Presentation to Investors & Analysts Third Quarter 2019 1 - - PowerPoint PPT Presentation

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Presentation to Investors & Analysts

Third Quarter 2019

2

Disclaimer

• From time to time, Transnational Corporation of Nigeria Plc (“Transcorp”) and its subsidiaries (“the Group”) make written and/or oral forward-

looking statements in presentations (including this presentation) and other communication. 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 2019,

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”, “project” 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. In the light of uncertainties 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 at 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

• ther 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 this presentation were obtained from several sources that the Group believes are reliable. Whilst Transcorp has taken

all reasonable care to ensure the accuracy of the information herein, neither Transcorp nor any of 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 place reliance on these information and carry out further research or seek the opinion of professional advisers before reaching conclusions regarding their investment decisions.

www.transcorpnigeria.com

OVERVIEW OPERATING ENVIRONMENT GROUP FINANCIAL OVERVIEW SEGMENT REVIEW OUTLOOK AWARDS, CSR & OTHER SOCIAL ENGAGEMENT

4 10 14 17 38 43

OVERVIEW

5

With an Aggressive

Growth Agenda

300,000

Shareholders with commanding presence in the Power, Energy & Hospitality sectors. Listed Company with approximately

Improving Lives, Transforming Nigeria

With a Purpose

• f

Deeply rooted values are the 3Es of

Execution, Enterprise and Excellence

www.transcorpnigeria.com

About Transcorp

A diversified conglomerate…

6

Operational Efficiency Growth Capacity Return on Investments Sound Corporate Governance

Our Investment Philosophy

www.transcorpnigeria.com

Long-term Shareholder Returns Socio-economic Impact

…guided by a sound investment philosophy

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www.transcorpnigeria.com

The Group at a Glance

Transcorp is committed to creating value and making socio-economic impact

With eyes set on generating 25% of the total power requirement in Nigeria, Transcorp Power Limited remains a leader in the Nigerian power sector. Through ownership of choice assets and provision of exceptional service, Transcorp Hotels Plc is redefining hospitality standards in the continent while remaining truly African. We are on a mission to ramp up domestic upstream capacity

…in strategic sectors of the economy

• c.972MW installed capacity gas fired power plant
• Current available capacity of 678MW to increase rapidly
• Medium term capacity target of 2500MW
• Transcorp Hilton Abuja: Nigeria’s foremost hotel and the

leading business hotel in Africa - 670 rooms, 5 hotel

• Transcorp Hotels Calabar – 132 rooms, 3 hotel
• Medium Term: Expansion to Lagos
• Owner/operator of OPL 281 oil block
• Estimated Oil Reserve – 189.73mn
• Gas – 377.48Bn Std Cubic Feet
• Exploration commences in 2020

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PHASE THREE 2019 - 2025 PHASE TWO 2012 - 2018 PHASE ONE 2004 - 2011

▪ 2004: Incorporation of Transcorp ▪ 2005: Acquisition of Transcorp Hilton Abuja ▪ 2006: Listing on the Nigerian Stock Exchange ▪ 2010: Acquisition of Transcorp Hotels Calabar ▪ 2011: Heirs Holdings becomes core investor ▪ 2012: Transcorp Ughelli Power emerges preferred bidder for Ughelli Power Plc (UPP) ▪ 2013: Successful takeover of UPP ▪ 2013: Execution of management agreement with Hilton for Transcorp Hilton Ikoyi ▪ 2014: Execution of Production Sharing Contract on OPL 281 ▪ 2014: Execution of Management Agreement for Hilton Port Harcourt ▪ 2014: Issuance of Transcorp Hotels IPO ▪ 2014: NSE Awards Transcorp the Most Compliant Firm in Nigeria ▪ 2015: Issuance of Transcorp Hotels N20bn bond ▪ 2015: Merger of TUPL and UPP as Transcorp Power Ltd ▪ 2016: Commencement of full Upgrade Project for Transcorp Hilton Abuja ▪ 2017: Commission of GT15 a 115MW Gas Turbine by Transcorp Power ▪ 2017: TPL surpassed BPE-set minimum performance of 670MW by generating 701MW. ▪ 2018: Conclusion of additional land acquisition for Transcorp Hilton Ikoyi POWER ▪ Increase power generation through acquisition of additional power plants ▪ Look out for opportunistic investments in renewable energy and off-grid solutions such as our recent partnership with Engie HOSPITALITY: ▪ Deepen Operational Efficiency ▪ Sweat existing assets ▪ Expand into new businesses and locations OIL AND GAS: ▪ Commence production

