The Transnational Corporation of Nigeria (Transcorp), a conglomerate, on Thursday evening presented its unaudited score-card for the half-year ended June 30, 2019, with less than desirable numbers that betrayed the sorry state of the nation’s economy at a time major decisions have remained on hold as investors await a hint of the government’s direction, just as purchasing power is at its ebb.
Major highlights of the result by Transcorp was the drop in all line items of the profit and loss accounts, beginning with a 30.18% revenue drop with the only increase recorded in net finance cost, which pushed after-tax profit down by 57.57%. The net profit could have been worse, however, but for the 59.21% reduction in tax expenses during the period. Earnings Per Share crashed from 11.6 kobo in the corresponding period of 2018, to just 4.29 kobo, following which the management must necessarily perform some magic to attain the 2018 full-year level if things continue at this pace.
Revenue for the period under review fell by N16.327bn or 30.18% to N37.762bn, from N54.089bn in 2018; in a similar manner, cost of sales dropped by N9.034bn or 30.6% to N20.482bn from N29.516bn. Cost of sales for the period was driven primarily by the N15.52bn in natural gas and fuel costs, which dropped from N24.768bn; followed from afar by food and beverages, N2.043bn, up from N1.873bn; and the N1.319bn depreciation, as against the previous N1.348bn; among others.
Gross profit, therefore, dropped by N7.292bn or 29.67% to N17.279bn, as against the N24.572bn reported in the 2018 half-year.
Administrative expenses for the period was also brought down by N1.084bn or 14.24% from N7.617bn to N6.532bn; other income, being management fees from subsidiaries, declined from N404.569m to N373.822m; while net other gains (foreign exchange) stood at N46.19m, compared to the N13.314m net loss reported in the prior half-year. These left operating profits at N11.167bn, having dropped by N6.179bn or 35.62% from N17.346bn to N11.167bn.
Finance cost (interest expense on loans rose to N7.381bn from N5.013bn; while interest on loans yielded N922.215m from N472.587m; resulting in a net finance cost of N6.459bn, up N1.918bn from N4.54bn in the previous half-year. Foreign exchange gain on financial activities stood at N341.816m from a loss of N816.792m.
Profit before tax fell to N5.05bn, after dropping by N6.894bn or 57.71% from N11.944bn in the first half of 2018, to N5.05bn. Tax expense stood at N435.932m from N1.068bn; which left net profit at N4.614bn, a drop by N6.261bn or 57.57%, from N10.875bn.
A breakdown of the revenue of the numbers showed that the group’s power business remains the cash cow, generating N28.459bn of total revenue for the period, down from N46.081bn in 2018. It earned N77.99m in finance income, down from the previous N41.007m; and spent N3.16bn on finance cost, as against N4.25bn, resulting in N5.559bn PBT for the period, compared to N11.862bn in 2018.
The hospitality segment followed with N9.302bn in earnings, an improvement over the N8.007bn in the prior half-year; N33,000 finance income, up from just N5.976m. Finance cost stood at N1.979bn, from nil previously; while PBT dropped significantly to N816.921m from N2.024bn. Tax expense fell to N266.74m from N640.933m. The oil & gas and agro-allied segments recorded no activities, despite housing N6.037bn and N270.145m of the group’s assets; as well as N6.482bn and N1.758bn liabilities.
A further breakdown of the revenue for the period showed that the group earned N17.84bn from its energy sent out, dropping from N29.79bn; capacity charge fell from N16.243bn in 2018 June, to N10.563bn. Room rentals from the hotel segment earned N5.879bn, up from N5.039bn; food and beverages followed with N2.589bn, compared to N2.295bn; shop rentals fetched N394.523m from N295.938m; service charge followed with N73.566m, a drop from N55.713m; other operating revenue amounted to N365.907m from N230.865m; just as ancillary services contributed N54.6m from N47.4m.