Presentation to Investors and Analysts - Transnational … · 2019. 3. 12. · • From time to time, Transnational Corporation of Nigeria Plc (“Transcorp”)and its subsidiaries

FULL YEAR 2018

Presentation to Investors and Analysts

Dis

cla

ime

r

• From time to time, Transnational Corporation of Nigeria Plc (“Transcorp”) and its subsidiaries (“the Group”) make written and/or oral forward-looking statements, including in this presentation and in other communications. In addition, representatives of the Group may make forward-looking statements orally to analysts, investors, the media and others. All such statements are intended to be forward looking statements.Forward looking statements include, but are not limited to, statements regarding the Group’s objectives and priorities for 2018, and beyondand strategies to achieve them, and the Group’s anticipated financial performance. Forward looking statements are typically identified bywords such as “will”, “should”, “believe”, “expect”, “anticipate”, “intend”, “estimate”, “may” and “could”.

• By their very nature, these statements require the Group to make assumptions and are subject to inherent risks and uncertainties, general andspecific. Especially in light of the uncertainty related to the financial, economic and regulatory environments, such risks and uncertainties –many of which are beyond the Group’s control and the effects of which are difficult to predict – may cause actual results to differ materiallyfrom the expectations expressed in the forward-looking statements. Risk factors that could cause such differences include: exchange rate,market exchange, and interest rate, operational, reputational, insurance, strategic, regulatory, legal, environmental, and other risks. All suchfactors should be considered carefully, as well as other uncertainties and potential events, and the inherent uncertainty of forward lookingstatements, when making decisions with respect to the Group and we caution readers not to place undue reliance on the Group’s forwardlooking statements.

• Any forward looking statements contained in this presentation represent the views of management only as of the date hereof and arepresented for the purpose of assisting the Group’s investors and analysts in understanding the Group’s financial position, objectives andpriorities and anticipated financial performance as at and for the periods ended on the dates presented, and may not be appropriate forother purposes. The Group does not undertake to update any forward-looking statements, whether written or oral, that may be made fromtime to time by or on its behalf, except as required under applicable securities legislation.

• The information used in the presentation is obtained from several sources the Group believes are reliable. Whilst Transcorp has taken allreasonable care to ensure the accuracy of the information herein, neither Transcorp nor its subsidiaries/affiliates makes representation orwarranty, express or implied, as to the accuracy and correctness of the information, Thus, users are hereby advised to exercise caution inattempting to rely on these information and carry out further research before reaching conclusions regarding their investment decisions.

2www.transcorpnigeria.com

04

09

12

15

30

33

34

OVERVIEW

OPERATING ENVIRONMENT

KEY BUSINESS DRIVERS

FINANCIAL REVIEW

OUTLOOK

QUESTIONS & ANSWERS

APPENDIX

OVERVIEW

About Transcorp

With an Aggressive Growth Agenda

290,000Shareholders with strong presence in the Power, Energy & Hospitality sectors.

Listed Company with about

Improving Lives, Transforming Nigeria

With a

Purpose

of

Deeply rooted values are

the 3Es of

Execution, Enterprise and Excellence

5

Diversified conglomerate

www.transcorpnigeria.com

Transcorp is committed to

creating values and Socio-economic

impact

6

The Group at a Glance…

83% Ownership

Hotels

50% Ownership

Power

100% Ownership

OPL281

• c.972MW installed capacity gas fired

power plant

• Present available capacity of 596MW to

increase rapidly

• Medium term capacity target of 2500MW

• Transcorp Hilton Abuja - No. 1 hotel

asset in Nigeria - 670 rooms, 5 hotel

• Transcorp Hotels Calabar – 132 room,

3 hotel

• Owner/operator of OPL 281 oil block

• Estimated Oil Reserve – 189.73mn

• Gas – 377.48Bn Std Cubic Feet

• Exploration commences in 2019/20


7

Our Journey So Far

PHASE THREE2019 - 2023

PHASE TWO2012 - 2018

PHASE ONE2004 - 2011

▪ Transcorp was

incorporated in 2004

▪ Acquisition of Transcorp

Hilton Hotel Abuja in

2005

▪ Listed on the Stock

Exchange in 2006

▪ Acquisition of Transcorp

Hotel Calabar in 2009

▪ Heirs Holdings becomes

core investor 2011

▪ Transcorp Ughelli Power emerges

preferred bidder for Ughelli Power

Plc (UPP) in 2012.

