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Transcorp Hotels’s cash from operations rise by 102%, highest in a decade

Transcorp Hotels’s cash from operations rise by 102%, highest in a decade

The hospitality industry is booming for Transcorp Hotels Plc, as the company’s net cash from operations increased by 102.29 percent to N11.47 billion in the full year of 2022 compared to N5.67 billion in 2021, the highest reported in ten (10) years.

This is despite the challenging economic conditions made worse by the Russian-Ukrainian war, which sent spiraling inflation to record highs worldwide.

According to the financial data available on the Nigerian Exchange Group, the hospitality company remained profitable while increasing its ability to generate enough cash from its core business activity.

Profit after tax deductions reported by Transcorp Hotels grew by 133.93 percent to N2.62 billion in 2022 from N1.12 billion in 2021, thereby bringing the profit margin up by 310 basis points to 8.33 percent in 2022 from 5.23 percent in 2021.

Its total revenue was up 46.78 percent during the period to N31.44 billion from N21.42 billion in 2021, the highest reported in 10 years. Revenue grew due to a 1,090 percent increase in the accommodation and experiences revenue-generating segment.

The accommodation and experience revenue-generating segment grew to N6.49 million in 2022 from N546 thousand in 2021, while rooms, food, and beverages increased by 43 percent and 58 percent respectively to N16.78 billion and N10.23 billion in 2022.

The hotel’s cost of sales can be seen growing faster than revenue by 64.25 percent, thereby reflecting the impact of rising inflation. Its cost of sales claimed 28.78 percent of its total revenue grew to N9.05 billion in 2022 from N5.51 billion in 2021.

The cost of sales grew on the back of growth amongst all cost line items, with other operating costs growing by 195 percent, rooms cost growing by 86 percent, and food and beverage costs growing by 46 percent during the period.

On the back of a 104 percent surge in advertising expenses, total operating expenses grew to N14.63 billion in 20221, indicating a 32 percent increase from N11.10 billion in 2021.

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Furthermore, riding on the hawkish stance of the central bank of Nigeria, interest on bank deposits caused finance income to surge by 103 percent to N8.72 million in 2022 from N4.29 million in 2021, while a 2 percent growth in interest on debts and borrowings drove finance costs to N4.14 billion in 2022.

Total assets grew by 3.97 percent to N120.49 billion in 2022, while total shareholder’s equity grew by 0.92 billion to N62.79 billion in 2021.

Total cash and cash equivalents grew by 2.52 percent to N3.26 billion in 2022 from N3.18 billion in 2021.

Movement in its cash and cash equivalents shows that net cash from investing activities for the period was negative amounting to N6.91 billion in 2022 largely driven by the N6.59 billion and N300 million spent on the purchase of property, plant, and equipment, and equity investments acquired.

It also generated N-4.74 billion from its financing activities during the period due to loans repaid, interests, and dividends paid during the period. The hotel also received borrowings totaling N2 billion during the period.

 

Ultimately, Transcorp Hotels Plc reported earnings per share of N26 per share in 2022 136 percent up from N11 per share in 2021 and declared a proposed dividend of N0.13 kobo per ordinary share