Transnational Corporation of Nigeria Plc (NSE: TRANSCORP) on Friday released its Financial Statements for the period ended 31 March, 2021. The conglomerate posted an impressive 58.75% growth in Revenue, a bumper 2,426% jump in Profit for the period, while at the same time keeping its borrowings low and maintaining a healthy cash flow.
An analysis of the company’s statement of profit and loss indicate that the investments the company made in recent years, like the acquisition of the 966MW Afam Power Plc are starting to yield positive results.
Transcorp had acquired the Ughelli Power Plant in 2013, and followed that up with the acquisition of Afam Power plant in 2020. Transcorp maintains controlling interests in Transcorp Power Limited and TransAfam Power Limited.
Transcorp Power Limited operate the 927MW-Capacity power plant in Ughelli Delta State, while TransAfam Power Limited operate the 966MW combined capacity power plants located in Okoloma Afam, Rivers State.
Transcorp recorded a total revenue of N24.435 billion in the first quarter period ending 31 March, 2021, with 83.75% of this revenue coming from its power subsidiaries. The revenue contribution for the various segments of the conglomerate are;
- Power: N20.465 billion
- Hospitality: N3.96 billion
- Corporate center: N0.77 billion
- Oil & Gas: N0.00
- Agro-allied: N0.00
- Intersegment elimination: – N0.77 billion
A further analysis of the revenue shows that N13.53 billion was earned from Energy sent out, almost 100% higher than the N6.90 billion earned in Q1 2020.
The impact of the continuing Covid-19 pandemic did not cause as much havoc as expected from its hospitality subsidiaries, as the company earned N2.55 billion from rooms rented, slightly lower than the N2.63 billion earned in Q1 2020, just as Covid-19 became a global pandemic.
Revenue from Food and Beverages was almost the same as well, as the company booked N1.024 billion in Q1 2021, slightly lower than the N1.11 billion booked in Q1 2020.
As the power plants sent out more energy, so did they burn more fuel and gas to produce the electricity being sent out. This ultimately reflected in a 74.13% increase in Cost of Sales, from N8.045 billion spent in Q1 2020 to N14.01 billion in Q1 2021.
Analysis show that Transcorp spent N11.46 billion on Natural gas and fuel in Q1 2021, against the N5.48 billion it spent for the same item in the same period in the preceding year.
It’s administrative expenses increased marginally by 9.43%, from N3.34 billion in Q1 2020 to N3.65 billion in Q1 2021.
The increase can be attributed to slight upticks in staff and management expenses; Staff costs went from N492.63 million to N642.00 million, Management and incentive fees went from N333.49 million to N544.06 million, while Director’s remuneration went from N101.14 million to N245.46 million.
The company posted an impressive 67.31% growth in Operating profit, from N4.134 billion to N6.91 billion, as an near 100% increase in other income (N244.68 million from N124.92 million) almost offsetted the increase in Administrative expenses.
By reducing its finance cost by 10.85% (from N4.14 billion in Q1 2020 to N3.69 billion in Q1 2021), the company was able to post a mouth watering 1,719% increase in its profit before tax; N2.49 billion in Q1 2021 versus N137.26 million in Q1 2020).
Its tax bill increase by 708% against the preceding year, as it paid N456.35 million in taxes in Q1 2021, while it paid only N56.47 million in the same period in 2020.
Of the N456.35 billion it paid as taxes, N363.97 million was for education tax (it paid no education tax in Q1 2020), while N92.38 million was Income Tax (Q1 2020: N56.47 million).
Education Tax is a tax chargeable on all companies registered in Nigeria as contribution to the Education Tax Fund. All registered companies in Nigeria are required to pay a percentage of their assessable profit into an Education Tax Fund. The tax is charged at 2%.
The companies profit after tax for the period settled at N2.04 billion, an astonushing 2,426% increase from N80.79 million it reported in Q1 2020.
It’s total comprehensive income for the period stood at N1.26 billion, up from minus N956.73 million in Q1 2020. The Basic Earnings Per Share improved to 1.79 kobo.
Its Total Assets was valued at N347.161 billion, just 2.65% from the figures as at 31 December 2020. The liabilities increased by 3.44%, while the Shareholders Equity increased by 1.11%.
As at 31st March, 2021, the company has a Cash and Cash Equivalent totaling N4.32 billion, up from the N3.76 billion it had as at 31st December, 2020.
About TRANSCORP
Transnational Corporation of Nigeria Plc, (“the Company” or “Transcorp”), was incorporated on 16 November, 2004 as a private limited liability Company domiciled in Nigeria in accordance with the requirements of the Companies and Allied Matters Act.
Following a successful initial public offer (IPO), the Company was in December 2006, listed on the Nigerian Stock Exchange. The shares of the Company have continued to be traded on the floor of the Exchange.
The Company is domiciled in Nigeria and the address of its registered office is 38 Glover Road, Ikoyi, Lagos, Nigeria.
Transnational Corporation of Nigeria Plc (Transcorp) is a publicly quoted conglomerate with a diversified shareholder base of over 300,000 investors, the most prominent of which is Heirs Holdings Limited, a pan-African proprietary investment company.
The Transcorp portfolio comprises strategic investments in the hospitality and energy sectors. Our notable businesses include Transcorp Hilton Abuja, Transcorp Hotels Calabar, Transcorp Power Limited and Transcorp Energy Limited, operator of OPL 281.
Transnational Corporation of Nigeria Plc has a market capitalization of N32.518 billion and 40.64 billion outstanding shares.
At the close of trading on Friday, TRANSCORP share price closed flat at N0.80 per share.
In three months, the equity price has dropped by 21.57%. YTD it is up by 8.11% while in 2 years and 5 years it has lost 28.57% and 19.19% of its value respectively.
Analysts at Investogist have a bullish outlook on the stock of this conglomerate, as we expect its performance to continue improving, and with it’s Oil & Gas asset coming online soon, the stock is a must BUY for long term investors.
Nnamdi Maduakor is a Writer, Investor and Entrepreneur