▪ Successful takeover of UPP in 2013

▪ Execution of management

agreement with Hilton for Transcorp

Hilton Ikoyi in 2013

▪ Execution of Production Sharing

Contract on OPL 281 in 2014

▪ Management Agreement for Hilton

Port Harcourt executed in 2014

▪ Transcorp Hotels N20bn bond

issuance in 2015

▪ Commenced full Upgrade Project

for Transcorp Hilton Abuja in 2016

▪ Transcorp Hotels IPO in 2014

▪ Award as the Most Compliant

Firm in Nigeria by the NSE in

2014

▪ Merger of TUPL and UPP as

Transcorp Power Ltd in 2015

▪ Transcorp Power

commissioned GT 15 a

115MW Gas Turbine in 2017

▪ Decision to divest from

Teragro Fruit juice

concentrate plant in 2017

▪ TPL:

▪ To expand customer base

▪ To deepen our play in

existing businesses and

expand into Africa

▪ To achieve target of

2500MW Available

Capacity

▪ THP:

▪ Leveraging on technology

to deepen our reach in

the hospitality sector.

▪ Addition of other service

lines.

▪ OPL 281:

▪ To commence Production

of oil and gas

21 3


8

Our Value Proposition

Sound Corporate Governance. Strong Service Delivery. Growth Capacity. Capital Appreciation.

Through our strategic businesses, we focus on creating long term shareholder returns and socio-economic impact.

Hotels

Through ownership of choice assets and Provision

of extra-ordinary service, THP is redefining

hospitality standards in the continent while

remaining truly and authentically African.

OPL281

We are on a mission to ramp up domestic

Upstream capacity

PowerWith sight set on Powering Nigeria Today, Tomorrow

and in the Future, TPL has consistently being the

leader in power generation


OPERATING ENVIRONMENT

Local Economy ReviewGross Domestic Product

▪ GDP expanded by 1.95% Y-o-Y in Q1 2018,contracting however to 1.5% in Q2 2018. Against theback of a 2.8% expansion in non-oil sector, GDPfurther expanded to 1.81% in Q3 2018, the upwardtrajectory of the nation’s expansion was sustained inQ4 2018 as the GDP expanded by 2.4% Y-o-Y, thestrongest since Q3 2015

▪ Data from World Bank and IMF shows a projected

growth of 2.2% and 2.0% respectively for the NigerianEconomy in 2019.

External Reserves

▪ Foreign Reserves appreciated by 2.95% to close theyear at $43Bn, which was 9.24% below its peak of$47Bn recorded in June 2018.

▪ Crude oil price moved above US$80/barrel inOctober 2018, hitting a 4-year high. It howeverreversed the gains recorded in previous months toend the year at an average of $57.36 per barrel.

Source: National Bureau of Statistics, Central Bank of Nigeria and TradingEconomics, Arrhenn

10

1.95%

1.5%1.81%

2.4%

Q1 '18 Q2 '18 Q3 '18 Q4 '18

Quarterly GDP Trend

0

20

40

60

80

100

36.00

38.00

40.00

42.00

44.00

46.00

48.00

50.00

Jan

'18

Feb

'18

Mar

'18

Apr

'18

May

'18

Jun

'18

Jul '18 Aug

'18

Sep

'18

Oct

'18

Nov

'18

Dec

'18

Average Crude Oil Price and Foreign Reserves ($Bn)

Foreign Reserves Average Brent Crude Oil Price


Source: National Bureau of Statistics, Central Bank of Nigeria and Arrhenn Research

Exchange Rate

▪ The rate of inflation peaked at 11.44% as at year-end, it however declined by 0.07% points to 11.37% by January of 2019.

▪ The composite food index rose to 13.56% in December 2018 compared to 13.30% in November 2018.

▪ The I&E window established by CBN continues to provide liquidity and exchange rate convergence with parallel market.

▪ The CBN has begun sale of Chinese yuan to localtraders and businesses. This is expected tostrengthen trade activities with China and ease thelong-running pressure on the naira currency.

