Investor Presentation Improving Lives, Transforming Nigeria RC - - PowerPoint PPT Presentation

Investor Presentation

Improving Lives, Transforming Nigeria

RC 611238

HALF YEAR, 2018

Disclaimer

• 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 beyond and strategies to achieve them, and the Group’s anticipated financial performance. Forward looking statements are typically identified by words 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 and specific.

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 materially from 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 such factors should be considered carefully, as well as other uncertainties and potential events, and the inherent uncertainty of forward looking statements, when making decisions with respect to the Group and we caution readers not to place undue reliance on the Group’s forward looking statements.

• Any forward looking statements contained in this presentation represent the views of management only as of the date hereof and are presented for

the purpose of assisting the Group’s investors and analysts in understanding the Group’s financial position, objectives and priorities and anticipated financial performance as at and for the periods ended on the dates presented, and may not be appropriate for other purposes. The Group does not undertake to update any forward-looking statements, whether written or oral, that may be made from time 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 all reasonable

care to ensure the accuracy of the information herein, neither Transcorp nor its subsidiaries/affiliates makes representation or warranty, express or implied, as to the accuracy and correctness of the information, Thus, users are hereby advised to exercise caution in attempting to rely on these information and carry out further research before reaching conclusions regarding their investment decisions.

1

Outline

OVERVIEW OPERATING ENVIRONMENT FINANCIAL REVIEW OUTLOOK QUESTIONS & ANSWERS APPENDIX

2

3 5 9 28 27 23

Overview

3

Overview of the Company

50.01%

• wnership

Power OPL281 Hotels

• Transcorp Hilton Abuja - No. 1 hotel asset in

Nigeria - 670 rooms, 5 hotel

• Transcorp Hotels Calabar – 132 room, 3 hotel
• Hilton Ikoyi (320 room, 5)& Hilton PH (250 room,

5) under development and opening 2019/2020

83%

• wnership
• c.972MW gas fired power plant
• Present available capacity of 652MW
• Medium term capacity target of 2500MW
• Owner/operator of OPL 281 oil block
• Reserve estimates Oil - 189.73Mn stock tank

barrel

• Gas – 377.48Bn std cubic feet
• Expected production in 2019/20

Diversified Conglomerate with a growth agenda

4 100%

• wnership

Operating Environment

5

Local Economy Review

Gross Domestic Product

6

• The Nigerian economy expanded 1.95% year-on-

year in the first quarter of 2018, easing from an upwardly revised 2.1% growth in the previous period.

• It is the fourth consecutive quarter of expansion, as

the oil sector continued to rise while the non-oil

• utput growth slowed.

External Reserves

• Foreign Exchange Reserves in Nigeria increased to

47,630 USD Million in June 2018 from 47,620 USD Million in May of 2018.

• Crude Oil price moved above $70 per barrel
• 0.91%

0.72% 1.17% 2.11% 1.95% 2%*

• 1.00%

0.00% 1.00% 2.00% 3.00% Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018

Quarterly GDP Growth Rate Trend

15 30 45 60 75 90 10 20 30 40 50 Jul '17 Aug '17 Sep '17 Oct '17 Nov '17 Dec '17 Jan '18 Feb '18 Mar '18 April '18 May '18 June '18 Average Monthly External Foreign Reserves Brent Crude Price

• Avg. Monthly External Reserves and Brent Crude Prices

Source: National Bureau of Statistics, Central Bank of Nigeria and US Energy Information Administration *World Bank forecast

Trend

Local Economy Review

Exchange Rate

• The

Consumer Price Index (CPI) which measures inflation increased by 11.23% (year-on-year) in June 2018. This represents the seventeenth consecutive disinflation since January 2017.

• Food Inflation stood at 12.98% YoY in June 2018
• The

CBN signed a $2.5 billion currency swap arrangement with the People’s Bank of China (PBOC) in May, under which the CBN would hold N720 billion in an account in favour of the PBOC while the Chinese central bank would hold 15 billion yuan, implying an exchange rate of N48 to the yuan.

• This will strengthen the Naira by reducing the demand

for the United States dollar by Nigerians who import goods from China.

7

Inflation Rate

16.05 16.01 15.98 15.91 15.9 15.37 15.13 14.33 13.34 12.48 11.61 11.23 Jul '17 Sep '17 Nov '17 Jan '18 Mar '18 May '18

Inflation Rate Trend (%)

50 150 250 350 450

USD-NGN Exchange Rate Trend (N)

CBN BDC

Source: National Bureau of Statistics, Central Bank of Nigeria and US Energy Information Administration

Trend

Key Trends Driving Our Business

• Improved gas supply, driven by a) tactical engagement of

suppliers b) infrastructural improvements by suppliers and c) improved payments to suppliers via PAP, led to generation increase

• Capacity Utilisation grew to 81% in Q2 2018 (Q2 2017: 53%)

while Average Generation grew to 531MW (Q2 2017: 311MW

Improved gas supply driving generation NBET N701bn PAP

• The

Payment Assurance Plan (PAP) window continues.

