence and execution to drive client growth and retention, expanded its footprint, developed innovative product lines and drove growth in its market share along core areas of product coverage and expertise.
“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.
Sanni added: “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 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.”
Determined to sustain its performance and use its expertise to empower investors though innovative products and services, United Capital Plc has launched two mutual funds. The two mutual funds are: United Capital Nigerian Eurobond Fund and United Capital Wealth for Women Fund, that are meant to meet the diversified investment portfolio needs of indigenous and global clients.
The United Capital Nigerian Eurobond Fund is an open-ended mutual fund that will be invested in Dollar denominated Eurobonds, floated by the Federal Government of Nigeria, Nigerian top tier banks and other corporate issuers whose securities are registered with the Securities and Exchange Commission (SEC).
According to the Managing Director, United Capital Asset Management, Mr. Jude Chiemeka, “We designed these new products specifically to suit the changing needs of our clients. We are excited to launch the United Capital Nigerian Eurobond Fund, as I believe if there was ever a best time for such a product, that time would be now. Our mutual funds have consistently offered attractive dividend returns for investors and we expect our two new funds to follow suit.”
On the other hand, the United Capital Wealth for Women Fund aims to encourage women to imbibe a savings culture, provide an avenue for women to be financially independent and to create a sustainable foundation for women’s financial empowerment and development in Nigeria.
Commenting on the fund, Sanni said: “The Wealth for Women Fund comes at a time when the cause of advancement of women is at the forefront of the Africa narrative. Several studies have demonstrated that businesses with significant participation by women on their Boards as well as businesses led by women often outperform their peers. United Capital is committed to empowering African women and in launching this fund, we have gone beyond just saying it to doing something to support this cause through this innovative product.”
According to her, investment in the United Capital Wealth for Women Fund will provide investors with capital appreciation, competitive returns, diversified portfolio and regular and steady income stream not common with other forms of investment.
Sanni disclosed that the core focus of the fund will be to: enhance the financial security of women; encourage women to imbibe a healthy investment culture, provide avenues for women to be financially independent; and create a sustainable foundation for women’s financial empowerment and development.
She added that the target of the fund are female business leaders, entrepreneurs and investors across Africa and in Diaspora, primarily those with domiciliary accounts in Nigerian banks. The fund, she added, is also for top female executives, and senior female servants.