Last year (precisely on June 21, 2013), when shareholders at the annual general meeting (AGM) of Transnational Corporation of Nigeria plc (Transcorp) were assured of getting first dividend from the company at the end of its 2013 financial year, some ‘Thomas’ in their midst doubted the possibility.
When Transcorp released its group’s audited and consolidated financial statements for the year ended December 31, 2013, it became clearer to all shareholders of the company that it lives up to the promise.
The company’s recent dividend announcement spurred widespread excitement among many stakeholders, because it is the first dividend payment in its history, since it was listed on the Nigerian Stock Exchange (NSE) on November 23, 2006.
The company’s board of directors recommended a dividend payout amounting to N1.9 billion, which represents 5 kobo per share. Analysts say the announcement signals the beginning of an era where dividend payments will become regular and investors begin to reap the benefits of their investments.
The scorecard
The group announced a strong increase in turnover of N18.8 billion, representing a 42% rise over the N13.2 billion recorded in the corresponding period in 2012. Gross profit rose to N14.373 billion in 2103 from N9.768 billion in 2012.
Profits before tax rose by 129 percent from N3.9 billion in 2012 to N9 billion in 2013. Profit for the year rose to N6.957 billion in 2013 from N2.527 billion in 2012. The group’s basic earnings per share (kobo) rose to 12.17 in 2013 from 4.04 in 2012.
Growth drivers
In 2013, Transcorp took significant steps to strengthen its position in the market with new investments in power and expansion in its hospitality and agribusiness. Also in 2013, Heirs Holdings became a strategic shareholder in Transcorp under the chairmanship of Tony Elumelu. Since then, Transcorp has witnessed a complete turnaround and transformation.
Transcorp emerged the preferred bidder for the $300 million for 100 percent equity in Ughelli Power Plc, operator of Ughelli Power Plant, which it took over on November 1, 2013. Currently, the plant generates 360 megawatt (mw) of electricity, up from 160mw on November 1, when Transcorp took ownership of the plant.
With the additional 115mw, as well as other rehabilitation works planned at the plant, output at the Ughelli plant is set to increase to 700mw by December 2014. Transcorp has substantial investments in agriculture, hospitality and the oil and gas sectors, which are well on track and providing superior returns. The premier Transcorp Hilton Hotel Abuja continues to outperform in the local and African hotel industry. The planned expansion in hospitality following the recent management agreement executed in partnership with Hilton Worldwide to open additional hotels in Lagos and Port Harcourt is bound to consolidate the company’s position as the pacesetter in that space.
Stakeholders view
“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. We are optimistic that there would be dramatic change in their numbers going into 2014, as the transformation process continues. We find the numbers very impressive with 42 percent year-on-year (YoY) growth in turnover versus corresponding period in 2012” said Akinbamidele Akintola, vice president, Africa Equity Sales, Renaissance Capital.
“The demand for Transcorp shares is very strong,” said a Lagos-based stockbroker. Transcorp’s share price rose from N1.05 to N4.35 – a record increase of 314.29 percent between January and December 2013. “Stock is currently down to N3.70 on market expectation of a higher dividend which we think is unwarranted,” RenCap analyst said.
A shareholder of the company said, “I believe we will see more and better from Transcorp. This is a developing success story that will excite any strategic investor. From the look of things, Transcorp has regained its strong footing and it is here to stay. We as shareholders of the company are pleased with what is coming through.”
Board expresses optimism in delivering further growth targets
Obinna Ufudo, president/CEO, Transcorp, said: “Strong balance sheet, substantial liquidity, diversified earnings and robust cash flow and the returns to shareholders is consistent with our priorities and is an important signal of our confidence in our plans for a continuing profitable future.
“We expect significantly better results this year as our diversification and growth strategies take firmer roots.”
Tony Elumelu, chairman, Transcorp, said: “We 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 three months – 2014 promises to be a very rewarding year for the company and our 300,000 shareholders.”
Transcorp… tentacles across many sectors
Transnational Corporation of Nigeria 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, agribusiness and energy sectors. Its notable businesses include Transcorp Hilton Hotel, Abuja; Transcorp Hotels, Calabar; Teragro Commodities Limited, operator of Teragro Benfruit plant – Nigeria’s first-of-its-kind juice concentrate plant; Transcorp Ughelli Power Limited, Nigeria’s largest power generator, and Transcorp Energy Limited, operator of OPL 281.
Iheanyi Nwachukwu