• f
• il and gas in OPL 281

▪ Acquire new oil & gas assets

2 1 3

Our Journey

www.transcorpnigeria.com

…as evidenced by our enviable milestones

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Valentine Ozigbo President/CEO Helen Iwuchukwu Group Company Secretary Christopher Ezeafulukwe Executive Director Mutiu Bakare Group CFO Chinweugo Nwafor Group Head, Internal Audit Napoleon Esemudje Director of Resources Owen Omogiafo MD/CEO, Transcorp Hotels Plc Kevin Brett GM, Transcorp Hilton Abuja Chuma Mgbojikwe GM, Transcorp Hotels Calabar Kalyana Sundaram MD/CEO, Transcorp Power Limited Adebayo Salako Chief Technical Officer Peters Ameh Head, Plant Technical Audit and Support

Management Team

SUBSIDIARY LEADERSHIP

…a team of experienced professionals

www.transcorpnigeria.com

OPERATING ENVIRONMENT

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Overview of the Global Economy

Growth forecasts for major world economies looks bleak...

China

6.5%

USA

2.3%

UK

1.2%

Nigeria

2.3%

South-Africa

1.1%

POSSIBLE UPSIDES

• Central

banks globally are either maintaining

• r

reducing Interest rate to support growth in their respective economies.

• China continues to invest more in other economies

POSSIBLE DOWNSIDES

• Lingering trade tensions between the US and China
• Continued volatility of the oil price including the recent

attack on a Saudi Oil facility.

• Persisting currency pressures across emerging market

economies.

U.A.E

1.7%

Brazil

0.9%

Legend:

Upward GDP Growth Downward GDP Growth Stagnant GDP Growth

www.transcorpnigeria.com

Source: International Monetary Fund, Trading Economics, Standard Chartered Global Research

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…signaling a possible growth upside on the local scene

_ _ _ _ _ __

201 million4 population Median Age of 17.9 Years1 $2,396 GDP Per Capita 60.6%3 Electrification rate as a % of Population $397 billion 2018 GDP 107th Country in terms of Highest proportion of Internet Users 23.1% Unemployment rate

Large and Growing Market & Workforce

92.67%2 (Aug 2019) Tele-density

7th

Largest country globally

17.9 Years

Median Age

Investment Gateway to West Africa

c.60%

Of the West African market

No.1

GDP in Africa

50%

Of ECOWAS manufacturing capacity

1.98mn bpd Oil production in Q2 2019

Domestic Economy: Key Indicators

www.transcorpnigeria.com

201m 4

Population

Source: 1Worldometer/UN; 2NCC; 3IMF; 4NPC

Source: statisticstimes.com

GDP 2018 US$ billions

52 56 84 90 115 118 188 249 377 397

Ghana Tanzania Ethopia Kenya Angola Morocco Algeria Egypt South Africa Nigeria

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However, major macroeconomic variables look positive…

Key Macroeconomic Indicators

www.transcorpnigeria.com

Source: CBN, NBS, Q2 2019 GDP Report, *million barrels per day

• GDP grew 1.94% y-o-y in Q2 2019 representing thus, a 0.44 Percent point increase compared

to Q2 ‘18.

• The oil sector contributed 8.82% to the total real GDP in Q2 ’19. This represented a decrease
• f 0.27 percent points y-o-y.

Gross Domestic Product

1.50% 1.81% 2.38% 2.01% 1.94% Q2 '18 Q3 '18 Q4 '18 Q1 '19 Q2 '19

• Erstwhile tapering inflation rate spiked up to 11.24% at the end of September 2019 from

11.02% in the prior month, the first increase since the end of May 2019. The increase is reportedly fuelled by the border closure which has led to increase in the price of food items.