Inflation Rate

11

Local Economy Review

0.00%

5.00%

10.00%

15.00%

20.00%

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Inflation Vs Interest Rate

Inflation rate Interest rate


KEY DRIVERS

Key Trends Driving Our Business

13

KEY DRIVERS

Stable Foreign Exchange

Improving Gas Supply

NBET N701Bn Payment

Assurance Scheme

Growing Prospects in the

Hospitality Segment

• Improved access to Forex as a means for

debt service and rehabilitation of turbines.

• Reduced Forex loss from financing activities,

as the group witnessed a 30% year-on-year

reduction in such loss.

• The availability of more rooms for use drives

up the rate of occupancy.

• Additional revenue increase from the re-

pricing of the upgraded rooms.

• While there has been some challenges for

Gencos with respect to gas supplies, we

expect the situation to improve on the back

of; (1) Infrastructural Improvements by

suppliers (2) Prompt settlement of the gas

suppliers’ bill due to the PAP etc.

• The PAP continues to help ensure a prompt

payment of our outstanding bills.

• TPL was paid up to 76% of its receivables

under the scheme.


Key Trends Driving Our Business

14

Hospitality

▪ The Multi-Year Tariff Order (MYTO), there is need for anupward review as the current MYTO does not reflect theactual cost that allows for profitable and efficientoperation of GENCOs and DISCOs.

▪ Collection is also a key determinant of the success ofthe Power companies and the sector as a whole. Eventhough NBET collects from DISCOs directly, the GENCOshave been enabled to seek customers themselves.

▪ Hospitality and Tourism continues to contributepositively to the GDP as the sector is expected tocontribute 4.3% to GDP year-on-year between 2018-2028*.

▪ We are leveraging on technology to better deliver aunique customer experience. We are championingwith our “ICE app”- Guests get to interact and accessneeded information, thereby helping them personalizetheir experience and expand customer base.

Power

▪ The delay in the passage of the Petroleum Industry Bill hasled to a slow down in investment in the industry as a whole.

▪ The volatility in the price of crude oil is also major driver ofthe sector.

▪ Regulatory extensions of periods has been positive for OPL281.

Oil & Gas

*Source: Jumia Travel - Hospitality Report Nigeria 2018www.transcorpnigeria.com

FINANCIAL REVIEW

Result Snapshot

16

Group (YTD) FY 2018 FY 2017 Change(%)

BALANCE

SHEET

(N’billion)

Total Assets 297,140 285,522 4%

Total Equity 105,353 95,708 10%

Total Liabilities 191,787 189,815 1%

….we delivered an exemplary result of 94% growth in Profit After Tax

Group FY 2018 FY 2017 Change(%)

INCOME

STATEMENT

(N’billion)

Revenue 104,163 80,285 30%

Gross Profit 48,252 36,424 32%

Operating Profit 34,649 26,032 33%

Profit Before Tax 22,402 12,306 82%

Profit After Tax 20,627 10,607 94%

*Year To Date



Key Ratios

17

1%

-1%

4.10%

7.08%

FY '15 FY '16 FY '17 FY '18

Returns on Average Assets

2%

-1%

11.65%

20.52%

FY '15 FY '16 FY '17 FY '18

Returns on Average Equity

0.76 0.8

0.52

0.66

FY '15 FY '16 FY '17 FY '18

Price-to-Book

1.32

1.691.98

1.82

FY '15 FY '16 FY '17 FY '18

Debt-to-Equity

3,304 2,032

(1,127)

10,607

20,627

FY '14 FY '15 FY '16 FY '17 FY '18

PAT Trend (N’Mn)

Income Statement (YoY)

18

41,338 40,754

59,425

80,285

104,163

FY '14 FY '15 FY '16 FY '17 FY '18

Revenue Trend (N’Mn)


Group - Income Statement

19

Items FY 2018 FY 2017 Variance

N’mn N’mn %

Revenue 104,163 80,285 30%

Cost of Sales (55,910) (43,861) 27%

Gross profit 48,252 36,424 32%

Administrative expenses (14,600) (11,752) 24%

Other income/(expenses) 997 1,360 -27%

Operating profit 34,649 26,032 33%

Finance income 499 498 0.2%

Finance cost (9,578) (9,670) -1%

Foreign - exchange loss (3,168) (4,554) -30%

Profit before taxation 22,402 12,306 82%

Taxation (1,775) (1,698) 5%

Profit after taxation 20,627 10,607 94%

Other comprehensive income (1,255) 2,798 -145%

Total Comprehensive income 19,372 13,406 45%

Items Comment

Revenue

Increase in revenue continues to be led by a

growth in earnings from the hospitality and power

business.

