Transcorp Plc Completes Successful Share Reconstruction

In a move aimed at enhancing long-term shareholder value, Transnational Corporation (Transcorp) Plc, one of Nigeria’s foremost conglomerates, has recently completed a successful share reconstruction.

This strategic initiative aligns with the company’s growth trajectory and its goal of maximising value for its investors. The share reconstruction involved consolidating the company’s total issued shares at a ratio of 1:4, reducing the number of fully paid shares from 40.6 billion to 10.2 billion.

While the number of shares has decreased, the value of shareholder investments remains unaffected. This restructuring means that each shareholder will hold fewer shares, but the total investment value remains unchanged, with no dilutive impact on ownership. Specifically, the share capital reduction resulted in the cancellation of three out of every four shares held, lowering the issued share capital to N5.08 billion, with 10,161,997,574 ordinary shares of N0.50 each in circulation.

Strategic Rationale and Investor Benefits

The primary objective behind the share reconstruction is to optimise Transcorp’s capital structure and potentially boost its stock value. In consolidating shares, the company aims to improve key financial ratios, enhance per-share metrics, and simplify its capital structure. For shareholders, the reconstruction holds the potential to increase the value of each share, making it more attractive for investors.

Upon completion of the share consolidation on October 28, 2024, Transcorp’s stock price surged to N48.60 per share from its previous price of N11.00 per share, reflecting the positive impact of the restructuring. The decision was based on several factors, including the company’s market capitalisation, the price of its shares, and considerations regarding the sustainability of the post-reconstruction share price. Importantly, the proportional nature of the share consolidation ensures that shareholders’ ownership stakes are unaffected, preserving their percentage of ownership while enhancing per-share performance metrics.

Transcorp’s Group President/CEO, Dr. Owen Omogiafo, commented on the initiative, describing the share reconstruction as part of the company’s strategic growth plan, aimed at maximising shareholder value and improving its capital structure. According to Dr. Omogiafo, the company remains committed to driving growth and delivering value to its shareholders through continuous strategic actions aligned with its long-term business objectives.

Financial Performance Highlights

The announcement of the share reconstruction follows Transcorp’s impressive financial performance for the third quarter (Q3) ended September 30, 2024, further solidifying its growth strategy. The company recorded a remarkable 133 percent increase in revenue, reaching N298 billion compared to N128 billion in Q3 2023. Profit before tax (PBT) surged by 303 percent, reaching N105.5 billion, a substantial increase from N26.2 billion in the same period of the previous year.

This exceptional financial performance was driven by growth across Transcorp’s subsidiaries, including Transcorp Power and Transcorp Hotels. Transcorp Power, one of Nigeria’s leading power producers, reported a 198 percent increase in PBT to N81.1 billion, up from N27.3 billion in Q3 2023. The subsidiary’s revenue for Q3 2024 grew by 153 percent to N223.6 billion, driven by higher energy production and strategic improvements in power infrastructure.

Similarly, Transcorp Hotels demonstrated impressive growth, with a 192 percent increase in PBT to N16.44 billion, up from N5.64 billion in Q3 2023. The hospitality subsidiary’s revenue grew by 67 percent, reaching N48.49 billion, driven by strong performance across its luxury hotels in Abuja and Calabar, which saw significant demand from international business and tourism sectors.

Transcorp’s asset base grew by 29 percent, from N530 billion in December 2023 to N684 billion by Q3 2024, reflecting its strong market position and diversified investment portfolio. Shareholders’ equity also increased by 34 percent, from N187 billion to N251 billion in the same period, underpinned by the company’s strategic focus on long-term growth and value creation.

Long-term Strategic Vision

Transcorp’s remarkable financial performance and successful share reconstruction are the culmination of a carefully executed growth strategy focused on innovation, operational efficiency, and sectoral diversification. Dr. Omogiafo emphasised that the company is investing heavily in high-growth sectors such as energy and hospitality, with a focus on enhancing operational efficiency and creating value for both shareholders and the broader Nigerian economy.

The company’s strong performance has been reflected in its ability to navigate Nigeria’s complex market environment, despite the challenges posed by inflation and rising interest rates. The company’s operating expenses rose by 38 percent to N32 billion in Q3 2024, largely due to inflationary pressures, while net finance costs increased by 12 percent to N12 billion, primarily due to higher interest rates.

Despite these challenges, Transcorp’s ability to sustain strong financial growth and deliver consistent results demonstrates its resilience and capacity to create value for shareholders, even in volatile market conditions.

Transcorp has solidified its position as a dominant player in Nigeria’s business landscape through its impressive financial results and strategic initiatives such as the share reconstruction. The company’s diverse investments in power, hospitality, and other high-growth sectors continue to provide significant returns to shareholders while contributing to the Nigerian economy.

As one of the largest power producers in the country, Transcorp Power’s contributions to Nigeria’s power generation capacity are critical in addressing the nation’s electricity supply challenges. Likewise, Transcorp Hotels remains a cornerstone of Nigeria’s hospitality industry, attracting international business and tourism, and providing significant employment opportunities.

Through these efforts, Transcorp has not only bolstered investor confidence but also contributed to Nigeria’s broader economic development, creating thousands of jobs and generating vital revenue for the government. The successful share reconstruction is a clear indication of Transcorp’s commitment to maximising shareholder value while fostering long-term growth and sustainability.