• The CBN since March 2019 has been pursuing an expansionary monetary policy by easing

the monetary rates. The MPR has been maintained at 13.50% and the Loan Deposit Ratio (LDR) revised to 60% as at Q3 2019 (65% by Q4 2019)

Inflation and Interest Rate

• Nigeria recorded an average daily oil production of 1.84 million barrels per day in the third

quarter on 2019, slightly lower than the revised production of Q2 of 1.98 MBPD*.

• The Brent crude oil price averaged $58.92/barrel in the month of October in the wake of the

drone attack on Saudi Arabia’s Aramco oil facility.

Crude Oil Price and Production

Q-o-Q GDP Growth

14% 14% 13.5% 13.5% 13.5% 13.5% 13.5% 13.5% 13.5% 11.37% 11.31% 11.25% 11.37% 11.40% 11.22% 11.08% 11.02% 11.24% 10.80% 11.00% 11.20% 11.40% 11.60% Jan '19 Feb '19 Mar '19 Apr '19 May '19 Jun '19 Jul '19 Aug '19 Sep '19 13% 13% 14% 14% 14% 14%

Interest and Inflation Rate

MPR Inflation Rate 1.98 1.84 1.94 1.91 1.99 1.98 1.84 64.6 71.4 73.0 64.3 60.5 65.1 58.9 1.75 1.80 1.85 1.90 1.95 2.00 2.05 0.0 20.0 40.0 60.0 80.0 Q1 '18 Q2 '18 Q3 '18 Q4 '18 Q1 '19 Q2 '19 Q3 '19

Oil Production (MBPD) and Crude Oil Price ($)

Oil Production (MBPD) Average Brent Crude oIl Price

GROUP FINANCIAL REVIEW

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www.transcorpnigeria.com

Financial Highlights

Income Statement

Q3 2019 Q3 2018 (N’ Million) (N’ Million)

Revenue 58,278 79,861 Gross Profit 26,956 36,960 Operating Profit 17,083 25,930 Profit Before Taxation 7,356 17,717 Profit After Taxation 6,744 15,963

Statement of Financial Position

N Million Q3 2019 FY 2018 (N’ Million) (N’ Million)

Total Assets 312,954 297,140 Total Liabilities 201,606 191,787 Shareholders’ Fund 111,348 105,353

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www.transcorpnigeria.com

• Our Power business contributed c.75% to the group’s revenue during the period under review.
• The segment faced challenges around gas availability, evacuation and technical losses. However, both the gas and

technical issues have largely been resolved.

• Buoyed by an increasing occupancy rate and an above industry average daily rate, the hospitality business contributed an

increased rate of 25% to the group’s revenue during the review period.

COMMENT

Revenue Break down by Subsidiaries

Q3 2019 (N’ Million) Contribution Q3 2018 (N’ Million) Contribution Transcorp Power 43,601 75% 67,190 84% Transcorp Hotels 14,677 25% 12,671 16%

TOTAL

58,278 79,861

Group Revenue Breakdown

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SEGMENT REVIEW: POWER

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The sector remains challenged

46%*

Population that has no access to grids

1.4/7.0

WEF’s scoring in terms of quality of electricity supply Ranked 136th

• ut of

137 countries in terms of Quality of

electricity supply

0.14kWh Per

Capita

• 91 million Nigerians do not have access to electricity
• A far cry from other African oil producing States’ scores.

Egypt has a score of 5.0 while Algeria has a score of 4.2

• Its sub-Saharan Africa counterpart, South Africa was ranked 97th
• India, its peer in the Emerging Market category, was ranked 80th
• … lags peers’ as South Africa has 4.14kWh per capita,

Indonesia has 0.82kWh per capita and Kenya has 0.17kWh per capita

Source: WEF – World Economic Forum: The Global Competitive Report; Ernst & Young; *RenCap

www.transcorpnigeria.com

Segment Review - Power

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03 02 01

Increased Electricity Generation Nigeria recorded peak generation

• f

5,375MW in Q1 2019. Also, the total electricity generated for the period was 8,951,869 MWh, which is 0.8% more than the level

