Nairametrics| Heirs holding, owned by billionaire Tony Elumelu has taken moves to reverse the losses in Transcorp. It has decided to appoint Mr Adim Jibunoh who currently works with Heirs holdings as President/CEO effective June 1st 2017. The current MD, Mr Emmanuel Nnorom will remain on the board as a non-executive director. Coincidentally, Mr Nnorom before his stint as CEO of Transcorp was the President/COO of Heirs Holdings.
Transcorp has released a string of poor results recently. Full year 2016 results saw the group making a loss of N579 million, even though revenue and gross profit increased. Largely due to foreign exchange loss on financing activities totalling N18.9 billion. A similar loss of N6 billion was made in the corresponding period of 2015. Unaudited first quarter 2017 results witnessed a slight increase in profit after tax from N1.2 billion to N1.4 billion, but foreign exchange losses have continued. The foreign exchange losses are most likely due to the cost of purchasing gas for Transcorp power, its generating company (GENCO) and dollar denominated loans.
Receivables due have also increased from N54 billion as at December 2016 to N62 billion in March 2017. A large proportion of this are due from the Transmission Company of Nigeria (TCN) and the Nigerian Bulk Electricity Trading Company (NBET) which oversee payments to GENCOs. The power sector in Nigeria is bedeviled by many problems, the root cause being tariffs that are non-cost reflective, poor payment of energy bills and the purchase of gas in dollars. Dollar payments leave gencos at the risk of exchange rate fluctuations. The depreciation in the Naira means they will have to pay more in Naira terms to purchase gas, but continue to receive a fixed amount in Naira.
The closure of the Abuja airport for six weeks also had an adverse effect on Transcorp hotels as revenue made from rooms in the first quarter of 2017 dropped from N2.4 billion in March 2016 to N1.8 billion in March 2017. The closure meant fewer visitors staying in Transcorp Hilton Hotels, and a rescheduling of conferences. Teragro, the arm of Transcorp concerned with juice concentrates is out of operation at the moment. Year to date, Transcorp shares are up 6.90%, outperforming the All Share Index.
Heirs holdings acquired a majority stake in Transcorp in 2011. Transcorp plc was incorporated in November 2004. The vision for the company was to be Nigeria’s version of South Korea’s Chaebols or multinational conglomerate. Controversy ensued in its formation, as the then DG of the Nigerian Stock Exchange (NSE), Ndi Okereke-Onyuike and several individuals were accused of conflict of interest by having shares in the firm. Controversy also broke out when, Heirs Holdings acquired its majority stake in 2011.
