Unaudited condensed consolidated interim financial For the period ended
Statement of Financial Position As at Note Assets Non-current assets Property, plant and equipment 6 120,173,968 109,761,030 22,085 35,015 Intangible assets 7 38,876,945 38,886,750 5,076,158 5,076,385 Investment property 8 1,706,600 1,706,600 1,706,600 1,706,600 Investment in subsidiaries 9 - - 27,529,887 27,529,887 Debt and equity securities 14 2,065,414 1,764,937 2,065,414 1,764,937 Prepaid lease rental (long term) 11 66,100 5,000 - - 162,889,027 152,124,317 36,400,144 36,112,824 Current assets Inventories 12 4,645,155 4,597,456 - - Trade and other receivables 13 48,441,984 31,353,769 23,797,373 20,137,082 Prepaid lease rental (short term) 11 30,000 30,000 - - Debt and equity securities 14 85,642 358,887 85,642 358,887 Cash and cash equivalents 15 4,369,649 14,419,520 17,855 10,686 57,572,430 50,759,632 23,900,870 20,506,655 Total assets 220,461,457 202,883,949 60,301,014 56,619,479 Liabilities Current liabilities Trade and other payables 16 34,024,204 20,097,690 8,286,857 7,647,979 Taxation 17 4,383,085 5,695,106 213,512 202,198 Borrowings (short term) 18 14,173,782 15,363,985 5,309,039 5,627,440 Advance deposits 19 1,875,000 1,875,000 1,875,000 1,875,000 54,456,071 43,031,781 15,684,408 15,352,617 Non-current liabilities Borrowings (long term) 18 81,806,854 61,844,507 13,176,886 10,045,155 Deferred tax 10 10,502,430 10,502,430 - - 92,309,284 72,346,937 13,176,886 10,045,155 Total liabilities 146,765,355 115,378,718 28,861,294 25,397,772 Equity Ordinary share capital 28 20,328,524 19,360,499 19,360,499 19,360,499 Share premium 28 6,245,343 7,213,368 7,213,368 7,213,368 Treasury shares 28 (345,819) (345,819) - - Other reserves (188,548) (587,547) (52,776) (475,867) Retained earnings 20,170,317 28,138,355 4,918,629 5,123,707 Equity attributable to owners of the parent 46,209,817 53,778,856 31,439,720 31,221,707 Non controlling interest 29 27,486,285 33,726,375 - - Total equity 73,696,102 87,505,231 31,439,720 31,221,707 Net equity and liabilities 220,461,457 202,883,949 60,301,014 56,619,479-0 - 0 - The notes on pages 5 to 18 are an integral part of these financial statements. -0.065200001 The financial statements on pages 8 to 47 were approved and authorised for issue by the Board of Directors on 24 March and Ibikunle Oriola Chief Finance Officer FRC/2013/ICAN/00000004372 Emmanuel Nnorom President, Chief Executive Officer FRC/2014/ICAN/00000007402 1
Statement of Comprehensive Income For the nine months ended Note Revenue 20 41,921,050 30,425,206 1,723,376 2,271,384 Cost of sales 21 (22,081,654) (12,247,880) - - Gross profit 19,839,396 18,177,326 1,723,376 2,271,384 Administrative expenses 24 (8,966,826) (8,307,505) (1,322,925) (1,140,007) Other income/expenses 22 364,062 1,169,083 879,422 883,144 Other (losses)/gains - net 23 347,008 - - - Operating profit 11,583,640 11,038,904 1,279,873 2,014,521 Finance income 25 786,283 942,522 1,018,182 844,310 Finance cost 25 (25,152,912) (4,793,136) (2,330,795) (1,620,045) Finance cost -net (24,366,629) (3,850,614) (1,312,613) (775,736) Profit before taxation (12,782,989) 7,188,290 (32,740) 1,238,786 Taxation 17 (1,425,139) (1,302,538) (172,338) (227,138) Profit for the period (14,208,128) 5,885,752 (205,078) 1,011,648 Profit attributable to: Owners of the parent (7,968,038) 3,003,106 (205,078) 1,011,648 Non controlling interest (6,240,090) 2,882,646 - - Other comprehensive income Items that may be reclassified to profit or loss: Changes in the fair value of available-for-sale (equity securities) 14 398,999 (63,367) 398,999 (63,367) Total comprehensive income for the period (13,809,129) 5,822,385 193,921 948,281 Attributable to: Owners of the parent (7,569,039) 2,939,739 193,921 948,281 Non controlling interest (6,240,090) 2,882,646 - - Basic EPS (kobo) 27 (19.02) 7.76 (0.53) 2.61 Diluted EPS (kobo) 27 (19.02) 7.76 (0.53) 2.61 The result shown above relate to continuing operations, there are no incomes or expenses from discontinued operations. The notes on pages 5 to 18 are an integral part of these financial statements. 2