• f

generation during Q4 2018 Improved Transmission Network Efficiency The Transmission Loss Factor (TLF) decreased in Q1 2019, maintaining at an average of 7.56% which is lower than the 8.05% industry (MYTO) reference loss factor. This is attributed to the significant system upgrades by TCN. Increased Generation Capacity Total energy generation rose by 0.8% with 8.9 percentage points increase in generation capacity utilization arising from reduction in the constraints of insufficient gas supply, transmission and distribution networks, and water management at the hydropower stations. Approved Performance Improvement Plan (PiP) Guidelines for Discos by NERC The PiP is to address the inefficiencies in the Discos. The process is to address the technical and operational challenges impacting the operational efficiencies

• f the Discos.

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…with some positive results recorded in the sector

Segment Review - Power

www.transcorpnigeria.com Source: NERC Quarterly Report 2019

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Factors affecting our power business

www.transcorpnigeria.com

GAS SUPPLY

• There was inadequate supply of gas to TPL from Q3 2018 up till first

half of 2019; ➢ Gas supply to TPL was restricted as a result of insufficient gas from NGC. ➢ The NGC closed the gas shutoff valve, for some days in Q1 and Q3 2019, to TPL as a result of persisting low gas line pressure. ➢ Ughelli East gas plant was completely shut down for statutory maintenance from 26th May, 2019 to 2nd June, 2019 and for emergency maintenance in July 2019. ➢ NGC 18-inch gas pipeline was vandalized in June and July 2019.

• Gas supply was largely on a best endeavour basis as it was not

contractual.

WAY FORWARD

▪ We have recorded significant improvement in the level of gas supply in Q3 2019. We have made significant progress

• n the activation of the Gas Supply and Aggregation

Agreement (GSAA) with the gas suppliers by executing necessary agreements with all parties. ▪ This Agreement places a contractual obligation on the gas suppliers to supply a minimum of 124mmscf to TPL on daily basis. ▪ We intend to

• ptimize

the

• pportunities

from the activation of the agreement. This will result in increase in mega watts generated and allowance for full payment on capacity. ▪ We are equally exploring additional affordable gas supply from other gas producers. ▪ Our long term strategy is to produce the gas requirement from our OPL 281 assets which is located close to the power plant. …having identified a number of these issues

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Factors affecting our power business

www.transcorpnigeria.com

TRANSMISSION

• There were several dispatch instructions from National

Control Centre (NCC) requesting TPL to reduce generation due to distribution constraints and preferential dispatch accorded to Hydro Power Plants (HPP).

• There

were a number

• f

transmission infrastructure challenges during the year which greatly limited TPL’s ability to evacuate generated power into the national grid. TCN lost the 330KV line G3B in Q1 2019 due to vandalism; 75Mx reactor was engulfed by fire at the Benin Transmission in Q2 2019 and High system voltages were recorded in Q3 2019,

• A total of 9 grid collapses were recorded from Jan 2019 to
• date. This further reduced power transmission to the grid.

WAY FORWARD ▪ We are currently exploring opportunities created by the Eligible Customer regime initiated by the Federal

• Government. This would allow us to sell power

directly to certain end users who meet the criteria set out in the governing regulation. By so doing, we can put to good use, our stranded capacities.

…having identified a number of these issues

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Factors affecting our power business

www.transcorpnigeria.com

COMMERCIAL MATTERS OUTSTANDING RECEIVABLES DUE FROM NBET ▪ FEC has given approval for the extension of the Payment Assurance Plan (PAP). ▪ With this approval, we expect payment of outstanding receivables will be fast tracked. ▪ TPL was paid up to 80% of January 2019 invoices and part February 2019 invoices as guaranteed under the PAP. This is inclusive of 90% of gas invoice paid directly to suppliers ▪ With regards to our outstanding receivables from NBET, we are currently pursuing measures to fast track payment. ▪ In addition to the PAP, we are engaging the government on other ways to repay what is outstanding.

