Huge Tax Burden Takes Toll On Tranex’s Profit

By Festus Okoromadu

Trans-Nationwide Express (Tranex) Plc reported a loss after tax of N34.39 million for the financial year ended December 31, 2012 which is a radical diversion from a profit after tax of N48.653 million recorded in 2011.

The loss was recorded despite an increase of 6.8 per cent in revenue from N563 million in 2011 to N601 million in the review financial period.

The decline in the company’s bottom-line can be traced to an astronomical rise in income tax. The company remitted N90.56 million to the coffers of government for the financial year ended 2012 compared to N9.865 million in 2011, representing 818 per cent increase.

Meanwhile, the company did not offer any explanation for the radical increase in income tax which Analysts believed was due to accumulated deferments.

It is obvious that the company would have posted profit but for the huge tax paid to government, though it may have been less than what was recorded in 2011.

Profit before tax stood at N56.168 million which was four per cent less than N58.518 million posted in 2011. Meanwhile, there are indications that the tax brouhaha may not be over soon as the sum of N71.580 million is posted on the balance sheet as deferred tax while in 2011, such item was not part of the account.

With this result, shareholders are not likely get rewarded for providing the fund for running the business in 2012. The company had distributed a dividend of five kobo per share in addition to issuing one new share for every two held previously as bonus to shareholders for the 2011 financial year.

Meanwhile, there are indications that the company may be facing tough times as growth in total liability outweighs total assets during the period under review. For instance, while total liability grew by 95.8 per cent to N290.550 million from N148.407 million, total assets rose by a marginal 4.4 per cent to N605.067 million from N579.533 million. Meanwhile, shareholders funds has started dwindling as it declined by 27 per cent to N314.517 million from N431.126 million in 2011.

Experts say if shareholders funds continue to decline in the coming years, the company will have to carry-out a recapitalization programme to be able to function optimally.

Tranex was incorporated in 1984 as a private company with the name, TNT Skypak Nigeria Limited. In 1992 it was converted to a public limited company and the name changed to Trans-Nationwide Express Plc and became listed on the NSE in 1993. Tranex is a wholly Nigerian company engaged in transportation, express delivery, logistics and freight businesses.