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ANNOUNCEMENT OF UNAUDITED GROUP RESULTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
Summary Consolidated Statement of Profit or Loss and
6 Months Ended
6 Months Ended
12 Months Ended
Other Comprehensive Income For the
30.06.2022
30.06.2021
31.12.2021
Unaudited
Unaudited
Audited
Kshs ‘000
Kshs ‘000
Kshs ‘000
Transactions levy – Equity
129,806
167,335
329,777
Transactions levy – Bonds
47,427
32,943
66,988
3.2%
80%
20%
4%
DATA VENDING
TOTAL ASSETS
INCOME INCREASED BY
DECREASED BY
Data vending income
50,302
27,994
52,452
Annual, initial and additional listing fees
35,253
36,563
72,041
Interest income
58,311
48,346
105,752
Capital gain on trading book
–
21,184
28,451
Unquoted securities platform fees
4,530
1,010
5,958
Dividend from equity investment
6,047
6,459
6,500
Other income
29,189
26,988
46,348
Total income
360,865
368,822
714,267
Staff costs
95,934
95,320
171,841
Systems maintenance costs
24,727
28,423
54,636
Depreciation and amortisation
25,821
30,122
54,915
Building and office costs
32,558
30,715
52,802
Directors’ emoluments
23,607
23,388
43,605
Other operating expenses
72,412
48,675
110,033
Total expenses
275,059
256,643
487,832
Profit before fair value movements
85,806
112,179
226,435
Provision for expected credit losses and bond mark to market valuation
(17,930)
(4,811)
(12,178)
Share of (loss)/profit of associate
(8,185)
601
(3,389)
Profit before taxation
59,691
107,969
210,868
Taxation charge
(19,453)
(30,576)
(78,334)
Profit for the year
40,238
77,393
132,534
Other comprehensive profit
44,808
23,159
26,721
Total comprehensive income for the year
85,046
100,552
159,255
Earnings Per Share* – Basic and diluted (Kshs)
0.15
0.30
0.51
*EPS based on no. of shares
260,391,401
260,004,000
259,501,000
Summary Consolidated Statement of Financial Position
30.06.2022
30.06.2021
31.12.2021
As At
Unaudited
Unaudited
Audited
Kshs ‘000
Kshs ‘000
Kshs ‘000
Assets
OPERATING ENVIRONMENT AND MARKET PERFORMANCE – FIRST HALF OF 2022
According to the International Monetary Fund (IMF), global economic growth for year 2022 has been projected at 3.2% down from the 6.1% growth recorded in 2021. This is as a result of fundamental macroeconomic developments in the first half of the year such as the geo-political tensions in Eastern Europe caused by the ongoing Russia-Ukraine war that continues to impact on global economic trade especially the supply of food and energy. The war has affected supply chains leading to increased global inflation as well as the tightening of the monitory environment globally.
Inflation was revised upwards to 6.6% in advanced economies and 9.5% in emerging and developing economies, an upward revision of 0.9% and 0.8% respectively. Kenya’s GDP growth based on the grant economic outlook is projected to decrease to 6% compared to 7.6% in 2021.
During the first half of this year, overall inflation has risen to 7.9% in June 2022 mainly due to rising basic food prices and fuel.
The Central Bank Rate was retained at 7.5% due to positive impact seen from tightening monetary policy, easing fiscal policy on certain commodities and provision of subsidies to ease inflationary pressures during the period. The Kenyan Shilling averaged Kshs.115 against the US Dollar in H1 2022
The aforementioned factors coupled with the general election weighed heavily on domestic and institutional investors affecting trading activity as well as the prices of listed securities on the NSE.
The Government raised approximately Kshs. 406.13 Billion in Treasury Bonds through the issuance of fixed rate and infrastructure bonds. The bonds were oversubscribed in most offers depicting high level of interest in the fixed income market.
MARKET PERFORMANCE
Kshs. 167.3 Million for H1 2021 to Kshs. 129.8 Million in H1 2022.
