Secure Electronic Technology Plc (SET Plc) recorded a post-tax loss of N14.4M in Q3 2020, triggered by a high dealer’s commission. 

A cursory analysis of the Q3 2020 results of Secure Electronic Technology Plc (SET Plc) indicates that the Q3 2020 post-tax loss reduced by 33.7% from N21.7M in the same quarter last year. 

READ: For SET Plc, failure in lottery shifts focus to online gaming

Highlights 

• Revenue increased by 1.0% 
• Prizes/winnings increased by 0.52% 
• Dealers commission increased by 3.42%    
• Net income decreased by 14.71% 
• Administrative expenses decreased by 21.21%  
• Operating loss decreased by 34.62% 
• Financial charges increased by 68.23% 

READ: MTN: Data subscriptions triggered surge in Q2 2020 Revenues

What you should know

• A cursory analysis of the latest results of the company reveals that revenues generated from lottery sales and gaming products increased by 1% in Q3 2020 relative to Q3 2019, despite COVID-19 pandemic disruptions that have affected revenues of most businesses worldwide.
• YoY, revenue decreased by 2.15% from N3.18B in 2019 (9-months) relative to N3.11B in 2020 (9-months) – indicating that COVID-19 might have impacted the activities of the company, when considered on a yearly basis.   
• While the company was able to increase revenues by 1%, reduce its operating loss by 34.62%, and reduce its administrative expenses by 21.21%; high dealers commission and administrative expenses as well as finance charges which increased by 68.23% contributed to the post-tax loss recorded.  
• Dealers commission and administrative expenses constitute a drag on the company’s profitability. Dealer’s commission was 36.12% of revenues in the period under consideration while prizes/winnings were 60.35%. Administrative expenses was 137.16% of net income in the quarter under consideration. 
• The post-tax loss is an indication that there was no distributable profit. Thus, the Earnings Per Share (EPS) of the company would be a deficit; so that Q3 2020 EPS was –0.26 kobo.  

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The shares currently trade at N0.20 per unit. The highest price for a unit of share in 52 weeks was N0.20 and the lowest N0.20, indicating that the share price of the company has been stable. A total of 20,212 units was sold in the last seven days trades. Shares outstanding is 5.63 billion units and its market capitalization as at close of business Friday 16th October 2020 was N1.13 billion. 

Interlinked Technologies Plc operates in the same sub-sector as SET Plc – Speciality. Its share price is N2.91. The highest price for a unit of share in 52 weeks was N2.91 and the lowest N2.91 – indicating that the share price of the company has been stable. A total of 141,020 units was sold in the last seven days trades. Shares outstanding is 236.7 million units and its market capitalization as at close of business Friday 16th October 2020 was N688.80 million.  

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Background

Secure Electronic Technology Plc (SET Plc), formerly known as National Sports Lottery was incorporated in 2000 with an exclusive 30-year license granted by the FG to operate the National Lottery in Nigeria.

SET Plc started out as a gaming/lottery company. While online gaming remains a major part of its operations. Aside from lottery and gaming, the company now explores other business areas within the ambit of technology and data management. 

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Today, the company is involved in the vending of airtime, provision of card payment solutions, trivia promo syndication, provision of central database and information processing services, as well as treasury/asset management services.  

Regency Alliance Insurance Plc, a major player in Nigeria’s insurance industry has released its earnings forecast for Q4 2020 to the Nigerian Stock Exchange (NSE), with a profit after tax of N730.72 million.  

While awaiting its Q3 2020 financials, the projected profit after tax figures is up by 32.75%, from N550.46 million recorded in Q2 2020 to a projected figure of N730.72 million for the last quarter of the year. 

READ: Nigeria’s GDP grew by 2.28% in Q3 2019, as border closure hits trade sector

Other key projected financial metrics which recorded an increase are: 

• Profit before tax recorded a 28.3% increase from N670.11 million recorded in Q2 2020 to a projected sum of N859.67 million. 
• Taxation grew by 7.8% from N119.65million recorded in Q2 2020 to a projected sum of N128.95 million 

READ: COVID-19 boosts Fidson Healthcare Plc’s Q2 2020 performance

Other key figures in the forecast for Q4 2020 include; the projected sums of N4.28 billion for Gross premium earned, N2.82 billion for Net premium, N855.9 million for Net claims incurred, N928.65 million for Underwriting/Management Expenses, and N487.3 million for Net cash generated from operating activities. 