… we see light at the end of the tunnel

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www.transcorpnigeria.com

Financial Highlights - Power

Income Statement

N Million Q3 2019 Q3 2018 (N’ Million) (N’ Million)

Revenue 43,601 67,190 Gross Profit 15,933 27,657 Operating Profit 13,172 23,658 Profit Before Taxation 8,238 17,023

Statement of Financial Position

N Million Q3 2019 FY 2018 (N’ Million) (N’ Million)

Total Assets 161,368 150,380 Total Liabilities 130,540 127,789 Shareholders’ Fund 30,828 22,591

• Revenue

from the power segment declined by 35% y/y as a result of the Gas, Transmission and technical issues highlighted earlier.

• Total Asset Increased by 7% YTD* as a

result

• f

the refurbishment

• f

generating turbines. This would lead to increase in generation and revenue in the years ahead.

COMMENT

*Year-To-Date

… however, some of these issues continue to impact our numbers

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Segment Review – Power

www.transcorpnigeria.com

Our operations are experiencing considerable improvements…

75% 52% 59% 62%

Q4 '18 Q1 '19 Q2 '19 Q3 '19

Quarter-on-Quarter Capacity Utilization and Gas Consumed

Capacity utilization Gas Consumed Recovery Imminent 587 563 560 304 333 349

Q1 '19 Q2 '19 Q3 '19

Available Vs Generated Capacity (MwH)

Available Capacity (MwH) Generated Capacity (MwH) Improving Generation

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www.transcorpnigeria.com

...as such, we are steadily coasting to regaining our position* as the topmost Genco

444 371 350 322 291

Jan-19

382 341 321 303 281

Feb-19

*The Metric used here is Average Generated Capacity MwH 459 385 328 307 292

Mar-19

419 305 302 299 292

Apr-19

430 333 291 284 267

May-19

461 332 254 246 228

Jun-19 As at the third quarter of the 2019 financial year, Transcorp ranked among the top 5 in power generation.

421 350 265 260 238

Jul-19

376 359 338 289 289

Aug-19

461 332 254 246 228

Sept-19

TPL EGBIN SHIRORO JEBBA AZURA TPL EGBIN SHIRORO KAINJI JEBBA TPL EGBIN JEBBA KAINJI ODUKPANI TPL TPL TPL TPL TPL TPL KAINJI KAINJI KAINJI KAINJI KAINJI KAINJI EGBIN EGBIN EGBIN EGBIN EGBIN EGBIN AZURA AZURA AZURA AZURA AZURA ODUKPANI JEBBA JEBBA JEBBA JEBBA JEBBA JEBBA

Segment Review - Power

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SEGMENT REVIEW: HOSPITALITY

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One of the fastest growing sectors globally

8% South America North America Africa Australia Europe Middle-East 4% 8% 8% 4% 4%

Source: 1United Nation World Tourism Organization, 2World Travels & Tourism Council (WTTC)

Quarterly Growth in International Tourists’ Arrival

Total Export Earnings From International Tourism

$1.7 Trillion

International Tourism represents 30% of world service export

Travel & Tourism created 1 in 5 jobs within the past 5 years.

Global International Tourists’ Arrival Grew by 4% as at Q3 2019

www.transcorpnigeria.com

Segment Review - Hospitality

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With increasing prospect for success… Recreation Food & Beverage Lodging Travel & Tourism

• The hospitality sector is one of the fastest-growing sectors in the world. The sector has

continued to thrive largely due to travel and tourism activities, which keep hospitality afloat, despite the tough economic times that have threatened other sectors.

• While the global hospitality industry has largely been dominated by a few key cities or

destinations considered most desirable for global travel (e.g., New York, Paris and London), global travelers have started to head to new destinations. This has led investors to identify numerous opportunities in secondary markets, reflecting a broader search for higher-yield investments.

