Business

NIGERIA: Transcorp Fulfils Promise to Shareholders

Goddy Egene writes that with the recommendation of N1.93 billion dividend for    the 2013 financial year, directors of Transcorp have fulfilled their promise to shareholders
 
“Heirs Holdings will engage positively with the board and management of Transnational Corporation of Nigeria (Transcorp) Plc so the transformation we envisage for the company can be implemented and conducted in a spirit of cooperation for the greater good of all shareholders,” these the words of directors of Heirs Holdings when the company bought a strategic stake in Transcorp in 2011.
 
Less than three years after, the shareholders of Transcorp have started reaping the fruits of their investments, following the recommendation of a dividend of N1.93 billion for the year ended December 31, 2013.
 
Prior to the acquisition by Heirs Holding, Transcorp was on the verge of extinction. However, the acquisition, which led to the coming in of Tony Elumelu as chairman, marked the turning point in the fortunes of the company. Last week, the company, which has not paid dividend since its establishment, recommended a dividend of N1.9 billion to be shared among the investors at the rate of five kobo per share.
 
Corporate Profile
Transnational Corporation of Nigeria Plc (Transcorp) was incorporated on 16 November 2004 with the objective of creating a truly Nigerian conglomerate with the ability to compete successfully on a global scale. One of the founding goals included setting up a company capable of mobilising local and international capital in the development of world-class enterprises, under strong Nigerian management and leadership.
 
Today, Transcorp is a publicly quoted conglomerate with a diversified shareholders base of about 290,000 investors, the most prominent is Heirs Holdings Limited, a pan-African proprietary investment company.
 
The Transcorp portfolio comprises strategic investments in the hospitality, agriculture and energy sectors. The company’s notable businesses include: Transcorp Hilton Hotel, Abuja; Transcorp Hotels, Calabar; Teragro Commodities Limited, operator of Teragro Benfruit juice concentrate plant; Transcorp Ughelli Power Limited; and Transcorp Energy Limited, operator of OPL281.
 
The company’s vision is “To create sustainable value for our stakeholders in our chosen markets,” while its mission is “To build a conglomerate of successful businesses underpinned by excellence, execution and entrepreneurship.”
 
The board of directors of Transcorp is led by Elumelu, while Obinna Ufudo is chief executive officer. Other directors are:  O’tega Emerhor, Kayode Fashola, Alhaji Mohammed Nasir Umar, Dr. Stanley Lawson, Emmanuel Nnorom, and Chibundu Edozie.
 
2013 Financial Results
Transcorp is the first company in the conglomerate sub-sector to release its  2013 audited results, reporting a revenue of N18.82 billion in 2013, up from N13.22 billion posted in 2012. 
 
Gross profit rose from N9.76 billion to N14.373 billion, while operating profit settled at N10.2 billion compared to N3.765 billion in 2012. Profit before tax rose from N3.94 billion to N9 billion, while profit after profit after tax soared by 300 per cent from N1 billion to N4 billion.
 
Earnings per share (EPS) stood at 12 kobo, up from four kobo the previous year. Hence, the directors recommended a dividend of five kobo be paid out of the 12 kobo EPS. Total assets rose from N99.6 billion to N149.5 billion.
 
Directors’/Analysts’ Comments
Commenting on results, Ufudo said: “Our full year audited accounts reflect our commitment to our long term strategic plan, translating into strong and sustainable growth. We are excited about the achievements we recorded across our businesses within the past year.
 
“Our entry into the power sector has been a significant driver and we are already running ahead of our 2014 estimates. We expect significantly better results this year, as our diversification and growth strategies continue to gain momentum.”
 
Also speaking on the results, Elumelu said the directors are  particularly  pleased to be able to recommend a dividend to shareholders for the first time in the company’s history.
 
“This is the beginning of a very bright future for all our patient and loyal shareholders. With the tremendous progress we have already recorded in our power business – taking the Ughelli plant’s power output from 160mw when we took over on November 1, 2013 to 360mw within 3 months – 2014 promises to be a very rewarding year for the company and our 300,000 shareholders,” he said.
 
Renaissance Capital, a leading international financial advisory firm a leading investment services firm, similarly commented on the Transcorp’s  performance , saying “We are pleasantly surprised that Transcorp decided to pay dividend (for the first time) at all especially as they are entering into a growth period.”
 
Analysts at the firm added that they are optimistic that there would be dramatic changes in Transcorp’s   numbers going into 2014 as the transformation process continues.
 
Surpassing Projection
Going by the 2013 results, Transcorp actually surpassed its profit projection for the  year. Addressing the stock market community last year, Ufodu had said the company would end the year with a profit before tax of N7bilion. But the company recorded a PBT of N9 billion.
 
He had equally said the PBT would increase to N23 billion in 2014, N32 billion in 2015 and N51 billion in 2016. ATranscorp  is expected to  end 2017 and 2018 with PBT of  N102 billion and N140 billion respectively.
 
The company had recorded a PBT of N3.949 billion in 2012 and had posted N5.148 billion PBT as at nine months ended September 30, 2013.
 
Ufudo had said Transcorp  was in the second phase of its turnaround agenda.
According to him,  under the second phase, Transcorp acquired and successfully took over Ughelli Power Plant, commenced renovation and upgrade of the Transcorp Hilton Hotel Abuja, executed a management agreement for Transcorp Hilton, Ikoyi, Lagos and acquired a site for five-star hotel in Port Harcourt, Rivers State.
 
He added that in the agribusiness,   the company commenced production of orange, mango and pineapple concentrates while in the oil and gas sector,  it  commenced pre-drilling planning for Oil prospecting lease (OPL 281).
 
“We are delighted to be able to come to the Exchange having delivered on our promises. We believe the Transcorp transformation is only the beginning and we look forward to recording further success for our shareholders, stakeholders and staff. We also pay tribute to the critical role our strategic investor, Heirs Holdings, has played in catalysing change,” Ufudo said.
 
Ufudo assured stakeholders that Transcorp’s entry   into the power sector has been a significant driver.
 
“We are already running ahead of our 2014 estimates. We expect significantly better results this year, as our diversification and growth strategies continue to gain momentum,” he said.
 
Elumelu had last December said  Transcorp  is a vehicle for all Nigeria to gain access  to opportunities that the country offers.
 
“We promised our investors that they would reap the rewards of their patience and now we have built a company that is not only sharing the tangible fruits of our labour, it is also a vehicle for all Nigerians to gain access to the opportunities that our country offers,” he said.
 

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