Statement of Changes in Equity For the nine months ended Attributable to owners of the parent Total Non Total Share Share Treasury Other Retained Controlling Controlling Equity Capital Premium Shares Reserves Earnings interest interest Balance at 1 January 19,360,499 7,213,368 (137,790) - 30,070,219 56,506,296 33,248,555 89,754,851 Revaluation of AFS financial assets (63,367) (63,367) (63,367) Profit for the period - - - - 3,003,106 3,003,106 2,882,646 5,885,752 Dividend paid (2,323,281) (2,323,281) - (2,323,281) Balance at 19,360,499 7,213,368 (137,790) (63,367) 30,750,044 57,122,754 36,131,201 93,253,955 Balance at 1 January 19,360,499 7,213,368 (345,819) (587,547) 28,138,355 53,778,856 33,726,375 87,505,231 Profit for the year - - - - (7,968,038) (7,968,038) (6,240,090) (14,208,128) Acquisition of treasury shares - - - - - - - - Shares alloted to NCI - - - - - - - - Dividend paid - - - - - - - - Other comprehensive income - - - 398,999-398,999-398,999 Balance at 19,360,499 7,213,368 (345,819) (188,548) 20,170,317 46,209,817 27,486,285 73,696,102 Share Share Other Retained Total Capital Premium Reserves Earnings Balance at 1 January 19,360,499 7,213,368-6,887,323 33,461,190 Revaluation of AFS financial assets - - (63,367) - (63,367) Dividend paid - - - 1,011,648 1,011,648 Profit for the year - - - (2,323,281) (2,323,281) Balance at 19,360,499 7,213,368-63,367 5,575,690 32,086,190 Balance at 1 January 19,360,499 7,213,368 (475,867) 5,123,707 31,221,707 Transfer from OCI - - 24,092-24,092 Dividend paid - - - - - Loss for the period - - - (205,078) (205,078) Other comprehensive income - - 398,999-398,999 Balance at 19,360,499 7,213,368 (52,776) 4,918,629 31,439,720 The notes on pages 5 to 18 are an integral part of these financial statements. 3
Statement of Cash Flows For the nine months ended Note Cash flows from operating activities Cash generated from/(used in) operations 31 11,332,126 11,291,519 (1,448,750) (2,253,627) VAT paid - - Tax paid 17 (2,737,160) (1,805,196) (161,024) (175,224) Net cash flows generated from /(used in) operating activities 8,594,966 9,486,323 (1,609,774) (2,428,851) Cash flows from investing activities Interest received 25 786,283 942,522 1,018,182 844,310 Increase in intangible assets 7 (516) (16,157) - Purchase of property, plant and equipment 6 (12,819,469) (6,788,505) (415) (937) Proceeds from Sale of property, plant and equipment Proceeds from sale of AFS equity securities 98,522 98,522 Fixed income investment 14 18,119 440,934 18,119 440,934 Net cash flows (used in)/ generated from investing activities (11,917,061) (5,421,206) 1,134,408 1,284,307 Cash flows from financing activities Net movement in borrowings 18,772,144 6,964,005 2,813,330 5,091,940 Interest payment 25 (6,702,527) (4,793,136) (2,330,795) (1,620,045) Dividend Payment - (2,323,281) - (2,323,281) Net cash flows generated/ (used in) from financing activities 12,069,617 (152,412) 482,535 1,148,614 Net increase/ (decrease) in cash and cash equivalents 8,747,522 3,912,705 7,169 4,069 Cash and cash equivalents at the beginning of the year 15 14,419,520 2,930,517 10,686 8,118 Foreign exchange (loss)/ gain on cash and cash equivalents 23 (18,797,393) 266,672 - - Cash and cash equivalents at the end of the period 15 4,369,649 7,109,894 17,855 12,187 The notes on pages 5 to 18 are an integral part of these financial statements. 4
