TRANSNATIONAL Corporation of Nigeria (Transcorp) Plc is considering a major restructuring of its businesses after the conglomerate saw steep declines in incomes and profitability.
The Board of Directors of the conglomerate has indicated that it would be seeking the approval of their shareholders to undertake restructuring of the conglomerate.
At the annual general meeting of the conglomerate later this month, shareholders are expected to consider and vote on a resolution authorising the directors to “carry out restructuring, reorganisation, or reconstruction of the company or a combination of any of such actions or other business arrangements as they deem appropriate”.
The board is also seeking to be empowered to consider various options, including investing in, acquiring or divesting from any business or entity by way of a scheme or otherwise.
Shareholders are expected to authorise the board to take steps and do all acts that they deem necessary in furtherance of restructuring upon such terms and conditions that the directors may deem appropriate.
Transcorp cut its dividend payout by half after net profit dropped by 82 per cent in 2019. Key extracts of the audited report and accounts of Transcorp for the year ended December 31, 2019 showed declines in all key performance indicators. Turnover dropped from N104.16 billion in 2018 to N76.35 billion in 2019. Profit before tax slumped to N7.9 billion in 2019 as against N22.4 billion in 2018. Profit after tax also dropped from N20.63 billion in 2018 to N3.70 billion in 2019. Earnings per share consequently declined from 23 kobo in 2018 to 4.0 kobo in 2019.
The Board of Directors has recommended payment of a dividend per share of one kobo for the 2019 business year compared with a dividend per share of two kobo paid for the 2018 business year.
The group’s performance was impacted by the slowdown in its hospitality business. Transcorp Hotels Plc, a publicly quoted subsidiary of the conglomerate, recorded net profit of N614 million in 2019 as against N3.71 billion in 2018. Profit before tax for the year ended December 31, 2019 had dropped from N5.04 billion in 2018 to N1.12 billion in 2019. Turnover however rose from N17.43 billion in 2018 to N20.41 billion in 2019. Transcorp Hotel declared a dividend per share of 7.0 kobo for the 2019 business year.
The steep decline in 2019 represented a surprise reversal for the conglomerate, which had shown high growth rates in the previous year. The audited report and accounts for the year ended December 31, 2018 had shown that Transcorp’s turnover rose by 30 per cent while profits before and after tax grew by 82 per cent and 94 per cent.
Group turnover posted a record growth to N104.2 billion in 2018 compared with N80.28 billion in 2017. Gross profit rose from N36.42 billion in 2017 to N48.25 billion in 2018. Profit before tax increased to N22.4 billion as against N12.3 billion while profit after tax jumped from N10.61 billion in 2017 to N20.63 billion in 2018.
Chairman, Transnational Corporation of Nigeria (Transcorp) Plc, Mr. Tony Elumelu, said the conglomerate’s power subsidiary, Transcorp Power Limited, would be investing as much as $2.5 billion in power projects to help boost power supply in Nigeria.
He said the company has so far injected about $1 billion in projects with a combined capacity of 700 megawatts while the company is also bidding for Afam Electricity Generation Company, which operates a natural-gas fired power generation plant in southern Rivers State.
Transcorp, one of the largest publicly quoted conglomerates, has businesses in the power, hospitality, agribusiness and oil and gas sectors. Its notable businesses include Transcorp Hilton Abuja, Transcorp Hotels Calabar, Transcorp Power and Transcorp Energy.
Source: The Nation