Transcorp Half-Year Net Profit Soars By 161.2%, Despite Growth In Opex, Tax

In what may be whetting investors’ appetite ahead of its December year end, Transnational Corporation of Nigeria (Transcorp), on Monday released its half-year unaudited financials showing a robust growth in revenue and even juicier increase in net profit, despite the growth in cost of sales, administrative expenses and finance cost, even as tax expenses rose three-fold.
Revenue rose N19.916bn or 58.27% from N34.173bn in 2017 half year to N54.089bn, while cost of sales rose by N10.216bn or 52.93% to N29.516bn, compared with the previous N19.3bn; resulting in gross profit of N24.572bn, as against N14.873bn in prior half-year.
Administrative expenses rose to N7.617bn from N5.663bn; other income increased to N404.569m from N305.965m; while other loss- net stood at N13.314m from a gain of N4.66bn. This left operating profit at N17.346bn, an increase of N7.826bn or 82.2%, over previous half-year’s N9.52bn.
Finance income crawled from N436.643m to N472.587m, just as the N311.975m or 6.63% containment in finance cost from N4.701bn to N5.013bn; and the N861.792m in foreign exchange loss on financing activities for the period, from N721.707m in prior Q2. Net finance cost therefore stood at N5.402bn, up from N4.988bn, or N414.296m, or 8.3%.

Profit before tax stood at N11.944bn, an increase by about N7.411bn or 163.52% from N4.532bn; while the N700.214m or 190% increase in tax expenses from N368.526m in the corresponding period of 2017, to N1.068bn, left net profit for the period at N10.875bn. This represents a N6.711bn growth from N4.163bn, besides translating to Earnings Per Share of 11.6 kobo, compared to 3.87 kobo in the 2017Q2.

A breakdown of the profit and loss account into segments, shows that the power business remained the group’s honey pot, which was also responsible for the biggest revenue growth over the period.
The power segment accounted for N46.081bn of revenue, up by N18.107bn or 64.72% from N27.974bn in 2017; followed by hospitality with N8.007bn, up from N6.199bn; while corporate centre earned N4.278bn. Also, the power segment contributed a total of N11.862bn to PBT, ahead of the N2.4bn from the corporate centre and N2.024bn from hospitality segment; compared to N4.882bn; N1.1067bn and N1.004bn respectively.

The hospitality business also accounted for N640.933m tax, up from N205.546m; followed by N427.807m by the corporate centre, as against N162.98m by the hospitality segment.
A further breakdown of the revenue for the period showed that energy sent out yielded N29.79bn, up from N18.025bn; ahead of the N16.243bn from capacity charge, compared to N9.859bn. Also, income from room occupancy increased to N5.039bn from N3.817bn; followed by N2.295bn from shop rental, as against N1.723bn, among others.
Natural gas and fuel costs was equally the biggest contributor to cost of sales, as against N15.189bn; while staff costs accounted for N1.873bn from N1.108bn; while depreciation rose marginally from N1.14bn to N1.348bn.

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