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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
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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
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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
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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
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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
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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.
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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
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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)
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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.
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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%
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SEGMENT REVIEW
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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
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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%
Profit Before Tax 5,042 3,680 37%
Income Tax (1,328) (998) 33%
Profit After Tax 3,714 2,682 38%
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.
www.transcorpnigeria.com
Segment Review – Hospitality
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
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Segment Review – Hospitality
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)
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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%
Profit Before Tax 20,751 10,838 91%
Income Tax 651 1,883 -65%
Profit After Tax 21,402 12,721 63%
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Segment Review – Power
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
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Segment Review – Power
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
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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
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QUESTIONS?
APPENDIX
Contact: Mutiu Bakare
Florence Nasamu
www.transcorpnigeria.com
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Thank You