• TPL

was paid up to 80%

• f

2018 invoices as guaranteed under the PAP. This is inclusive of 90% of gas invoice paid directly to suppliers

• Outlook is to fast track payment to current month.
• CBN policy initiatives such as the I&E window

has helped liquidity of FX

• Improved access to FX for debt service and

rehabilitation of turbines

• No substantial FX loss anticipated by year end

based on CBN policy direction

Focus on recovery for Hospitality

Stabilising foreign exchange regime

• Higher occupancy due to

more completed floors (Compare to Q2 2017)

8

Financial Review

9

Result Snapshot

Group (YTD) HY 2018 FY 2017 Change (%) BALANCE SHEET

(N’billion)

Total Assets 290.26 285.52 2% Total Equity 105.87 95.71 11% Total Liabilities 184.40 189.82

• 3%

A solid performance underpinned by sustained momentum in the growth of our businesses

10

Group HY 2018 HY 2017 Change(%) INCOME STATEMENT (N’billion)

Revenue 54.09 34.17 58% Gross Profit 24.57 14.87 65% Operating Profit 17.35 9.52 82% Other Income 0.41 0.31 32% Total Comprehensive Income 10.97 6.22 76% Profit Before Tax 11.94 4.53 164% Profit After Tax 10.88 4.16 161%

Key Ratios

11

11.6 3.87 Q2 2018 Q2 2017

EPS (kobo)

20.11% 12.18% Q2 2018 Q2 2017

Profit Margin

21.58% 12.86% Q2 2018 Q2 2017

Annualised ROE

7.55% 4.30% Q2 2018 Q2 2017

Annualised ROA

Group - Income Statement

HY 2018 HY 2017 Variation N’mn N’mn % Revenue 54,089 34,174 58% Cost of Sales (29,517) (19,300) 53% Gross profit 24,573 14,874 65% Administrative expenses (7,618) (5,664) 35% Other income/expenses 405 306 32% Operating profit 17,347 9,521 82% Finance income 473 435 9% Finance cost (5,013) (4,701) 7% Foreign - exchange loss (862) (722) 19% Net finance (cost)/income (5,403) (4,989) 8% Profit before taxation 11,944 4,532 164% Taxation (1,069) (369) 190% Profit after taxation 10,875 4,164 161% Other comprehensive income Change in value of AFS 96 2,056

• 95%

Total Comprehensive income 10,972 6,220 76% Items Comment Revenue Increase is driven by higher generation in TPL and increase in occupancy due to release of more floors in THP Cost of sales Movement is driven by increase in cost

• f gas to achieve increase in

generation Admin. Expenses Increase is largely due to repairs and maintenance in the ongoing upgrade Other income Change is driven by proceeds on sale

• f THP assets as a result of the upgrade

12

Group - Assets

Year to Date Item HY 2018 FY 2017 Change

NON CURRENT ASSETS (N’million)

Property, Plant and Equipment 146,003 141,836 3% Debt and Equity Securities 5,068 4,971 2% Other Non Current Assets 44,584 44,626 0% Total Non Current Assets 195,654 191,433 2%

CURRENT ASSETS (N’million)

Trade & Other Receivables 84,852 83,828 1% Cash and Cash Equivalent 4,971 5,598

• 11%

Other Current Assets 4,785 4,663 3% Total Current Assets 94,608 94,089 0.55% Total Asset 290,262 285,522 2% Items Comment PPE Increase is due to the assets being added in upgrade project in THP. Debt and Equity Securities Movement is due to appreciation in share price of equities Trade and

• ther

Receivables Largely due to receivables

• wed by NBET for sale of

power in Q2 2018 Cash Movement is due to repayment of loans and bond due

13

Group - Liabilities

Item HY 2018 FY 2017 Change

CURRENT LIABILITIES (N’million)

Trade and other payables 70,460 64,847 9% Current income tax liabilities 1,705 1,424 20% Borrowing (short term) 30,931 36,509

• 15%

Advanced Deposit 1,875 1,875 0% Total Current Liabilities 104,971 104,656 0%

LONG TERM LIABILITIES (N’million)

Long term borrowings 69,855 75,590

• 8%

Deferred tax 7,159 7,159 0% Other liabilities 2,410 2,410 0% Total Long Term Liabilities 79,424 85,159

• 7%

Total Liabilities 184,396 189,815

• 3%

EQUITIES (N’million)

Equity attributable to owners of parent 65,313 61,314 7% Non controlling interest 40,553 34,394 18% Total Equity 105,867 95,708 11% Net Equity and Liability 290,262 285,522 2% Items Comment Trade and

• ther

payables Increase is driven by payments due to gas suppliers for TPL and vendors for the upgrade

• f THP

Current income tax liabilities Increase in Income Tax provision for Q2, largely from THP. Borrowings Reduced due to repayment of mature loans.

