By Aduragbemi Omiyale

Shareholders of the Central Securities Clearing System (CSCS) Plc have expressed pleasure over the decision of the board of the company to pay a cash reward to them for the 2021 financial year.

On Friday, May 6, 2022, at the Civic Centre, Victoria Island, Lagos, shareholders of CSCS gathered for the Annual General Meeting (AGM) and the board presented the payment of a dividend of N3.7 billion to them for approval.

The amount translates to an 83.7 per cent payout ratio, reflecting the resilient profitability of the organisation despite the impact of lower trading activity on most exchanges in the Nigerian capital market and inflationary pressures.

The investors were happy with the payment, commending the board and the management of CSCS for an incredible performance in the midst of the challenging operating environment.

Chairman of CSCS, Mr Oscar Onyema, while addressing the shareholders at the meeting, stated that, “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, from N526 million or 11.3 per cent of total income in 2020FY.

“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 of 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, the chief executive of the firm, Mr Haruna Jalo-Waziri, 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 per cent during the year, we sustained our cost efficiency strategy, leading to a 1.6 per cent 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 me in delivering on our pledge to sustainably create value for shareholders and our broader ecosystem.

“It has been 25 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.”

In the year under consideration, the organisation achieved its diversification drive with the ultimate objective of creating sustainable and superior wealth for shareholders and its broader stakeholders.