$86bn

Global revenue

$7.6tr

Global revenue

$570bn

Global revenue

$70bn

Global revenue

Source: Statista, UNWTO,WTTC, Q1 2019 GDP Report, *Figures are for the Nigerian Hospitality sector www.transcorpnigeria.com

Hospitality Industry Figures

Total Export earnings from International Tourism

5,372.2*

1.8bn

Expected International Travelers by 2030 Expected number of new jobs to be created by 2029

GLOBAL INDUSTRY FIGURES

5,372.2* $1.7 Tn

Segment Review - Hospitality

29 MILLENIALS DIGITAL MEDIA INFLUENCE RISING MIDDLE CLASS GLOBAL CONNECTIVITY

According to the WTTC*, there will be 2+ billion new middle-class consumers within the next 20 years translating into more travelers visiting more hotels around the world. Digital technology is bringing places and experiences closer to people than before. This is possibly going to disrupt the industry and Transcorp Hotels is at the forefront

• f

this change locally. 19%* of travelers in 2018 were Millennials, a number which is projected to even grow further. Millennials are poised to take the hospitality industry by storm as globally connected and curious travelers. The prolific use of social media apps and the rise of social influencers have engendered new behaviors amongst millennials.

..and is currently being impacted by factors such as Rising middle class among other key factors

Source: *World Travels & Tourism Council

www.transcorpnigeria.com

Segment Review - Hospitality

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www.transcorpnigeria.com

Financial Highlights-Hospitality

Statement of Financial Position

Q3 2019 FY 2018 (N’ Million) (N’ Million)

Total Assets 111,861 111,277 Total Liabilities 52,042 53,816 Shareholders’ Fund 58,819 57,461

Income Statement

Q3 2019 Q3 2018 (N’ Million) (N’ Million)

Revenue 14,677 12,671 Gross Profit 11,030 9,324 Operating Profit 11,235 9,459 Profit Before Taxation 1,003 3,452

• Revenue

from the hospitality segment ramped up by 16% y-o-y

• n

the strength

• f

increased earnings from rooms, beverages and shop rental during the period under review.

• In

compliance with IAS 28, the hotel business started expensing finance cost post-completion

• f

the renovation, thus accounting for a reduced PBT.

COMMENT

Revenue for the hospitality business is buoyed by strong fundamentals…

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www.transcorpnigeria.com

Segment Review-Hospitality

…that have continued to support continued profitability

…Growing Revenue …Growing Gross Profit …Impact of Finance Cost

4,187 5,116 5,374

Q1 '19 Q2 '19 Q3 '19 Revenue (N Million)

3,102 3,897 4,030

Q1 '19 Q2 '19 Q3 '19 Gross Profit (N Million)

458 363 182

Q1 '19 Q2 '19 Q3 '19 Profit Before Taxation (N Million)

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Segment Review – Hospitality

www.transcorpnigeria.com

We remain the leader in the hospitality industry...

74% 56% 63% 64% 51% 61%

Jul '19 Aug '19 Sep '19

Occupancy Rate

THP Industry 87,945 78,071 78,791 67,427 58,113 63,311

Jul '19 Aug '19 Sep '19

Average Daily Rate (NGN)

THP Industry 64,880 43,485 49,590 43,116 29,622 38,519

Jul '19 Aug '19 Sep '19

Revenue Per Available Room (NGN)

THP Industry Source: STR Global, Transcorp Hotels

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SEGMENT REVIEW: OIL & GAS

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XXX

XXX

$58.92

Average brent crude

• il price for the month
• f October 2019.

8.82%

Industry Contribution to Nigeria Q2 2019 GDP

>N15Tn

Sectoral Value in terms

• f Real GDP

N302bn

Estimated total lost income from gas flaring in 2018

40-50

Marginal undeveloped fields are available for bid after the election Average production for the year Q3 2019.

36,972 MB*

Proven Crude Oil reserve in Nigeria as at 2018 m Total barrels of Crude Oil Exported in the year 2018

Source: OPEC, NBS, International Energy Agency, EnergyMix Report, 1Million Barrels Per Day, *Million Barrel

686mn

1.84MBPD1

▪ Global crude oil prices have been fluctuating on the back of an increased US supply and recovery

• f

Saudi

• utput

following the drone attack on their oil facility. ▪ To assuage the fear of a glut, OPEC has directed Nigeria and Iraq to cut daily crude oil production by 232,000BPD ▪ Regulated prices for PMS imposed by the federal government for the downstream sector has hampered economics of trade. ▪ Domestic gas production to spike with execution of key agreements by Federal Government, through NNPC for delivery of seven Critical Gas Development Projects. The projects will bring 3.4bcf per day of gas on line by 2020. ▪ Reduction