Cost of sales

This was largely driven by an increase in the cost of gas

for the Power business resulting from increase

production as evidenced in the 31% increase in

generated capacity YoY

Admin.Expenses

This was driven largely by increase in cost that are revenue-driven as well as

repairs & maintenance and professional fees.


Group – Assets & Liabilities

20

Item FY 2018 (Mn) FY 2017 (Mn) Change

NON

CURRENT

ASSETS

(N’million)

Property, Plant and

Equipment154,566 141,836 9%

Other Non Current Assets 49,977 49,597 1%

Total Non Current Assets 204,543 191,433 7%

CURRENT

ASSETS

(N’million)

Trade & Other Receivables 83,602 83,472 0.2%

Other Current Assets 8,994 10,617 -15%

Total Current Assets 92,596 94,089 -2%

Total Asset 297,140 285,522 4%

Items Comments

PPEIncrease was due to assets being added

to upgrade projects in Abuja.

Trade and other

Receivables

This increased marginally despite the

significant growth in our revenue. This is

due to improvement in collection during

the year.

Items Comment

Trade and other

payables

Increase was marginal despite the

significant growth in our cost of sales, this

was due to improvement in payments to

vendors, especially gas suppliers.

BorrowingsReduced due to the servicing of loan

facilities.

Item FY 2018 (Mn) FY 2017 (Mn) Change

CURRENT

LIABILITIES

(N’million)

Trade and other payables 68,642 66,686 3%

Borrowing (short term) 54,174 36,509 48%

Other Current Liabilities 2,209 1,460 51%

Total Current Liabilities 125,026 104,656 19%

LONG TERM

LIABILITIES

(N’million)

Long term borrowings 57,374 75,590 -24%

Other Long term Liabilities 9,387 9,569 -2%

Total Long Term Liabilities 66,761 85,159 -22%

Total Liabilities 191,787 189,815 1%


SEGMENT REVIEW


83%

17%

TPL THP

Segment Review

22

80%

20%

2018 TPL THP

75%

25%

2017TPL THP

Revenue Contribution by Segment

2017

PBT Contribution by Segment

TRANSCORP POWER LIMITED (TPL)

B'n

2018 2017

Revenue 86.74 66.44

Cost of Sales 49.84 40.10

Gross Profit 36.90 26.34

PBT 20.75 10.84

PAT 21.40 12.72

Total Asset 149.73 149.40

Total Liabilities 127.79 131.91

Total Equity 21.94 17.49

TRANSCORP HOTELS PLC (THP) B'n

2018 2017

Revenue 17.4 13.8

Cost of Sales 4.5 3.8

Gross Profit 12.9 10.1

PBT 5.0 3.7

PAT 3.7 2.7

Total Asset 111.3 100.5

Total Liabilities 53.8 45.6

Total Equity 57.5 54.9

83%

17%

TPL THP2018

Segment Review

23

TRANSCORP POWER LIMITED (TPL)

Profit Margin 42.5% 39.6%

PBT Margin 23.9% 16.3%

PAT Margin 24.7% 19.1%

RoaA 13.9% 9.6%

RoaE 105.3% 82.3%

TRANSCORP HOTELS PLC (THP)

Profit Margin 74.0% 72.8%

PBT Margin 28.9% 26.6%

PAT Margin 21.3% 19.4%

RoaA 3.5% 2.8%

RoaE 6.6% 4.9%

2018

20172018

2017


Segment Review – Hospitality

24

(N’million) FY 2018 FY 2017 Variance

Revenue 17,425 13,843 26%

Cost of Sales (4,536) (3,763) 21%

Administrative Expenses (8,431) (7,796) 8%

Other Operating Income 571 1,179 -52%

Finance Income 12 217 -94%


Income Tax (1,328) (998) 33%


Items Comment

Revenue

This increased on the back

of the appreciation in

Revenue per available room,

More so the average

occupancy rate increased to

67% from 63% in the prior

year.

