Transcorp Plc posts N12bn Profit After Tax for H1 2022

Transnational Corporation Plc (NGX: TRANSCORP) has posted an impressive half year report, with double digit year-on-year growth in both revenue and profit after tax.

It’s unaudited condensed consolidated financial statements for the period ended 30 June 2022, released on the Nigerian Exchange Limited and seen by Investogist, shows that the company boosted it’s revenue by 18.08% to N62.88bn while it’s profit for the period jumped 84.71% to N12.01bn.

It’s Trade and other receivables continued the increase, and will definitely be a source of worry to but the management and investors alike. A significant portion of the trade receivable according to the report relates to receivable from the Transmission Company of Nigeria Plc and Nigerian Bulk Electricity Trading Plc which are the regulatory bodies for the power business.

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Trade receivables is the amount owed to a business by its customers following the sale of goods or services on credit. Also known as accounts receivable, trade receivables are classified as current assets on the balance sheet.

Analysis of the Financial Statements

Income Statement:

Revenue: N62.88bn, compared to N53.26bn earned in H1 2021, an 18.08% YoY growth. All the reported revenue was earned in Nigeria. Energy sent out and Capacity charge accounted for more than 50% of the revenue with N25.74bn (H1 2021: N29.70bn) and N17.09bn (H1 2021: N14.76bn) respectively. It earned N9.61bn (H1 2021: N5.59bn) from Rooms and N4.63bn (H1 2021: N2.32bn) from Food and beverages.
Gross Profit: N31.10bn, a 32.33% increase from the N23.50bn cost incurred in H1 2021. Its gross profit margin improved from 44% to 49%, as it was able to keep its cost of sales from increasing at a percentage relative to the increase in its revenue. The cost of sales went up by only 6.82% from N29.75bn to N31.78bn.
Administrative Expenses: N10.89bn, a 45.24% YoY increase from the N7.49bn it spent in H1 2021. The increase in administrative expenses was seen in the Insurance cost which went up from N782.56mn to N1.11bn, and other operating expenses which went up from N943.51mn to N1.72bn.
Finance Income & Cost: TRANSCORP’s net Finance cost stood at N6.07bn (H1 2021: N7.97bn), as it paid N6.59bn interest on loans in the period in review.
Profit Before Tax: N13.36 Billion, compared to N7.05 Billion in H1 2021 (89.50% YoY Growth);
Profit After Tax: N12.01 Billion, compared to N6.50 Billion in H1 2021 (84.71% YoY Growth).
Earnings Per Share: 14.40kobo (7.91kobo in H1 2021).

Balance Sheet:

Total Assets: N417.18 Billion, compared to N416.00 Billion as at 31st December 2021 (0.29% Growth). Of these assets, N277.27bn is on property, plant and equipment under non-current assets, while N5.32bn is current asset being cash and ban balances. The company’s inventory stood at N5.89 billion, while its trade and other receivables went up from N67.98bn to N76.84bn.
Total Liabilities: N259.69 Billion, compared to N269.70 Billion as at 31st December 2021 (3.71% Decrease). TRANSCORP’s long term borrowing went up from N50.69bn to N73.91bn, while its short term borrowing dropped from N55.38bn to N29.15bn. The trade and other payables decreased from N135.07bn as at 31 Dec. 2021 to N129.66bn.
Shareholders’ Fund: stood at N157.49 Billion, an 7.65% increase from N146.29 Billion as at 31st December 2021.
Retained earnings: stood at N52.64 billion, a 110.59% increase from N47.60 billion as at 31st December 2021.

Cashflow:

Operating activities: N5.19 billion was generated from operating activities, against N23.41 billion generated in H1 2021.
Investing activities: N3.54 billion was used for investing activities, against N7.41 billion used in H1 2021.
Financing activities: N10.42 billion was used for financing activities against N2.76 billion used in H1 2021.
Cash and cash equivalents at the end of the period was N5.32 billion (H1 2021: N16.71 billion).

There was no corporate action announcement following the release of the financial statements.

About the Company

Transnational Corporation Plc is a public company incorporated under the Companies and Allied Matters Act (CAMA) on 16 November 2004, domiciled in Nigeria and whose shares are publicly traded. The registered office is located at 38 Glover Road, Ikoyi, Lagos, Nigeria.

The Major Shareholder is UBA Nominees Limited with 3,762,647,000 shares being 9.26% shareholding according to information on the the company’s 2021 financial statements.

The Group is principally engaged in the power, agro-allied, oil & gas and hospitality industry

The Company is in a Technical and Management services agreement with Transcorp Hotels Plc, Transcorp Power Limited, and Trans Afam Power Limited. As stipulated in the signed agreement, the Company earns management fee of higher of N350 million or 5% of profit before tax of these Companies.

TRANSCORP has 40.64 billion outstanding ordinary shares and a market capitalization of N41.05bn, with its share price at N1.01.

We have a BUY rating on this stock, with a long term perspective.