• f gas flaring

through the Nigeria Gas Flare Commercialization Programme (NGFCP) on track to prevent gas flaring in Nigeria and recover about $80mn in lost revenue. ▪ Global LNG export capacity is rising. The current top 7 exporters of LNG in the world are Qatar, Australia, Malaysia, Nigeria, Indonesia, Algeria and Russia. www.transcorpnigeria.com

Key insights

Key Energy indicators in Nigeria

Segment Review – Oil and Gas

35

The

• ccasional

agitations by indigenes in the Niger Delta due to environmental and political reasons has remained a challenge for the oil and gas

• industry. However, recent times

have seen a relatively peaceful atmosphere. Fluctuation in global oil prices in 2019 had its toll

• n

the external reserve of the country and also dampen investors interest in the upstream sub sector. The price ceiling placed by the government

• n

PMS, has hampered the economics

• f

trade The continued uncertainty surrounding the Petroleum Industry Bill (PIB) has also slowed the exploration and production scene in Nigeria. The long-promised sector reform has been repeatedly delayed, creating uncertainty among investors with respect to the future legal and fiscal environment. Inadequate infrastructure in the form

• f

transportation and distribution network for natural gas remains a huge challenge to the development

• f

the domestic gas value chain.

The oil and gas industry in Nigeria continues to face several challenges. . .

Delay in PIB Infrastructural Deficit Price fluctuations and price ceilings Insurgency/pipeline vandalism

Segment Review – Oil & Gas

www.transcorpnigeria.com

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Estimated Oil Reserve and Gas are 189.73mn Million Stock Tank Barrels (MMSTB)and 377.48 Billion Standard Cubic Feet (BSCF) respectively.

Partnerships

 Identification

• f

competent and capable technical/financial partners to jointly develop asset  Commence funding considerations and financing options for OPL 281 Work Programme obligations

2018 - 2019

Drilling Expansion

 Site Survey and Location Preparation  Community Engagement and conclude FTOs with Host Communities  Complete drilling of Obote-2X Well.  Increase production

• f

the hydrocarbons (oil & gas) depending

• n drilling results;

 Expand gas productions  Conversion of OPL to OML

2019 - 2020 2021 - 2022

Production

 Acquire 3D Seismic Data  Drilling of second well  Complete all Work Programme obligations

2020 - 2021

…we however, have perfectly mapped out our path to success in the sector

www.transcorpnigeria.com

Segment Review – Oil and Gas

OUTLOOK

38

Q4 2019 Outlook

Hospitality Power Business

ADR (N) 81,602 82,510 Occupancy(%) 64% 66% Rev Par (N) 52,652 54,726 Average (MW) Available Capacity 560 677 Average (MW) Generated Capacity 349 370 Q4 2019: Community Engagement Q1 2020: Commence Exploration Q3 2019 Actual Q4 2019 Target

www.transcorpnigeria.com

Oil and Gas

39

Strategic fit Gas Availability Sufficient Evacuation Capacity Cost-efficient Capacity Recovery Eligible Customer Opportunity

01 02 03 04 05

Afam Acquisition: Another emerging success story

www.transcorpnigeria.com

40 Plant Capacity Power Plant Gas Turbine Model Configuration & Capacity Status Afam I BBC Type 12 2X10.3MW and 2X17.5MW Decommissioned Afam II BBC Type 9C 4 X 23.9MW Decommissioned Afam III BBC Type 9C 4 X 27.5MW Decommissioned Afam IV BBC Type 13D 6 X 75MW 2 turbines in service Afam V Siemens V 94.2 2 X 138MW Not in service Afam III FP GE TM-2500 turbines 8 X 30MW Ready but not yet hooked up

• By a letter dated 17th October 2019, BPE notified the Transcorp Consortium of the approval of the National

Council on Privatisation (NCP) of the Consortium as the Preferred Bidder for Afam Power Plc and Afam Fast Power Limited. NCP has also authorized BPE to enter into negotiation with the Consortium regarding the terms of the transaction. Receipt of NCP Approval

• Following agreement on payment terms with the FG, GE has commenced work on AFAM Three fast Power.

