Investor Presentation Improving Lives, Transforming Nigeria RC HALF YEAR, 2018

Transcription

1 Investor Presentation Improving Lives, Transforming Nigeria RC HALF YEAR, 2018

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, 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

3 Outline OVERVIEW OPERATING ENVIRONMENT FINANCIAL REVIEW OUTLOOK QUESTIONS & ANSWERS APPENDIX

4 Overview 3

5 Overview of the Company 83% ownership Hotels Transcorp Hilton Abuja - No. 1 hotel asset in Nigeria 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 Diversified Conglomerate with a growth agenda 50.01% ownership 100% ownership Power OPL281 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 Mn stock tank barrel Gas Bn std cubic feet Expected production in 2019/20 4

6 Operating Environment 5

7 Local Economy Review Gross Domestic Product Trend The Nigerian economy expanded 1.95% year-onyear 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 output 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 Crude Oil price moved above $70 per barrel ource: National Bureau of Statistics, Central Bank of Nigeria and US Energy Information Administration -1.00% Quarterly GDP Growth Rate Trend 3.00% 2.00% 1.00% 0.00% Jul '17 Aug ' % 1.17% 2.11% 1.95% 2%* Q Q Q Q Q Q % *World Bank forecast Avg. Monthly External Reserves and Brent Crude Prices Average Monthly External Foreign Reserves Sep '17 Oct '17 Nov '17 Dec '17 Jan '18 Feb '18 Mar '18 Brent Crude Price April '18 May '18 June '

8 Local Economy Review Inflation Rate The Consumer Price Index (CPI) which measures inflation increased by 11.23% (year-on-year) in June This represents the seventeenth consecutive disinflation since January Food Inflation stood at 12.98% YoY in June 2018 Exchange Rate Trend Inflation Rate Trend (%) May '18 Mar '18 Jan '18 Nov '17 Sep '17 Jul ' 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. Source: National Bureau of Statistics, Central Bank of Nigeria and US Energy Information Administration USD-NGN Exchange Rate Trend (N) CBN BDC

9 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 No substantial FX loss anticipated by year end based on CBN policy direction Higher occupancy due to more completed floors (Compare to Q2 2017) Stabilising foreign exchange regime Improved gas supply driving generation NBET N701bn PAP Focus on recovery for Hospitality 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 Q (Q2 2017: 53%) while Average Generation grew to 531MW (Q2 2017: 311MW The Payment Assurance Plan (PAP) window continues. TPL was paid up to 80% of 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. 8

10 Financial Review 9

11 Result Snapshot A solid performance underpinned by sustained momentum in the growth of our businesses Group HY 2018 HY 2017 Change(%) Revenue % Gross Profit % INCOME STATEMENT (N billion) Operating Profit % Other Income % Total Comprehensive Income % Profit Before Tax % Profit After Tax % Group (YTD) HY 2018 FY 2017 Change (%) BALANCE SHEET (N billion) Total Assets % Total Equity % Total Liabilities % 10

12 Key Ratios Annualised ROA Annualised ROE 7.55% 4.30% 21.58% 12.86% Q Q Q Q EPS (kobo) Profit Margin % % Q Q Q Q

13 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 % Operating profit 17,347 9,521 82% Finance income % 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, % Taxation (1,069) (369) 190% Profit after taxation 10,875 4, % Other comprehensive income Change in value of AFS 96 2,056-95% Total Comprehensive income 10,972 6,220 76% Items Revenue Cost of sales Admin. Expenses Other income Comment Increase is driven by higher generation in TPL and increase in occupancy due to release of more floors in THP Movement is driven by increase in cost of gas to achieve increase in generation Increase is largely due to repairs and maintenance in the ongoing upgrade Change is driven by proceeds on sale of THP assets as a result of the upgrade 12

14 Group - Assets Year to Date Item HY 2018 FY 2017 Change Items Comment NON CURRENT ASSETS (N million) Property, Plant and Equipment 146, ,836 3% Debt and Equity Securities 5,068 4,971 2% Other Non Current Assets 44,584 44,626 0% PPE Increase is due to the assets being added in upgrade project in THP. Total Non Current Assets 195, ,433 2% Trade & Other Receivables 84,852 83,828 1% Debt and Equity Securities Movement is due to appreciation in share price of equities CURRENT ASSETS (N million) Cash and Cash Equivalent 4,971 5,598-11% Other Current Assets 4,785 4,663 3% Total Current Assets 94,608 94, % Total Asset 290, ,522 2% Trade and other Receivables Cash Largely due to receivables owed by NBET for sale of power in Q Movement is due to repayment of loans and bond due 13

15 Group - Liabilities CURRENT LIABILITIES (N million) LONG TERM LIABILITIES (N million) EQUITIES (N million) Item HY 2018 FY 2017 Change 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, ,656 0% 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, ,815-3% 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, ,522 2% Items Trade and other payables Comment Increase is driven by payments due to gas suppliers for TPL and vendors for the upgrade of THP Current Increase in Income Tax income tax provision for Q2, largely from liabilities THP. Borrowings Reduced due to repayment of mature loans. 14

16 Income Statement (QoQ) Revenue Trend (N Mn) PBT Trend (N Mn) 18,406 22,583 23,529 26,302 27,787 2,799 4,509 3,263 5,935 6,009 Q Q Q Q Q Q Q Q Q Q

17 Segment Review 16

18 Segment Review Hospitality (N million) Q Q Variance Revenue 4,192 3,212 31% Cost of Sales 1, % Gross profit 3,101 2,358 32% Other Income % Items Revenue Comment 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 OPEX (1,997) (1,919) 4% Operating Profit 1, % Finance Income % EBIT 1, % 17