For the nine months ended ` 1. General information Transnational Corporation of Nigeria Plc, ("the " or "Transcorp"), was incorporated on 16 November, 2004 as a private limited liability domiciled in Nigeria in accordance with the requirements of the Companies and Allied Matters Act. Following a successful initial public offer (IPO), the was in December 2006, listed on the Nigerian Stock Exchange. The shares of the have continued to be traded on the floor of the Exchange. The is domiciled in Nigeria and the address of its registered office is 38 Glover Road, Ikoyi, Lagos, Nigeria. The maintains controlling interests in the following companies. The, together with the subsidiaries are known as the Transcorp, ("the ") - Capital Leisure and Hospitality Limited - Transcorp Hotels Plc - Transcorp Hotels Calabar Limited - Transcorp Energy Limited - Teragro Commodities Limited - Transcorp Power Limited (Transcorp Ughelli Power Limited) - Transcorp Staff Share Ownership Trust Limited - Transcorp Properties Limited - Transcorp OPL 281 Limited - Transcorp Telecomms Ltd - Transcorp Trading and Logistic Ltd - Transcorp Refining Limited - Transcorp Hotels Ikoyi Limited - Transcorp Hotels Port Harcourt Limited The s business is the investment in and operation of portfolio companies in the hospitality, power, agro-allied and oil & gas sectors. These financial statements are presented in Nigerian Naira, being the functional currency of the primary economic environment in which the operates. 2. Summary of significant accounting policies 2.1 Basis of preparation The interim condensed consolidated financial statements for the third quarter ended, have been prepared in accordance with IAS 34 Interim Financial Reporting and the Companies and Allied Matters Act (CAMA). The interim condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the s annual financial statements as at. The accounting policies adopted in the preparation of the interim condensed financial statements are consistent with those followed in the preparation of the s annual consolidated financial statements for the year ended. In preparing these interim financial statements, Management make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. The significant judgements made by Management in applying the s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements as at and for the year ended. The interim condensed financial statements have been prepared on a historical cost basis except for the fair value basis applied to certain property plant and equipment, intangible assets, investment property and equity investments. The financial statements are presented in Naira being the functional currency of the primary economic environment in which the operates. All values are rounded to the nearest thousand (N 000), except when otherwise indicated. 5
For the nine months ended 3. Financial risk management 3.1 Financial risk factors The s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the s financial performance. The does not hedge any of its risk exposures. The condensed interim financial statements do not include all financial risk management information and disclosures required in the annual financial statements; they should be read in conjunction with the 's annual financial statements as at. Risk management is carried out in line with policies approved by the board of directors. The board provides written policies for overall risk management, as well as set the overall risk appetite for the. Specific risk management approaches are defined for respective risks such as interest rate risk, credit risk,liquidity and investment risk. The s overall risk management program seeks to minimize potential adverse effects on the s financial performance. There have been no changes in any risk management policies since year end. 3.3 Fair value estimation The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows: Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices). Level 3: Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs). The following table presents the s financial assets that are measured at fair value at. 3.3 Fair value estimation (continued) Assets Level 1 Level 2 Level 3 Total Financial assets at fair value through other comprehensive income Equity securities at fair value through OCI 2,065,414 - - 2,065,414 The following table presents the s financial assets and liabilities that are measured at fair value at. Assets Level 1 Level 2 Level 3 Total Financial assets at fair value through profit or loss Equity securities