Cost of sales

This was driven by cost of

room maintenance within

the year under review.



25

19%

21%

FY '17 FY '18

PAT Margin

73%

74%

FY '17 FY '18

Gross Profit Margin

13.84

17.43

3.685.04

FY '17 FY '18

Revenue Vs PBT

Revenue PBT



26

55%

76%70% 69%

64% 65%

76%

57%

66%

75%

66% 69%

0%

20%

40%

60%

80%

Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18

Monthly Occupancy Rate %

80,592

85,084 84,275

81,387

78,000

80,000

82,000

84,000

86,000

Q1 '18 Q2 '18 Q3 '18 Q4 '18

Quarterly Average Daily Rate (N)

54,074

56,150 55,928

57,050

52,000

53,000

54,000

55,000

56,000

57,000

58,000

Q1 '18 Q2 '18 Q3 '18 Q4 '18

Quarterly Average Revenue Per Available Room(N)


Segment Review – Power

27

Items Comment

Revenue

Change is due to significant

improvement in gas supply with

relative peace in Niger/Delta

Cost of salesChange is driven by increase in gas

underpinning increase in Revenue.

OPEX

Change is largely due to increase in

cost that are revenue driven, as well

as repairs and maintenance

(N’million) FY 2018 FY 2017 Variance

Revenue 86,738 66,441 31%

Cost of Sales (49,838) (40,098) 24%

Administrative Expenses (5,875) (3,330) 76%

Other Operating Income 115 16 619%

Finance Cost (10,452) (12,193) -14%

Finance Income 62 841 -93%


Income Tax 651 1,883 -65%




28

78% 80% 80% 81% 82% 81% 79% 78%

62%69%

80%75%

0%

20%

40%

60%

80%

100%

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Monthly Capacity Utilization %

650 652 644 579

514 531 469 433

-

200

400

600

800

Q1 '18 Q2 '18 Q3 '18 Q4 '18

Quarterly Average Available Capacity and

Generated Capacity

Available Capacity (Mwh) Generated Capacity (Mwh)

5%

-2%

19%

24%

-5%

0%

5%

10%

15%

20%

25%

30%

FY '15 FY '16 FY '17 FY '18

PAT Margin




29

POSITION AS NIGERIA’S TOP GENCO (MWh)

468 436

342291 272

0

100

200

300

400

500

Q1 2018

483 477

311259 228

0100200300400500600

Q2 2018

458 429361

277 251

0

100

200

300

400

500

Q3 2018

448399 394 384 366

0

100

200

300

400

500

Q4 2018

OUTLOOK

31

2019 Outlook

Hospitality

Power

Business Agenda

Transcorp Hilton Abuja Operations

• Target effective higher occupancy rate• Maintain differential level of service excellence• Leverage upside (traffic & pricing) from pre-election activities and conclusion

of upgrade• Introduction of spa• Increase meeting facilities

Transcorp Hotels Calabar

• Improving service and financial performance• Continue cost management initiatives • Aggressive marketing aligned with competitive pricing

OPL 281

• Increased market

coverage

• New revenue sources

• Market share

protection

Implication

• Target an average of 632MW available capacity and generated power of 538MW.

• Commence exploratory drilling activities

• Increased revenues

• Portfolio optimization

• Contribution expected in 2019/20


32

2019 Outlook Cont’d

Hospitality

Power

Business

ADR (N) 82,835 82,541

Occupancy(%) 67 69

Rev Par (N) 55,800 56,953

Average (MW) Available Capacity

631 632

Average (MW) Generated Capacity

487 538

2018 Actual 2019 Target


QUESTIONS?

APPENDIX

Contact: Mutiu Bakare

[email protected]

Florence Nasamu

[email protected]



mailto:[email protected]

mailto:[email protected]

Thank You

Documents

Presentation to Investors and Analysts - Transnational … · 2019. 3. 12. · • From time to time, Transnational Corporation of Nigeria Plc (“Transcorp”)and its subsidiaries