READ: Credit to households increases in Q2 2020 – CBN

Backstory 

Regency Alliance Insurance Plc had earlier announced 28th October 2020, as the date for its board meeting, to consider its Q3 2020 financials for the period ended 30th September 2020. In lieu of this, its closed period will be from October 13, 2020. 

On this basis, the projected key financial metrics were compared with the last reported financials in Q2 2020.  

READ: Non-Performing loans in Nigerian Banks rise to N1.21 trillion in H1 2020

What this means 

The increase in projected Q4 2020 might be connected to the drive to meet up with recapitalization requirements for insurance firms in Nigeria. Recall that Nairametrics had earlier reported on how the aforementioned firm had planned to raise more capital through various strategic means including issuing a N10 billion additional ordinary shares at N0.50K each. 

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Theoretically, the projected increase in profit is realizable when a number of factors such as optimization of underwriting skills, lower claims ratio, higher gross premium, and efficient optimization of technology, amongst others are satisfied. 

READ: See excuses these companies are giving ahead of late filing 2018 results

What you should know

Regency Alliance Insurance Plc is an insurance company in Nigeria with its headquarters in Lagos. It is licensed to cover all classes of non-life insurance. The company also has business interests in property investments in the form of real estate development and leasing, finance leasing, retail and microfinance banking, and vehicle tracking and fleet management services.  

The Nigerian National Petroleum Corporation (NNPC), has stated that it reduced its loss by 99.7% from N803 billion in 2018 to N1.7 billion in 2019.

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BREAKING:@NNPCgroup Releases 2019 Audited Financial Statement, Reduces Loss by 99.7%#Transparency #Accountability#PerformanceExcellence #TAPE
 
THREAD…👇 pic.twitter.com/bWnywfvbWC

— NNPC Group (@NNPCgroup) October 15, 2020

Barely five months after releasing its 2018 Audited Financial Statement (AFS), the company has released its 2019 AFS, stating that performance improved compared with the same period last year.

READ: NNPC seeks Russian firms’ partnership to revamp oil refineries  

The CFO of the company noted that general administrative expenses dipped by 22% from N894 billion in 2018 to N696 billion in 2019.

According to the spokesman of the company – Mr. Umar Ajiya, a majority of the company’s subsidiaries also recorded improved performance. For example, it was reported that the Nigerian Petroleum Development Company Limited (NPDC) recorded N479 billion profit in 2019, compared to N179 billion in 2019. This represents a 167% increase.

READ: Nigeria refineries recorded ₦66 billion operational deficit in 2017

What they are saying

Mr. Ajiya quoting Dr. Kennie Obateru, the CFO of the company – submitted that the 2019 AFS was concluded less than five months from the release of the 2018 AFS. He also submitted that the results will be published on the company’s website, in line with the management’s transparency commitments and the principles of the Extractive Industries Transparency Initiative (EITI), for which it is a partner.

READ: Thrive Agric: “Where is my money?”

What you should Know

The Nigerian National Petroleum Corporation (NNPC) is the state oil corporation, ​established on the 1st of April 1977. In addition to its exploration activities, the Corporation was given powers and operational interests in refining petrochemicals and products transportation, as well as marketing.

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Between 1978 and 1989, NNPC constructed refineries in Warri, Kaduna, and Port Harcourt and took over the 35,000-barrel per day Shell Refinery, established in Port Harcourt in 1965.

READ: President Buhari to scrap NNPC, PPPRA as he submits new PIB to National Assembly

In 1988, the NNPC was commercialized into 12 strategic business units, covering the entire spectrum of oil industry operations like exploration and production, gas development, refining, distribution, petrochemicals, engineering, and commercial investments. Currently, the subsidiary companies include:

• Nigerian Petroleum Development Company (NPDC)
• The Nigerian Gas Company (NGC)
• The Products and Pipelines Marketing Company (PPMC)
• Integrated Data Services Limited (IDSL)
• National Engineering and Technical Company Limited (NETCO)
• Hydrocarbon Services Nigeria Limited (HYSON)
• Warri Refinery and Petrochemical Co. Limited (WRPC)
• Kaduna Refinery and Petrochemical Co. Limited (KRPC)
• Port Harcourt Refining Co. Limited (PHRC)
• NNPC Retail
• Duke Oil

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In addition to these subsidiaries, the industry is also regulated by the Department of Petroleum Resources (DPR) – a department within the Ministry of Petroleum Resources. The DPR ensures compliance with industry regulations; processes applications for licenses, leases, and permits; establishes and enforces environmental regulations. The DPR and NAPIMS play a very crucial role in the day to day activities throughout the industry.