at fair value through profit or loss 1,764,937 - - 1,764,937 There were no transfers between levels 1 and 2 during the year. (a) Financial instruments in level 1 The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm s length basis. The quoted market price used for financial assets held by the group is the current bid price. These instruments are included in Level 1. Instruments included in Level 1 comprise primarily equity investments listed on the Nigerian Stock Exchange (NSE) classified as equity securities at fair value through other comprehensive income and profit or loss in Q3 and financial year respectively. Valuation techniques used to derive level 2 fair values Level 2 fair values of land have been derived using the sales comparison approach. Sales prices of comparable land in close proximity are adjusted for differences in key attributes such as property size. The most significant input into this valuation approach is price per square foot. 's valuation processes The 's finance department includes a team that performs the valuations of financial assets required for financial reporting purposes. This team reports directly to the Chief Financial Officer (CFO). The CFO reports to the Finance and Investment Committee (FIC). Discussions of valuations processes and results are held between the CFO and the FIC periodically in line with the 's reporting process. 6
For the nine months ended 4 Critical accounting estimates and judgments 4.1 Critical accounting policies and key sources of estimation uncertainty The preparation of financial statements requires the directors to use judgment in applying its accounting policies and estimates and assumptions about the future. Estimates and other judgments are continuously evaluated and are based on the directors' experience and other factors, including expectations about future events that are believed to be reasonable under the circumstances. The following discusses the most significant accounting judgments and estimates that the has made in the preparation of the financial statements: Impairment of goodwill The reviews goodwill at least annually and other non-financial assets when there is any indication that the asset might be impaired. The has estimated the value in use and fair value of operating segments to which goodwill is allocated using discounted cash flow models that required assumptions about future cash flows, margins, and discount rates. See note 7 for methods and assumptions used in estimating net recoverable amount. 4.2 Critical judgements in applying the entity's accounting policies Consolidation of entities in which the group holds less than 50% Management consider that the group has de facto control of Transcorp Staff Share Ownership Trust Limited (the entity) even though the group's interest is only 1%. Control has been determined based on the following considerations: i) The directs the activities that significantly affect the entity's returns ii) Transcorp is exposed to variable returns from its involvement with the entity as the number of shares held by the share scheme are used to reduce the share capital of the group iii) Transcorp has the ability to use its power to affect the its returns from its involvement with with the entity 5 Segment Analysis The The chief operating decision-maker has been identified as the Board of Directors of Transcorp. The Board reviews the s internal reporting in order to assess performance and allocate resources. The directors have determined the operating segments based on these reports. The Board considers the business from an industry perspective and has identified 5 operating segments. i ii iii iv v Hospitality The hospitality business is made up of its direct subsidiary Transcorp Hotels Plc. (THP) and indirect subsidiaries, Transcorp Hotels Calabar Limited (THC), Transcorp Hotels Ikoyi Limited and Transcorp Hotels Port Harcourt Limited. These entities render hospitality services to customers. Agro-allied This relates to a subsidiary