Business

Power business favours Transcorp as profit hits 9-year high

Transcorp.

Transnational Corporation of Nigeria Plc, in its recently released half-year (H1) financial statement on the Nigeria Exchange Group (NGX), reported its highest profit in nine years with the power operating segment of the company contributing 84.59 percent of the total profit in the period, according to findings by BusinessDay.

Its profit after tax grew by 84.77 percent to N12.01 billion in the first half of 2022 from N6.50 billion in the first half of 2021.

The company’s revenue also grew by 18.08 percent to N62.89 billion in the first half of 2022, from N53.26 billion in the corresponding period of 2022, the highest half-year revenue reported by the company in 9 years.

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On a quarter-on-quarter basis, revenue was up by 0.35 percent to N31.50 billion in the second quarter (Q2) of 2022 from N31.39 billion in the first quarter (Q1) of 2022.

Further breakdown of the operating segments shows that the company’s power segment contributed the bulk by 76.16 percent to N47.90 billion in the first half of 2022. However, the hospitality segment grew the most by 70.81 percent to N14.98 billion in the first quarter of 2022 from N8.77 billion in the corresponding period of 2021.

Similarly, its power operating segment also grew by 7.66 percent to N47.90 billion in the first half of 2022 from N44.49 billion in the first half of 2022, vehicle its corporate centre operating segment grew by 48.2 percent to N4.52 billion from N3.05 billion in the period under review.

Commenting on the performance, Owen Omogiafo, Transcorp’s president/group CEO, attributed the Group’s continued strong performance to growth in its power and hospitality businesses, which continued excellently despite the challenging operating environment.

Omogiafo said “in our Power business, despite the challenges of grid instability and gas reliability, we recorded considerable growth in our power investment, with our available capacity growing by 21 percent (100MW) over last year and improving our overall operational efficiency. We have continued to progress with our OPL281 investment and are well on the way towards attaining our integrated energy strategy, and increasing returns for all stakeholders.”

The conglomerate company’s cost of sales grew by 6.82 percent to N31.78 billion in the first half of 2022 from N29.75 billion in the first half of 2021, with natural and fuel costs claiming 67.56 percent of the total cost of sales in the period.

However, Repairs and maintenance, food and beverages, and rooms were the major drivers of the increase in the cost of sales, as repairs and maintenance grew by 372.27 percent to N2.98 billion, food and beverages grew by 80.56 percent to N2.60 billion, and rooms grew by 70.7 percent to N1.34 billion in the first half of 2022.

The company’s administrative expenses in the period were up by 45.20 percent to N10.89 billion in the first half of 2022 from N7.50 billion in the corresponding period of last year.

Transcorp Group recorded a decline in net finance costs by 23.84 percent to N6.07 billion in the first half of 2022 from N7.97 billion in the prior period (H1 2021).

The decline in finance costs can be attributed to a steep decline in interest expense despite the increase in interest income to N521.1 million in H1 2022 from N304.7 million in H1 2021.

Interest expenses declined by 20.41 percent to N6.59 billion in the first half of 2022 from N8.28 billion in the corresponding period of 2021.

Similarly, foreign exchange loss on borrowings declined by 20.61 percent to N1.04 billion in the first half of 2022 from N1.31 billion in the first half of 2021.

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Total assets recorded by the company grew by 16.45 percent to N417.19 billion in the first half of 2022 from N358.26 billion in the first half of 2021.

Transcorp Group shareholder’s equity in the period under review amounted to N157.49 billion, a 31.41 percent increase from N119.85 billion in H1 2021.

Analysis by Businessday to measure the rate of return that the owners of common stock of a company receive on their shareholdings shows a return on equity (ROE) of 14.31 percent in the first half of 2022.

The conglomerate company’s cash and cash equivalent which shows the value of a company’s assets that are cash or can be converted into cash immediately amounted to N5.32 billion in the first half of 2022, down 68.18 percent from N16.72 billion in the first half of the prior year.

The company generated N5.19 billion from operating activities in the first half of 2022, a 77.84 percent decline from the N23.42 billion it generated in the first half of 2021.

The conglomerate reported a negative cash flow used in investing activities of N-3.55 in the first half of 2022 due to the large cash outflow in the period.

Read also: Transcorp Group reports 32.3% revenue rise, total assets grow to N416 billion

A breakdown of the cash flow used in investing activities shows that Transcorp Group paid interest amounting to N521.09 million and invested in the purchase of property, plant, and equipment amounting to N3.31 billion, in the first half of 2022.

Its cash inflow from investing activities during the period was from dividend income on equity security and proceeds from the sale of property and equipment which amounted to N128.68 million and N151.36 million respectively.

Similarly, its net cash flow used in financing activities was negative, amounting to N10.42 billion in the first half of 2022 due to net movement in borrowings, interest, and dividend payments during the period, which amounted to N3.02 billion, N6.59 billion, and N812.96 million respectively.

The conglomerate reported total borrowings of N103.06 billion in the first half of 2022, a 17.58 percent decline from N125.04 billion reported in the first half of 2021.

Transcorp Debt

Analysis by Businessday to measure the extent to which the shareholder’s equity can fulfill obligations to its creditors, in the event of a business decline, shows a debt-to-equity ratio of 17.90 percent.

The company reported earnings per share (EPS) of N14.40 per share in the first half of 2022, up 82.05 percent from N7.91 billion in the first half of 2021.

Owen Omogiafo said “across all our businesses, we are relentless in executing our transformation and growth agenda and are pleased with the results achieved thus far. We have invested strategically over the years in long-term projects and businesses that continue to yield productive returns and position Transcorp Group as an institution that delivers value to all stakeholders, and as one to transcend many generations.”

Transcorp Plc

According to her, Transcorp Group is fully geared up to sustain its growth trajectory for the rest of the year and beyond, notwithstanding the macro-economic issues. “We do not plan to rest on our laurels, and we will continue to surpass past performance” Owen Omogiafo assured its stakeholders.

Transnational Corporation of Nigeria Plc is a diversified conglomerate with business interests in the power generation, hospitality, and oil and gas sectors.

It owns and operates Transcorp Hilton Hotel in Abuja and Transcorp Hotel in Calabar. In the energy sector, the company is involved in upstream petroleum development and has interests in exploring refining, and marketing oil and gas.

Other business interests include generating electric power, maritime operations, and supplying products for the mining and construction sectors which include stone, sand, lime, and iron. Transnational Corporation of Nigeria Plc head office is in Lagos, Nigeria.

Transcorp's Financial Performance
 
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