Non current assets
1,290,924
1,123,275
1,067,117
Current assets
1,052,817
1,318,919
1,147,275
Total assets
2,343,741
2,442,194
2,214,392
Equity and liabilities
Share capital
1,041,567
1,040,017
1,040,017
Share premium
279,459
278,579
278,579
Revenue reserves
552,506
820,749
746,246
Non controlling interest
17,492
17,876
17,518
Other reserves
47,777
(593)
2,969
Non current liabilities
13,966
14,983
15,103
Current liabilities
390,974
270,583
113,960
Total shareholders’ funds and liabilities
2,343,741
2,442,194
2,214,392
Summary Consolidated Statement of Cash Flows
6 Months Ended
6 Months Ended
12 Months Ended
For The
30.06.2022
30.06.2021
31.12.2021
Unaudited
Unaudited
Audited
Kshs ‘000
Kshs ‘000
Kshs ‘000
Cash flows from operating activities
Cash generated from operations
60,712
25,037
140,624
Tax paid
(57,535)
(58,780)
(85,391)
Net cash generated from/(used in) operating activities
3,177
(33,743)
55,233
Net cash (used in)/generated from investing activities
(186,006)
118,153
172,469
Net cash used in financing activities
(21,304)
–
(256,033)
(Decrease)/increase in cash and cash equivalents
(204,133)
84,410
(28,331)
Cash and cash equivalents at the beginning of the period
374,417
402,748
402,748
Cash and cash equivalents at the end of the period
170,284
487,158
374,417
Summary Consolidated Statement of Changes
Revaluation
Non
in Equity For the Six Months Ended
Share
Share
& Other
Retained Controlling
Capital
Premium
Reserves
Earnings
Interest
Total
Kshs ‘000
Kshs ‘000 Kshs ‘000
Kshs ‘000
Kshs ‘000
Kshs ‘000
At 1 January 2021
1,038,003
277,185
(23,752)
883,258
15,509
2,190,203
Profit for the period
–
–
–
75,026
2,367
77,393
Other comprehensive income, net of tax
–
–
23,159
–
–
23,159
2020 dividend declared in the year
–
–
–
(137,535)
–
(137,535)
Issue of shares to employee share ownership plan
2,014
1,394
–
–
–
3,408
At 30 June 2021 (Unaudited)
1,040,017
278,579
(593)
820,749
17,876
2,156,628
Profit for the period
–
–
–
55,499
(358)
55,141
Other comprehensive income, net of tax
–
–
3,562
–
–
3,562
2021 special dividend declared in the year
–
–
–
(130,002)
–
(130,002)
At 31 December 2021 (Audited)
1,040,017
278,579
2,969
746,246
17,518
2,085,329
Profit for the period
–
–
–
40,264
(26)
40,238
Other comprehensive income
–
–
44,808
–
–
44,808
2021 second special dividend declared in the year
–
–
–
(130,002)
–
(130,002)
2021 final dividend declared in the year
–
–
–
(104,002)
–
(104,002)
Issue of shares to employee share ownership plan
1,550
880
–
–
–
2,430
At 30 June 2022 (Unaudited)
1,041,567
279,459
47,777
552,506
17,492
1,938,801
Explanatory Notes
The accounting policies used in preparing these financial statements are consistent with those
At the close of H1 2022, equity turnover decreased by 22.41% to stand at Kshs. 54 Billion compared to Kshs. 69.7 Billion recorded in H1 2021. The decline in equity turnover was attributable to a reduction in trading activity mainly from international and domestic institutional investors. This was as a result of international institutional investors reallocating capital to global fixed income assets, whilst domestic institutional activity declined owing to reallocation of capital to domestic fixed income assets.
Bonds market turnover declined by 17.85% in the first half of 2022 compared to a similar period in 2021. As at June 30 2022, total bonds turnover stood at Kshs. 387 Billion compared to Kshs. 471 Billion recorded over a similar period in 2021.
Equity market capitalization stood at Kshs. 1.94 Trillion compared to Kshs.
2.7 Trillion recorded over a similar period in 2021. The total value of outstanding bonds stood at Kshs.3.59 Trillion.
The NSE 20 Share Index declined by 15% to stand at 1,612.89 points at the close of the review period compared to 1,902.57 recorded over a similar period in 2021.
The equity market continued to witness increased corporate actions which saw companies strengthen their shareholder capital. These included TPS Serena which issued a debt swap that saw USD 14.5 Million debt converted to shares. Bank of Kigali (BK) issued a Dividend Re-Investment Plan that saw investors re-invest their net dividend into ordinary shares of BK at a 5% discount to the share price. Car & General also issued a bonus issue in the ratio of 1 new share for every 1 share owned.