Teragro Commodities Limited. The subsidiary is engaged in the manufacturing/processing of fruit concentrates from fruits from which the derives revenue. Power This relates to a subsidiary Transcorp Power Limited (TPL). The subsidiary is engaged in generation of electric power. Oil & Gas Two subsidiaries make up the oil & gas segment namely Transcorp Energy Limited and Transcorp OPL 281 Limited. The companies are into the exploration, refining and marketing of petroleum products. The subsidiaries are in the start-up phase and have not started generating revenue. Corporate Centre This segment is the parent, Transnational Corporation of Nigeria Plc and the other non-operational subsidiaries. The Board assesses the performance based on operating profits for each operating segment that is reviewed by the Board. Other information provided, except as noted below, to the Board is measured in a manner consistent with that of the financial statements. Sales between segments are carried out at arm s length. The revenue from external parties reported to the group is measured in a manner consistent with that in the income statement. Total segment assets exclude tax related assets. These are included in the reconciliation to the total statement of financial position assets. 7
For the nine months ended 5 Segment Analysis (continued) As at Hospitality Oil & gas Agro-allied Power Corporate Centre Intersegment eliminations Total Revenue 11,470,931-15,791 30,434,328 1,723,376 (1,723,376) 41,921,050 Finance income 446,957 - - - 1,018,182 (678,856) 786,283 Finance cost - (479,420) (22,767) (22,556,467) (2,330,795) 236,537 (25,152,912) Depreciation and amortisation (727,728) - (31,018) (1,623,551) (12,070) - (2,394,367) Profit/(loss) before taxation 3,926,998 (479,420) (119,682) (13,387,350) (32,740) (2,690,795) (12,782,989) Taxation (1,252,801) - - - (172,338) (1,425,139) Segmental assets 90,204,392 6,761,136 398,417 98,070,467 60,301,016 (35,273,971) 220,461,457 Segmental liabilities 33,887,256 7,557,388 1,552,284 96,215,133 28,861,291 (21,307,997) 146,765,355 Additions to non current assets - 32,378 - - - 32,378 As at Hospitality Oil & gas Agro-allied Power Corporate centre Intersegment eliminations Total Revenue 10,462,430-105,131 19,857,646 2,271,384 (2,271,384) 30,425,207 Finance income 275,947 - - - 844,310 1,120,256 Finance cost - - -25,764 (3,325,061) (1,620,045) (4,970,871) Depreciation and amortisation (769,936) - -5,706 (1,431,111) (12,290) (2,219,043) Profit before taxation 3,417,042 - -166,280 4,970,128 1,175,418 9,396,308 Taxation (1,075,400) - - - (227,138) (1,302,538) At December Segmental Assets 90,943,774 6,761,136 390,365 89,562,660 56,927,580 (41,701,566) 202,883,949 Segmental Liabilities 37,328,677 7,077,968 1,418,255 74,317,985 26,016,232 (30,780,399) 115,378,718 Additions to non current assets - - 485,991 - - - 485,991 Revenues from transactions with other operating segments relates to dividend income from Transcorp Hotels Plc and Transcorp Power Limited to the, Transnational Corporation of Nigeria Plc. Reconciliations of reportable segment revenues, profit or loss, assets and liabilities. The totals presented for the s operating segments reconcile to the key financial figures as presented in its financial statements as follows: Revenue Total revenue for reportable segments 43,644,426 32,696,591 Elimination of inter-segment revenue (i) (1,723,376) (2,271,384) External revenue 41,921,050 30,425,206 Profit or loss Total profit or loss for reportable segments (10,092,194) 9,396,308 Elimination of inter-segment profits (ii) (2,690,795) (2,208,018) Consolidated profit before taxation (12,782,989) 7,188,291 Assets Total assets of reportable segments 255,735,428 244,585,515 Consolidation eliminations (iii) (35,273,971) (41,701,566) Consolidated total assets 220,461,457 202,883,949 Liabilities Total liabilities of reportable segments 146,159,117 118,519,068 Consolidation eliminations (iv) 606,238 (3,140,350) Consolidated total liabilities 146,765,355 115,378,718 8