We expect this to be delivered before our takeover. GE Work Resumption

Afam Acquisition: Overview

www.transcorpnigeria.com

41

Secure Formal Approval from NCP

Issue of 15% Bank Guarantee Negotiation of Transaction Agreements Execute Transaction Agreements Payment of 25% Acquisition Cost Payment of Balance 75% Acquisition Cost Takeover

Q4 2019 Q4 2019 Q4 2019 Q1 2020 Q1 2020 Q2 2020 Early Q3 2020 We will explore the possibility of early takeover.

Secure Funding Indicative Timeline

Afam Acquisition: Outlook

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AWARDS, CSR & OTHER SOCIAL ENGAGEMENT

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Seven Star Luxury & Hospitality Awards Transcorp Hilton Abuja received 2 sectoral leadership awards for Nigeria and Africa. President/CEO Valentine Ozigbo was honoured with the Seven Stars Hospitality Person of the Year. Chairman, Tony O. Elumelu received the first ever Man of the Year award

• Discharge of Transcorp Hotels Plc from BPE post privatization monitoring
• Approval of Transcorp Power Consortium as Preferred Bidder by NCP for the 100% acquisition of Afam GENCO
• MOU Signing with ENGIE for the development of solar mini-grids in Nigeria
• Trip Advisor 2019 Certificate of Excellence for Transcorp Hilton Abuja – This is awarded to hotels that deliver great service

consistently.

• 2019 Certificate of Excellence for the Bukka Restaurant at Transcorp Hilton Abuja
• 2019 Travellers’ Choice Awards THP is in the Top 10 Hotels for Service Nigeria Category

Latest Milestone and Awards

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Support for Tony Elumelu Foundation: Transcorp actively supports Africa’s largest entrepreneurship development initiative that’s is powered by the Tony Elumelu Foundation. This year’s forum was hosted at Transcorp Hilton Abuja on the 26th and 27th of July 2019 was attended by received worldwide coverage. It is worthy of mention that the Foundation has supported 7,520 entrepreneurs since inception.

CSR Activities

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School Donations: Transcorp Hotels Calabar, in line with our commitment to improve lives and transform Nigeria, donated stationery (branded notebooks and pens) to pupils of the Presbyterian Nursery and primary school in September World Teachers Day Celebration: Transcorp Power Staff School joined the rest of the world to celebrate teachers with the theme, “Young Teachers: The future of the Profession.” In addition, teachers at the school were treated to various activities including a health workshop.

CSR Activities

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Business Empowerment Program for Women: The 5th Edition of the initiative which is sponsored by Transcorp Hilton Abuja, held with four women participating in the empowerment program. International Day of the Girl Child 2019: Transcorp Hilton Abuja hosted, hosted the pupils of Alderwood International School Abuja as part of activities to celebrate the International Day of the Girl Child . The young guests were treated to warm hospitality while the MD/CEO Owen Omogiafo took them on a tour of the hotel.

CSR Activities

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1. As part of our concerted efforts in solving Nigeria’s power challenges. Transcorp and Engie entered into a strategic alliance for the development of solar mini grids in Nigeria. Our Executive Director, Legal and Business Development, Chris Ezeafulukwe and ENGIE Africa’s CEO, Yoven Moorooven at the signing of Memorandum of Understanding (MOU) to herald this partnership. 2. In line with our commitment to intensify advocacy robust electricity value chain, we participated at the Business Day Power Conference and our President/CEO Valentine Ozigbo x-rayed the challenges and potentials of the power generation space. He also touched on our diversification strategy into the off-grid sub sector as part of the strategic objective of deepening our play in the industry. 3. Furthermore, MD/ CEO of Transcorp Hotels Plc Owen Omogiafo, spoke to aspiring female leaders on the theme #SheSeesnoBoundaries.

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…and all stakeholders due to their immense impacts our businesses

Stakeholder Engagement

QUESTIONS

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Contact:

Mutiu Bakare mutiu.bakare@transcorpnigeria.com Adekunle Elumaro adekunle.elumaro@transcorphotelsplc.com Ejike Alumona ejike.alumona@transcorppower.com

Thank You