Transcorp Remains Resilient Despite Challenges
Kayode Tokede
Transnational Corporation Plc (Transcorp) listed on the Nigerian Exchange Limited (NGX) has continued to show impressive results amid prevailing economic challenges, including foreign exchange challenges, hike in inflation rate, among others.
The Company maintained controlling interests in Trans Afam Power Limited, Transcorp Hotels Plc, Transcorp Hotels Calabar Limited, Transcorp Energy Limited, Aura by Transcorp Hotels, Transcorp Power Limited, Transcorp Properties Limited, Transcorp OPL 281 Limited, Transcorp Hotels Ikoyi Limited, Transcorp Hotels Port Harcourt Limited and Teragro Commodities Limited.
The publicly quoted conglomerate declared N26.16billion profit before tax in nine months of 2023, representing an increase of 25.4 per cent from N20.87billion reported in nine months of 2022, while profit after tax hit N22.74 billion in nine months of 2023, an increase of 19.4 per cent from N19.04 billio in nine months of 2022.
The power sector recorded N23.77 billion profit before tax, contributing about 90.8 per cent to overall profit before tax in period under review.
The power subsidiaries of Transcorp that include Transcorp Power Limited (TPL) and Transafam Power are well positioned to exploit available opportunities for growth.
Specifically, TPL holds a significant position as one of Nigeria’s foremost electricity generation companies, and it proudly possesses ownership of the esteemed Ughelli Power Plant.
The Group has been investing in the power sector for 10 years, with its first investment in the Ughelli Power Plant through TPL.
certificate of discharge
TPL is the first company to receive the certificate of discharge from post-privatisation monitoring, having surpassed all requirements within the stipulated period.
TPL is a single cycle 972MW installed capacity power generating plant located in Ughelli, Delta State. It is the largest gas-fired power generating station in the country.
Its mission is to improve lives, and currently leading the way in energy generation for millions of people in Nigeria and Africa.
In November 2023 Year-till-Date (YTD), TPL has sent out 2,857,950.40MWh (357MW on average daily) which represents 8.65 per cent of the energy sent to the National Grid.
TPL had a stellar performance in November 2023 sending out an average of 438MW and was ranked second only behind Egbin. For the year 2023 YTD TPL is ranked 4th. TPL currently has a generation capacity of 500MW, and can generate enough energy to power 1.6 million homes daily.
Since the privatization of the power sector in November 2013, TPL has generated over 29,574,447MWh (29TWh) of energy to the national grid powering countless homes and industries in Nigeria and West Africa. TPL currently has a generation capacity of 500MW and currently generates 426MW on average daily in December.
The group, however, recorded a commendable growth across all its major indices signposted by an impressive revenue of N128 billion in nine months of 2023, a growth of 33 per cent when compared to N96.2 billion in nine months of 2022, while operating income increased to N42.7 billion in nine months of 2023, an increase of grew by 36 per cent from N31.5 billion reported in nine months of 2022.
The breakdown revealed that its Hospitality subsidiary reported N29.85 billion in revenue, an increase of 31.78 per cent from N22.65billion reported in nine months of 2022.
The hospitality business is made up of its direct subsidiary Transcorp Hotels Plc. (THP) and indirect subsidiaries, Transcorp Hotels Calabar Limited (THC), Transcorp Hotels Ikoyi Limited, Transcorp Hotels Port Harcourt Limited and Aura by Transcorp Hotels.
Power subsidiary generated N98.18billion revenue in nine months of 2023, an increase of 33.4 per cent from N73.59 billion reported in nine months of 2022, while revenue from Corporate centre of Transcorp generated N10.01 billion revenue in nine months of 2023, a growth of 31 per cent from N7.64 billion in nine months of 2022.
The 33.4 per cent increase in Power subsidiary of Transcorp is coming on the backdrop of challenges of Gas and infrastructure in the sector, showcasing the group’s innovative and resilient business strategy.
Cost of sales
Cost of sales increased to N63.77b illion in nine months of 2023, an increase of 29 per cent from N49.55 billion in nine months of 2022, to bring about N64.26 billion gross profit in nine months of 2023 from N46.7 billion reported in nine months of 2022.
The group’s CoS/Revenue dropped to 49.81 per cent in nine months of 2023 from 51.48 per cent in nine months of 2022.
Natural gas and fuel costs contributed N44.52billion to the group’s cost of sales in nine months of 2023 from N35.59billion reported in nine months of 2022.
The group’s administrative and general expenses stood at N23.25billion in nine months of 2023, representing 45.5 per cent increase from N15.98 billion in nine months of 2022, coming on the backdrop of double-digit inflation rate and weaken of Naira at the foreign exchange market.
From the profit & loss figures, about N6 billion “other operating expenses” in nine months of 2023 from N3.29billion in nine months of 2022 and management and incentive fees of about N3.7 billion in nine months of 2023 from N2.06 billion in nine months of 2023 were the key drivers of the group’s administrative expenses.
Transcorp’s operating profit closed the period under review at N42.74 billion, an increase of 35.6 per cent from N31.52 billion reported in nine months of 2022.
Finance cost hits N19.43 billio in nine months of 2023, a growth of 69.2 per cent from N11.49 billion in nine months of 2022.
Transcorp’s foreign exchange loss on borrowings stood at N6.1billion in nine months of 2023 from N1.05 billion in nine months of 2022 and N13.34 billion interest expense on loans in nine months off 2023, an increase of 28 per cent from N10.44billion in nine months of 2022, responsible for 69.2 per cent growth in finance cost.
Finance income, however, closed nine months of 2023 at N2.86 billion from N828.97 million in nine months of 2022, representing an increase of 245 per cent.
In addition, Basic Earning Per Share increased to 36.41kobo in nine months of 2023 from 21.93 kobo in nine months of 2022.
Divestment boosts balance sheets
The groups’ investment in Power, other critical sectors boost the group’s total assets that gained eight per cent from N442.7 billion in 2022 full year to N479.8 billion as of September 30, 2023.
As Non-current assets stood at N352.76 billion as of September 30, 2023 from N340.83 billion in 2022 FY, current assets hits N127.06 billion as of September 30, 2023 from N101.9 billion in 2022FY.
Transcorp’s total liabilities gained 4.16 per cent to N299.91billion as of September 30, 2023 from N287.93billion in 2022.
Consequently, total liabilities contributed 62.5per cent to total assets in nine months of 2023 from 65.04 per cent in 2022.
Current liabilities was at N204.97billion as of September 30, 2023 from N200.15 billion in 2022, as non-current liabilities stood at N94.94 billion as of September 30, 2023 from N87.78 billion in 2022FY.
In addition, Transcorp closed nine months with N179.92billion, representing an increase of 16.2 per cent from N154.77 billion reported in nine months of 2022.
Conclusion
The group’s stock has appreciated by 503.54per cent Year-till-Date to N6.82 per share as of December 8, 2023 from N1.13 per share it opened for trading in 2023.
The President/Group Chief Executive Officer, Transcorp, Dr. (Mrs) Owen Omogiafo, had expressed enthusiasm and confidence in the Group’s performance trajectory.
According to her, “Our Group, with our diverse investment in power, hospitality, and energy sectors has reported remarkable results, demonstrating resilience and agility in the third quarter of 2023 amidst the prevailing economic headwinds, including forex challenges, Naira devaluation, gas challenges, and rising inflation.”
“We remain agile, constantly exploring dynamic ways to maintain value for all our stakeholders, and focused on driving sustainable growth, improving lives, and transforming Africa.” asserted Omogiafo.