For the nine months ended 5 Segment Analysis (continued) The nature of differences between the measurements of the reportable segment's assets/liabilities and the assets/liabilities of the is as follows: (i) Elimination of inter-segment revenue relates to dividend income from Transcorp Power Limted and Transcorp Hotels to Transnational Corporation of Nigerira. (ii) Elimination of inter-segment profits relates to dividend income between the segments and other income arising from transactions with non-controlling interests. (iii) Investments of Transnational Corporation of Nigeria Plc in its subsidiaries and investment of Transcorp Hotels Plc in Transcorp Hotels Calabar Limited, Transcorp Hotels Port harcourt Limited and Transcorp Hotels Ikoyi limited respectively accounts for the consolidation eliminations of total assets of reportable segments. Intersegment receivables were also eliminated to arrive at the consolidated total assets. (iv) Inter-segment payables, dividend payable to segments within the and management fees payable to Transnational Corporation of Nigeria Plc from Transcorp Hotels Plc and Transcorp Power Ltd accounts for the consolidation eliminations in total liabilities of the reportable segments. Entity-wide Information The following is an analysis of the 's revenue from continuing operations from its major products and services. Analysis of revenue by category: Rooms 7,347,431 7,096,888 Food & Beverage 3,136,494 2,511,865 Shop rental 509,087 506,594 Service charge 11,262 10,327 Laundry 466,657 336,753 Juice Concentrate 15,791 105,131 Capacity charge 10,634,038 14,090,532 Energy delivered 19,687,716 5,621,766 Ancilliary services 112,574 145,349 Total 41,921,050 30,425,205 The is domiciled in Nigeria where it generates all its external revenue. The total non-current assets of the are all located in Nigeria. 6 Property, plant and equipment Land Building & Improvements Plant & Machinery Furniture & Fittings Computer & Office Equipments Motor Vehicles Capital Work in Progress Total Cost Balance as at 1 January 31,760,758 17,000,877 45,546,578 2,502,609 61,840 597,190 6,521,234 103,991,086 Additions 2,132,500 217,787 1,082,277 350,885 1,279 168,649 14,104,304 18,057,681 Reclassification 1,507,000 16,588 4,364,063 436-29,500 (4,410,587) 1,507,000 Disposals - - - (9,430) (1,635) (92,815) (358,582) (462,462) Balance as at 31 December 35,400,258 17,235,252 50,992,918 2,844,500 61,484 702,524 15,856,369 123,093,305 Balance as at 1 January 35,400,258 17,235,252 50,992,918 2,844,500 61,484 702,524 15,856,369 123,093,305 Additions 16,652 353,206 1,097,014 224,900-3,040 11,124,656 12,819,469 Reclassification - - - - - - - - Disposals - - (1,154) (2,313) (415) (25,385) - (29,267) Balance as at 30 September 35,416,910 17,588,458 52,088,778 3,067,087 61,069 680,179 26,981,025 135,883,507 9
For the nine months ended 6 Property, plant and equipment (continued) Land Building & Improvements Plant & Machinery Furniture & Fittings Computer & Office Equipments Motor Vehicles Capital Work in Progress Total Depreciation and impairment losses Balance as at 1 January - 1,443,735 6,898,158 1,797,656 19,232 313,712-10,472,493 Depreciation - 402,745 2,236,719 213,936 4,205 99,527-2,957,132 Disposals - - - (3,820) (1,320) (92,210) - (97,350) Impairment - - - - Balance as at 31 December - 1,846,480 9,134,877 2,007,772 22,117 321,029-13,332,275 Balance as at 1 January - 1,846,480 9,134,877 2,007,772 22,117 321,029-13,332,275 Depreciation 307,991 1,800,027 194,908-81,571-2,384,497 Disposals - (294) - (251) (6,689) - (7,233) Impairment - Balance as at 30 September - 2,154,471 10,934,610 2,202,680 21,866 395,911-15,709,539 Carrying amounts At 35,400,258 15,388,772 41,858,041 836,728 39,367 381,495 15,856,369 109,761,030 At 35,416,910 15,433,987 41,154,167 864,407 39,203 284,268 26,981,025 120,173,968 Building & improvements Plant & Machinery Furniture & Fittings Computer & Office Equipments Motor Vehicles Capital Work in progress Total Cost Balance as at 1 January 28,294 4,618 29,608 27,008 13,975-103,503 Additions 415-415 Disposals (415) (6,415) - (6,830) Balance as at 28,294 4,618 29,608 26,593 7,975-97,088 Depreciation and impairment losses Balance as at 1 January 19,082 1,124 15,339 21,751 11,192-68,488 Depreciation for the year 5,110 493 2,951 2,114 1,175-11,843 Disposals - - - (154) (5,174) - (5,328) Balance as at 24,192 1,617 18,290 23,711 7,193-75,003 Carrying amounts At 9,212 3,494 14,269 5,257 2,783-35,015 At 4,102 3,000 11,318 2,882 782-22,085 10