14

Income Statement (QoQ)

15

18,406 22,583 23,529 26,302 27,787 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018

Revenue Trend (N’Mn)

2,799 4,509 3,263 5,935 6,009 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018

PBT Trend (N’Mn)

Segment Review

16

Segment Review – Hospitality

(N’million) Q2 2018 Q2 2017 Variance Revenue 4,192 3,212 31% Cost of Sales 1,091 854 28% Gross profit 3,101 2,358 32% Other Income 43 43 0% OPEX (1,997) (1,919) 4% Operating Profit 1,147 482 138% Finance Income 5 43

• 88%

EBIT 1,152 525 119%

17

Items Comment Revenue Change is driven by:

• Increase in occupancy due to

more completed floors that were released for use

• Increase in charges

Cost of sales Higher in line with increase in Revenue

Segment Review – Hospitality

18

2,988 3,349 3,829 3,629 4,192 505 575 1,983 877 1,152 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018

Quarterly Revenue and PBT Trend (N’Mn)

Revenue PBT 74% 73% 73% 72% 74% Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018

Quarterly Gross Profit Margin

64% 63% 60% 65% 62% 28% 26% 33% 27% 25% 8% 11% 7% 8% 13% Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018

Quarterly Product Mix(Revenue Cont.)

Rooms Food & Beverage Others 17% 17% 52% 24% 27% Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018

Quarterly PBT Margin Trend

Segment Review – Hospitality

19

43,610 59,268 43,699 53,850 55,020 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018

Quarterly RevPAR (N)

82,679 81,522 80,474 80,808 82,948 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018

Quarterly ADR (N)

RevPAR –Revenue per available room ADR –Average Daily Room Rate

53% 73% 54% 67% 67% 0% 20% 40% 60% 80% Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018

Quarterly Occupancy Rate

Segment Review – Power

(N’million) Q2 2018 Q2 2017 Variance Revenue 23,596 15,194 55% Cost of Sales 14,082 9,617 46% Gross profit 9,514 5,577 71% OPEX (1,489) (471) 216% EBIT 8,025 5,107 57% Forex Loss 577 406 42% Net Finance cost 1,697 1,944

• 13%

PBT 5,750 2,756 109%

20

Items Comment Revenue Change is due to significant improvement in gas supply with relative peace in Niger/Delta Cost of sales Change 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

Segment Review – Power

21

58% 75% 76% 79% 81% Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018

Quarterly Average Utilization

7,884 7,884 7,884 7,884 8,321 15,672 15,672 15,672 15,672 15,274 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018

Quarterly Capacity and Energy Sales Tariff (N)

Capacity Charge Energy Sales Tariff 343 427 436 520 531 587 569 603 681 652 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018

Quarterly Generated v. Available Capacity (MW)

Quarterly Generated Available Capacity

Segment Review – Power

22

2,756 4,554 1,401 6,113 5,750 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018

Quarterly PBT Trend (N’Mn)

37% 43% 40% 41% 40% Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018

Gross Profit Margin

64% 64% 64% 64% 65% 35% 35% 35% 35% 34% Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018

Quarterly Product Mix

Capacity Charge Energy Sent Out 18% 24% 7% 27% 24% Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018

Quarterly PBT Margin Trend

Outlook

23

Q1 Actual Q2 Target

Q3 2018 Closing Expectations

24

Hospitality Power Business Agenda

Transcorp Hilton Abuja Operations

• Target effective occupancy of 70-80%
• Maintain differential level of service excellence
• Leverage upside (traffic & pricing) from pre-election activities and conclusion of

upgrade Transcorp Hilton Abuja Upgrade

• Conclusion of upgrade (rooms, public areas and external works)

Transcorp Hotels Calabar

• Continue cost management initiatives
• Aggressive marketing aligned with competitive pricing
• Maintain profitability track record

