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 OPERATING FINANCIAL OVERVIEW ENVIRONMENT REVIEW 3 5 9 OUTLOOK QUESTIONS & APPENDIX ANSWERS 28 23 27 2
Overview 3
Overview of the Company Transcorp Hilton Abuja - No. 1 hotel asset in • Nigeria - 670 rooms, 5 hotel 83% Transcorp Hotels Calabar – 132 room, 3 hotel • Hilton Ikoyi (320 room, 5 )& Hilton PH (250 room, • ownership 5 ) under development and opening 2019/2020 Hotels Diversified • c.972MW gas fired power plant Present available capacity of 652MW 50.01% • Conglomerate • Medium term capacity target of 2500MW ownership with a growth Power agenda Owner/operator of OPL 281 oil block • Reserve estimates Oil - 189.73Mn stock tank • 100% barrel Gas – 377.48Bn std cubic feet • ownership Expected production in 2019/20 • OPL281 4
Operating Environment 5
Local Economy Review Gross Domestic Product Trend The Nigerian economy expanded 1.95% year-on- Quarterly GDP Growth Rate Trend • year in the first quarter of 2018, easing from an 3.00% upwardly revised 2.1% growth in the previous 2.11% 2%* 1.95% period. 2.00% 1.17% 0.72% It is the fourth consecutive quarter of expansion, as • 1.00% the oil sector continued to rise while the non-oil output growth slowed. 0.00% Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 -0.91% -1.00% *World Bank forecast External Reserves Avg. Monthly External Reserves and Brent Crude Prices Average Monthly External Foreign Reserves Brent Crude Price Foreign Exchange Reserves in Nigeria increased to • 50 90 47,630 USD Million in June 2018 from 47,620 USD 75 40 Million in May of 2018. 60 30 45 20 30 Crude Oil price moved above $70 per barrel • 10 15 0 0 Jul '17 Aug Sep Oct Nov Dec Jan Feb Mar April May June '17 '17 '17 '17 '17 '18 '18 '18 '18 '18 '18 Source: National Bureau of Statistics, Central Bank of Nigeria and US Energy Information Administration 6
Local Economy Review Inflation Rate Trend Inflation Rate Trend (%) The Consumer Price Index (CPI) which measures • 11.23 inflation increased by 11.23% (year-on-year) in June May '18 11.61 12.48 2018. This represents the seventeenth consecutive Mar '18 13.34 disinflation since January 2017. 14.33 Jan '18 15.13 15.37 Food Inflation stood at 12.98% YoY in June 2018 • Nov '17 15.9 15.91 Sep '17 15.98 16.01 Jul '17 16.05 Exchange Rate The CBN signed a $2.5 billion currency swap • USD-NGN Exchange Rate Trend (N) arrangement with the People’s Bank of China (PBOC) in CBN BDC May, under which the CBN would hold N720 billion in an account in favour of the PBOC while the Chinese central 450 bank would hold 15 billion yuan, implying an exchange 350 rate of N48 to the yuan. 250 This will strengthen the Naira by reducing the demand 150 • for the United States dollar by Nigerians who import 50 goods from China. Source: National Bureau of Statistics, Central Bank of Nigeria and US Energy Information Administration 7
Key Trends Driving Our Business • 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 • Higher occupancy due to • No substantial FX loss anticipated by year end more completed floors based on CBN policy direction (Compare to Q2 2017) Focus on Stabilising recovery foreign Improved for exchange gas supply NBET Hospitality regime driving N701bn generation PAP • Improved gas supply, driven by a) tactical engagement of • The Payment Assurance Plan (PAP) window suppliers b) infrastructural improvements by suppliers and c) continues. improved payments to suppliers via PAP, led to generation • TPL was paid up to 80% of 2018 invoices as increase guaranteed under the PAP. This is inclusive of 90% of • Capacity Utilisation grew to 81% in Q2 2018 (Q2 2017: 53%) gas invoice paid directly to suppliers while Average Generation grew to 531MW (Q2 2017: 311MW • Outlook is to fast track payment to current month. 8
Financial Review 9
Result Snapshot A solid performance underpinned by sustained momentum in the growth of our businesses Group HY 2018 HY 2017 Change(%) Revenue 54.09 34.17 58% Gross Profit 24.57 14.87 65% Operating Profit 9.52 82% 17.35 INCOME STATEMENT Other Income 0.31 32% 0.41 ( N’billion ) Total Comprehensive Income 10.97 6.22 76% Profit Before Tax 11.94 4.53 164% Profit After Tax 10.88 4.16 161% Group (YTD) HY 2018 FY 2017 Change (%) Total Assets 290.26 285.52 2% BALANCE SHEET Total Equity 105.87 95.71 11% ( N’billion ) Total Liabilities 184.40 189.82 -3% 10
Key Ratios Annualised ROA Annualised ROE 21.58% 7.55% 12.86% 4.30% Q2 2018 Q2 2017 Q2 2018 Q2 2017 EPS (kobo) Profit Margin 11.6 20.11% 12.18% 3.87 Q2 2018 Q2 2017 Q2 2018 Q2 2017 11
Group - Income Statement Items Comment HY 2018 HY 2017 Variation N’mn N’mn % Increase is driven by higher generation Revenue in TPL and increase in occupancy due 54,089 34,174 58% Revenue to release of more floors in THP (29,517) (19,300) 53% Cost of Sales Movement is driven by increase in cost 24,573 14,874 65% Gross profit Cost of sales of gas to achieve increase in generation (7,618) (5,664) 35% Administrative expenses Admin. Increase is largely due to repairs and 405 306 32% Other income/expenses Expenses maintenance in the ongoing upgrade 17,347 9,521 82% Operating profit Other Change is driven by proceeds on sale 473 435 9% Finance income income of THP assets as a result of the upgrade (5,013) (4,701) 7% Finance cost (862) (722) 19% Foreign - exchange loss (5,403) (4,989) 8% Net finance (cost)/income 11,944 4,532 164% Profit before taxation (1,069) (369) 190% Taxation 10,875 4,164 161% Profit after taxation Other comprehensive income 96 2,056 -95% Change in value of AFS 10,972 6,220 76% Total Comprehensive income 12
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