19 Segment Review Hospitality Quarterly Revenue and PBT Trend (N Mn) Quarterly Gross Profit Margin Revenue PBT 74% 74% 3,349 2, ,829 3,629 4,192 1, ,152 73% 73% 72% Q Q Q Q Q Q Q Q Q Q Quarterly Product Mix(Revenue Cont.) Rooms Food & Beverage Others 64% 63% 65% 60% 62% Quarterly PBT Margin Trend 52% 28% 26% 8% 11% 33% 27% 25% 13% 7% 8% 17% 17% 24% 27% Q Q Q Q Q Q Q Q Q Q

20 Segment Review Hospitality Quarterly Occupancy Rate 80% 60% 53% 73% 54% 67% 67% 40% 20% 0% Q Q Q Q Q Quarterly RevPAR (N) Quarterly ADR (N) 43,610 59,268 43,699 53,850 55,020 82,679 81,522 80,474 80,808 82,948 Q Q Q Q Q RevPAR Revenue per available room Q Q Q Q Q ADR Average Daily Room Rate 19

21 Segment Review Power (N million) Q Q 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% Items Revenue Cost of sales OPEX Comment Change is due to significant improvement in gas supply with relative peace in Niger/Delta Change is driven by increase in gas underpinning increase in Revenue Change is largely due to increase in cost that are revenue driven, as well as repairs and maintenance Forex Loss % Net Finance cost 1,697 1,944-13% PBT 5,750 2, % 20

22 Segment Review Power Quarterly Generated v. Available Capacity (MW) Quarterly Generated Available Capacity % Quarterly Average Utilization 75% 76% 79% 81% Q Q Q Q Q Q Q Q Q Q Quarterly Capacity and Energy Sales Tariff (N) Capacity Charge Energy Sales Tariff 15,672 15,672 15,672 15,672 15,274 7,884 7,884 7,884 7,884 8,321 Q Q Q Q Q

23 Segment Review Power Quarterly PBT Trend (N Mn) Gross Profit Margin 43% 2,756 4,554 1,401 6,113 5,750 37% 40% 41% 40% Q Q Q Q Q Q Q Q Q Q Quarterly Product Mix Capacity Charge Energy Sent Out Quarterly PBT Margin Trend 27% 24% 24% 64% 64% 64% 64% 65% 18% 35% 35% 35% 35% 34% 7% Q Q Q Q Q Q Q Q Q Q

24 Outlook 23

25 Q Closing Expectations Business Hospitality Transcorp Hilton Abuja Operations Agenda Q1 Actual Q2 Target 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 Implication Increased market coverage New revenue sources Market share protection Continue cost management initiatives Aggressive marketing aligned with competitive pricing Maintain profitability track record Power OPL 281 Target 850MW available capacity and generated power of [ MW]. 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 24

26 Q Closing Expectations Business Q1 Q2 Q2 Actual Actual Q3 Target Target ADR (N) 82,948 85,084 Hospitality Occupancy 67% 70% Rev Par (N) 55,020 59,559 Power Average (MW) Available Capacity Average (MW) Generated Capacity

27 Our Journey So Far Transcorp was incorporated in 2004 Transcorp Ughelli Power emerges preferred bidder for Ughelli Power Plc (UPP) in 2012 Commissioning of Teragro Fruit juice concentrate plant in 2012 TPL: Achieve 2500MW Available Capacity Acquisition of NICON Hilton Hotel Abuja in 2005 Execution of management agreement with Hilton for Transcorp Hilton Ikoyi in 2013 Successful takeover of UPP in 2013 THP: Complete Transcorp Hotel Ikoyi and Portharcourt Listing on the Stock Exchange in 2006 Execution of Production Sharing Contract on OPL 281 in 2014 Transcorp Hotels IPO in 2014 OPL 281: Production of oil and gas 1 PHASE ONE 3 PHASE THREE PHASE TWO Acquisition of Metropolitan Calabar in 2009 Management Agreement for Hilton Port Harcourt executed in 2014 Award as the Most Compliant Firm in Nigeria by the NSE in 2014 Expand into infrastructure development Heirs Holdings becomes core investor 2011 Transcorp Hotels N20bn bond issuance in 2015 Merger of TUPL and UPP as Transcorp Power Ltd in 2015 Expand into Africa Commenced full Upgrade Project for Transcorp Hilton Abuja in 2016 Transcorp Power commissioned GT 15 a 115MW Gas Turbine in

28 Questions & Answers 27

29 Appendix Business Update 28

30 Overview A Short Story of Execution 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, Diversified conglomerate with a growth agenda With a Purpose of Improving Lives, Transforming Nigeria Listed Company with over 300,000 shareholders Deeply rooted values are the 3Es of Execution, Enterprise and Excellence 29

31 Transcorp Hotels Plc 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 of inventory and under renovation, with target completion by October 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. 30

32 Transcorp Power Ltd POSITION AS NIGERIA S TOP GENCO APRIL MAY JUNE

33 OPL 281 OPL 281 Hydrocarbons in Place OIL GAS Reservoir MMSTB BSCF Proven Prospects Total Drilling/Operations Update The Drilling permit has been revalidated by DPR and approval feedback sent to NAPIMS. 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. Million Stock Tank Barrels (MMSTB), *Billion Standard Cubic Feet (BSCF) SACOIL Update The partnership discussion with Sacoil is continuing 32

34 Contact: Mutiu Bakare