OPL 281

• Increased market

coverage

• New revenue sources
• Market share

protection

Implication

• Target 850MW available capacity and generated power of [550-600MW]. Militating

factors like liquidity, gas, foreign exchange and transmission are improving

• Commence exploratory drilling campaign having obtained drilling permit
• Increased revenues
• Portfolio optimization
• Contribution expected

in 2019/20

Q1 Actual Q2 Target

Q3 2018 Closing Expectations

25

Hospitality Power Business Q2 Actual Q3 Target

ADR (N) 82,948 85,084 Occupancy 67% 70% Rev Par (N) 55,020 59,559 Average (MW) Available Capacity 652 675 Average (MW) Generated Capacity 531 550

1 3

PHASE THREE 2018 - 2022

2

PHASE TWO 2012 - 2017 PHASE ONE 2004 - 2011

Transcorp was incorporated in 2004 Acquisition of NICON Hilton Hotel Abuja in 2005 Listing on the Stock Exchange in 2006 Acquisition of Metropolitan Calabar in 2009 Heirs Holdings becomes core investor 2011 Transcorp Ughelli Power emerges preferred bidder for Ughelli Power Plc (UPP) in 2012 Commissioning of Teragro Fruit juice concentrate plant in 2012 Execution of Production Sharing Contract on OPL 281 in 2014 Transcorp Hotels IPO in 2014 Execution of management agreement with Hilton for Transcorp Hilton Ikoyi in 2013 Successful takeover of UPP in 2013 Management Agreement for Hilton Port Harcourt executed in 2014 Award as the Most Compliant Firm in Nigeria by the NSE in 2014 Commenced full Upgrade Project for Transcorp Hilton Abuja in 2016 Transcorp Power commissioned GT 15 a 115MW Gas Turbine in 2017 Transcorp Hotels N20bn bond issuance in 2015 Merger of TUPL and UPP as Transcorp Power Ltd in 2015 THP: Complete Transcorp Hotel Ikoyi and Portharcourt OPL 281: Production of oil and gas Expand into infrastructure development Expand into Africa TPL: Achieve 2500MW Available Capacity

26

Our Journey So Far

Questions & Answers

27

Appendix – Business Update

28

Overview Diversified conglomerate with a

growth agenda

300,000 shareholders

Listed Company with over

Improving Lives, Transforming Nigeria

With a Purpose

• f

Deeply rooted values are the 3Es of

Execution, Enterprise and Excellence

We acquired the Ughelli power plant in November 2013, as part of Transcorp Plc’s commitment to improve lives and transform Nigeria by powering homes, schools, public utilities and businesses. The Bureau of Public Enterprises gave us a target to increase power generation from 160MW to at least 670MW in 5 years. We surpassed this expectation 12 months ahead of schedule, generating 701MW by November, 2017.

A Short Story of Execution

29

Transcorp Hotels Plc

30

Projects Updates 1. Abuja

• Guest Floors: Floors 10, 9, 8, 7, 6, 5, 4, 3 have been handed back to operations. Floors 2 and 1 are out
• f inventory and under renovation, with target completion by October 2018.
• Guest Elevators: Replacement of all 6 guest elevators complete.
• External Works: Site work ongoing. Aguiyi Ironsi, Shehu Shagari and Ademola Adetokunbo

gatehouses have been completed. Drivers village, car parks and general landscaping have also been substantially completed. The port cochère is due to be completed by mid-July. 2. MBC (Conference Hall)

• Tender completed.
• Value for money audit ongoing.
• Target is to complete construction within 24 months of commencement.

3. Transcorp Hilton Ikoyi

• Detailed Design completed.
• Foundation piling on Block A, the hotel complex, has been completed.
• Title documents being processed for additional plots acquired

4. Transcorp Hilton Port Harcourt

• Land acquisition and clearing concluded.
• Construction schedule to be determined following completion of Design.

Transcorp Power Ltd

31

POSITION AS NIGERIA’S TOP GENCO

MAY JUNE APRIL

481 477 364 294 244 483 478 323 315 290 477 473 290 255 253

OPL 281

32

Reservoir OIL GAS MMSTB BSCF Proven 174.64 346.74 Prospects 15.09 30.74 Total 189.73 377.48

• Million Stock Tank Barrels (MMSTB),

*Billion Standard Cubic Feet (BSCF) OPL 281 – Hydrocarbons in Place Drilling/Operations Update

• The Drilling permit has been revalidated by DPR and approval

feedback sent to NAPIMS. SACOIL Update

• The partnership discussion with Sacoil is continuing

Rig Inspection

• A rig has been identified for exploratory drilling of Obote 2x well

and engagement has advanced, subject to NAPIMS approval

• Following NAPIMS request, the identified rig has been rescheduled

for a re-inspection to certify the ‘warm-stacked’ operability & functionality and the re-negotiation of the drilling budget.

Contact:

Mutiu Bakare mutiu.bakare@transcorpnigeria.com www.transcorpnigeria.com