By Nkiruka Nnorom

In a bid to enhance returns for its shareholders in keeping with its mission of creating sustainable value for its stakeholders, Transnational Corporation of Nigeria, Transcorp, Plc, is embarking on various expansion initiatives. Presently, the company has made major acquisitions in power and agribusiness, coupled with new initiatives in its hotel and tourism business and the on-going exploratory activities from its existing oil block . Investment analysts are of the opinion that the various expansion projects will translate to improved financial fortune in the medium term.

Various expansion programmes

The Group has made several important decisions which will have significant impact on its fortune going forward. In the hospitality arm, Transcorp Hotels Plc successfully closed Tranches 1 and 2 of its N30 billion bond issuance programme, which is intended to fund the upgrade of Transcorp Hilton Abuja and the development of a multipurpose banquet center. Other major on-going projects include the development of a 320-room ?ve-star Transcorp Hilton in Ikoyi Lagos. Piling is on-going and is expected to be completed by May 2016.

In the same vein,Transcorp Hilton Port Harcourt has gotten the necessary planning approvals from the Rivers State Government to develop a 250-room Hilton Hotels & Resorts-branded property. In the power sectors,  Transcorp Ughelli Power Limited (TUPL) had acquired Ughelli Power Plc, one of the six successor power generation companies unbundled from Power Holding Company of Nigeria (PHCN) during the privatisation exercise by the Federal Government in 2013. TUPL plans to to add additional turbines for power generation. There is also plans to increase the output of the plant from 160MW to 650 megawatts in 2015 and is on track to deliver 850 megawatts of available capacity in 2016.

Transcorp OPL 281 Nigeria Limited has signed a Production Sharing Contract (PSC) with the Nigerian National Petroleum Corporation (NNPC) for the development of OPL 281.  According to Tola Odukoya, Vice President, Dunn Loren Merrifield Asset Management & Research,the current investments show that the company is building capacity which reflect a growth profile.

Profit & Loss account

The expansion projects and investments made in four arms of the business are, however, taking a toll on the financial position, but investment analysts posit that since the money borrowed are being used for productive purposes, there is no course for worries.

During the year ended December 31, 2015, Transcorp recorded N40.7 billion in gross revenue from N41.3 billion, representing 1.4 per cent decline. The decline in revenue was occasioned by non-implementation of the Multi-Year Tariff Order (MYTO) 2015 in the Power sector and impacts of forex devaluation on the cost of gas and debt service. Profit before tax, PBT, declined to N3.3 billion compared to N7.7 billion achieved in year ended December 2014, while the profit after tax, PAT, stood at N2.03 billion as against N3.30 billion in 2014, representing 38.5 per cent. The finance cost for the period was up ,, per cent to N12.89 billion from N7.8 billion in 2014.

Balance Sheet position

The Group’s total non-current assets, stood at over N152 billion in 2015 as against N134 billion in 2014, an increase of 30 per cent due to property, plants and equipment increase of 17 per cent. Current assets grew to N50.8 billion from N36 billion, following increase in trade and trade receivables, especially increase in cash and cash equivalents.

President’s assurance

Speaking in a parley with newsmen recently, the president assured of bright prospect for the Group, saying: “In the next five years, Transcorp Group will completely be a very big company. The power business would have gotten to a generation level; we are targeting to generate about 25 per cent of total power output in the country. It is our target; we are working on it. So in the five years time, I think we would have even achieved that much earlier than that. So that gives you a massive company, a massive resource, massive income.