For the nine months ended 7 Intangible assets Cost Goodwill Computer software Oil Prospecting License Exploration and Evaluation Expenditure Total Computer software Oil Prospecting License Total At 1 January 30,934,143 145,040 5,075,818 2,818,412 38,973,413 12,966 5,075,818 5,088,784 Addition - 516 - - 516 - - - Disposal - - - - - - - - As at 30,934,143 145,556 5,075,818 2,818,412 38,973,929 12,966 5,075,818 5,088,784 Accumulated amortisation and impairment At 1 January - 86,663 - - 86,663 12,399-12,399 Amortisation charge - 10,321 - - 10,321 227-227 As at - 96,984 - - 96,984 12,626-12,626 Net book value Cost 30,934,143 145,556 5,075,818 2,818,412 38,973,929 12,966 5,075,818 5,088,784 Accumulated amortisation and impairment - (96,984) - - (96,984) (12,626) - (12,626) At 30,934,143 48,572 5,075,818 2,818,412 38,876,945 340 5,075,818 5,076,158 Net book value Cost 30,934,143 145,040 5,075,818 2,818,412 38,973,413 12,966 5,075,818 5,088,784 Accumulated amortisation and impairment - (86,663) - - (86,663) (12,399) - (12,399) At 30,934,143 58,377 5,075,818 2,818,412 38,886,750 567 5,075,818 5,076,385 Goodwill is not amortised but tested for impairment annually. The remaining amortisation period for computer software cost is between 3 to 6 years. The Production Sharing Contract between Transcorp and the Nigerian National Petroleum Corporation was signed by the Federal Government of Nigeria on 2 May 2014. Per the agreement, the exploration period is for 5 years after which the OPL converts to an Oil Mining License for a period of 20 years. Amortisation of the OPL cost will commence when it has been determined that commercial quantity of crude can be produced from the oil field and mining commences. Goodwill has been allocated to the following CGUs Transcorp Hotels Calabar (THC) 863,163 863,163 Transcorp Hotels Plc (THP) 20,369,790 20,369,790 Transcorp Power Limited (TPL) 9,701,190 9,701,190 30,934,143 30,934,143 Goodwill arose from the excess of the consideration over acquisition-date fair values of identifiable assets and liabilities of subsidiaries acquired. The goodwill amount relates to pre-existing goodwill from previous business combinations. In assessing goodwill for impairment at and 2014, the compared the aggregate recoverable amount of the assets included in the CGUs below to their respective carrying amounts. Recoverable amount has been determined based on the value in use of the CGUs using five year cash flow budgets approved by directors that made maximum use of observable markets for inputs and outputs. For periods beyond the budget period, cash flows were extrapolated using growth rates that do not exceed the long-term average for the business. No impairment in Goodwill has been recognised in financial year The key assumptions used for the value-in-use calculations are as follows: TPL THC THP TPL THC THP Budgeted gross margin % 55% 74% 80% 55% 74% 80% Weighted average growth rate 5% 6% 6% 5% 6% 6% Pre-tax discount rate 17% 17% 17% 17% 17% 17% Reasonably possible changes in key assumptions would not cause the recoverable amount of goodwill to fall below the carrying value. 8 Investment property Non-current assets - at fair value At 1 January 1,706,600 2,738,164 1,706,600 1,600,000 Additions - 407,000 - - Fair value gain on investment properties (a) - 106,600-106,600 Transfer to property, plant and equipment (b) - (1,507,000) - - Fair value loss on investment properties (b) - (38,164) - - At period end 1,706,600 1,706,600 1,706,600 1,706,600 11