The bond market attracted one additional listing bringing the total number of outstanding corporate bonds to 6 with the Kenya Mortgage Refinance Company which raised Kshs. 1.4 Billion against offers received of Kshs. 8.1 Billion. We continue to witness demand for fixed income securities on the Exchange. The Exchange remains an attractive venue for raising medium to long term capital.
The Derivatives market recorded a turnover of Kshs. 72 Million with 2,189 contracts traded. During the period, we also introduced four new contracts namely Co-operative Bank, Standard Chartered Bank, I & M Bank and NCBA Bank. The market now has a total of 12 contracts available to trade. As global and local markets continue to experience weakening sentiment, we see an opportunity for investors to trade derivatives.
This year, the listed Exchange Traded Fund (ETF) witnessed an increase in demand with H1 2022 turnover of Kshs. 372 Million which was a 576% growth over last year. The demand for the New Gold ETF was driven by the defensive nature of the asset class that continues to appreciate during this volatile period.
The Unquoted Securities Platform (USP) was launched in 2021 with Acorn Holdings listing two Real Estate Investment Trusts (REITs). The REITs have traded Kshs. 408 Million in H1 2022, with a cumulative trading volume of Kshs. 795 Million since launch in July 2021 and Kshs. 3 Billion raised on the platform.
FINANCIAL HIGHLIGHTS
OUTLOOK – SECOND HALF OF 2022
Management is hopeful that trading will regularize in the second half of the year after the election process, which affected investor sentiments and trading activity, is completed. The Exchange will continue to engage prospective issuers to consider capital markets financial solutions to fund their business growth and development.
With the increase of issuances in the corporate bond market, we will continue to interest companies to use this product to complement their funding needs. The NSE is an attractive avenue for the listing of bonds and we will ensure full availability of our infrastructure to deepen the trading of Government bonds.
The Unquoted Securities Platform (USP) has enabled the Exchange to explore the untapped opportunities that exists in the ever growing private over the counter markets space in Kenya. The Platform offers a very prominent value proposition through increased transparency, better turnaround time in closure of trades and an avenue for capital raising for entities that are not yet ready for the main market. The platform has raised over Kshs. 3 Billion for the issuers on the platform. We expect to see additional listings and capital raising activity for private companies, SACCOs and existing OTC registers.
Other asset classes at the NSE which include the Exchange Traded Funds (ETFs) and Real Estate Investment Trusts have also reported good performance in H1 2022. ETFs have seen material and heightened demand by investors who opted to buy the underlying asset, gold, in a bid to hedge against price volatility in equity markets. We continue to support issuers and investors who are interested in these asset classes.
The NSE will continue to focus on targeted investor and issuer forums to articulate the case for the capital markets. We will continue to hold targeted forums to sensitize potential clients on the benefits of NSE products.
The NSE launched the Environmental, Social and Governance (ESG) Disclosures Guidance Manual to provide a framework for ESG reporting in Kenya in November 2021. With the growing interest in sustainable finance, the NSE will continue to promote sustainability reporting as well as uptake of sustainable finance products through promoting them to clients engaged in developing climate friendly assets. The NSE is in the process of establishing a carbon trading platform to facilitate the trading of carbon credits.
We remain optimistic of a better second half of the year 2022.
DIVIDENDS
The Board of Directors does not recommend an interim dividend for the first half of the year 2022.
By Order of the Board
used for the Group’s 2021 annual financial statements. These unaudited financial statements are extracts from the books of accounts of the Group and were approved by the Board of Directors on 26 August 2022.
• Equity turnover stood at Kshs. 54 Billion in H1 2022, compared to Kshs. 69.7
Geoffrey O. Odundo
Billion in the same period in 2021 due to lower than expected trading
Chief Executive
activity especially from the international and domestic institutional
Nairobi
investors. This led to a reduction in equity trading levies by 22.4% from
26 August 2022
Attachments
Disclaimer
NSE – Nairobi Securities Exchange Ltd. published this content on 26 August 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 26 August 2022 15:40:01 UTC.

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