Financial Services company, VFD Group released its 2023 full-year results showing gross earnings rose 31.9% to N45.1 billion.
The company however reported a loss after tax of N1 billion representing a sharp reversal from the N8.5 billion profit reported a year earlier. This is the company’s first loss after tax since it was listedlast October and the first full year loss in at least 5 years.
The company carries on the business of a proprietary investment company with ownership stake in about 40 portfolio companies. Companies under its portfolio range from sectors that include financial services, asset management, real estate, hospitality leasing and Fintech
Key highlights
- Gross Earnings: N45.11 billion (up from N34.03 billion in 2022)
- Net Investment Income: N1.53 billion (down from N8.16 billion in 2022)
- Other Income: N6.76 billion (down from N10.50 billion in 2022)
- Total Expenses: N13.21 billion (up from N10.11 billion in 2022)
- Operating Loss Before Tax: N1.40 billion (compared to a profit of N8.25 billion in 2022)
- Loss Before Tax: N1.02 billion (compared to a profit of N8.58 billion in 2022)
- Loss After Tax: N750.44 million (compared to a profit of N6.84 billion in 2022)
- Borrowings: N81.5 billion vs N56.7 billion (43.8%)
- Shareholders’ Funds: N32.5 billion vs N32.5 billion (-0.2%)
This is the company’s first audited full year results since it became listed in October 2023 highlighting challenges faced during the year.
Commentary
A cursory analysis of the results reveal a number of challenges that may have resulted in the losses incured by the company.
- The investment and similar expenses for 2023 were significantly higher than the previous year, amounting to N32.7 billion compared to N12.3 billion in 2022.
- This considerable increase in expenses drastically impacted the net investment income, reducing it from N8.1 billion in 2022 to N1.5 billion in 2023.
- The higher interest expenses speaks to the higher borrowing cost in the country as the central bank increases interest rates to combat inflation.
- There was also a rise in substantial rise in other operating expenses, which increased from N6.4 billion in 2022 to N8.3 billion in 2023. This increase in operating costs contributed to the overall rise in total expenses.
- The impairment of financial assets negatively affected the financial performance. The company recorded an impairment loss of N171 million in 2023, although this was an improvement from the previous year’s impairment of N3 billion.
- Personnel expenses increased to N3.3 billion from N2.5 billion, and depreciation and amortization expenses rose to N1.4 billion from N1 billion These increases further added to the total expenses, reducing the net profit.
- The financial performance was also impacted by the hyper inflationary conditions in Ghana, where the company stated that the application of IAS 29 resulted in a net monetary loss of N241.6 million.
VFD Group also reported mixed results in Nigeria and Ghana, two of its primary locations where it operates. In Nigeria, the group reported a loss after tax of N2.49 billion whole in Ghana profits was N1.7 billion, this is despite a revenue of N30.3 billion and N3.9 billion respectively in both countries.
The group’s FinTech businesses also struggled during the year with VFD Microfinance Bank reporting a loss of N211.4 million and VFD Tech, N244.8 million (N284.6 million in 2022). However, its Cedi Capital
Microfinance Bank business finally swung to profits.
VFD Group share price has also fallen from its listing price of N269.3 per share to N202.9 per share which has been the average price for most period in the year.