For the nine months ended 9 Investment in subsidiaries Transcorp Hotel Plc 19,618,523 19,618,523 Transcorp Power Limited 7,860,464 7,860,464 Other subsidiaries companies 50,900 50,900 27,529,887 27,529,887 10 Deferred tax The movement in deferred tax liability is as follows: At 1 January 10,502,430 11,593,635 Adjustment to opening balance - - Income statement credit - (1,091,205) At period end 10,502,430 10,502,430 Accelerated tax depreciation Fair value on revaluation Provisions Tax losses charged to P&L Total At 1 January 4,790,266 6,784,356 15,154 3,859 11,593,635 Adjustment to opening balance - Credited to the income statement (1,091,205) - - - (1,091,205) At 3,699,061 6,784,356 15,154 3,859 10,502,430 At 1 January 3,699,061 6,784,356 15,154 3,859 10,502,430 Credited to the income statement - - - - - At period end 3,699,061 6,784,356 15,154 3,859 10,502,430 11 Prepaid lease rental At 1 January 35,000 65,000 Lease renewal 83,600 Utilisation (22,500) (30,000) At 30 Sept 96,100 35,000 Less minimum lease payments for the next 12 months (30,000) (30,000) Non current lease payments 66,100 5,000 Non current lease payments has been analysed as follows: Due between 1 to 5 years 66,100 5,000 Prepaid lease rental represents amounts paid to Benfruit Nigeria Limited by one of the subsidiaries, Teragro Commodities Limited for lease of facilities and equipment. The lease is for a 10 year period, commencing from the date of commissioning at an initial lease rental of N30 million per annum subject to a renewal option for the lessee of further terms of 5 years each. 12
For the nine months ended 12 Inventories Food and beverage 169,980 147,931 Fuel/ lubricant 128,427 91,307 Spares 4,222,289 4,230,747 Guest supplies 104,224 88,693 Finished goods 430 21,001 Packaging materials 8,752 6,521 Other sundry stock 11,053 11,256 4,645,155 4,597,456 13 Trade and other receivables Trade receivables 42,395,845 25,402,891 - - Less: provision for impairment of trade receivables (a) (1,034,255) (589,973) - - Trade receivables - net 41,361,590 24,812,918 - - Other receivables 4,859,216 4,760,429 3,739,441 3,383,367 Prepayments 637,462 122,875 128,313 51,291 Due from related companies 1,583,716 1,657,547 15,288,493 13,784,675 Dividend receivable - - 4,641,126 2,917,749 48,441,984 31,353,769 23,797,373 20,137,082 a Provision for impairment of trade receivables Balance at 1 January 589,973 147,520 Impairment losses/(write backs) recognised on receivables 444,282 442,453 At period end 1,034,255 589,973 A significant portion of the increase in trade receivable relates to receivable from the Transmission of Nigeria Plc and Nigerian Bulk Electricity Trading Plc which are the government regulated bodies for the power business. 14 Debt and equity securities and 2014 Current portion Equity securities at fair value through profit or loss - - Fixed income investment 85,642 358,887 85,642 358,887 Non-current portion Equity securities at fair value through OCI 2,065,414 1,764,937 2,151,056 2,123,824 See movement in debt and equity securities below: Equity securities Fixed income investment Equity securities Fixed income investment At 1 January 1,764,938 358,887 2,256,379 1,175,219 Fair value gain (Note 23) 398,999 - (475,867) - Liquidation/disposal (98,522) (18,119) (15,575) (467,270) Impairment - (255,126) - -349,062 At period end 2,065,415 85,642 1,764,937 358,887 Impairment recognised to reflect counterparty risk on fixed income investments 13
For the nine months ended 15 Cash and cash equivalents Cash and bank balance 4,369,649 14,419,520 17,855 10,686 Included in cash and bank balance for the is balance held at First Bank of Nigeria Plc of N210 million which is restricted due to a current court lien placed on it since May 2012 as a result of an existing court case between Lagos State Government and Power Holding of Nigeria (PHCN). 16 Trade and other payables Trade creditors 18,927,228 11,173,419 - - Accruals and other liabilities 12,094,824 5,431,646 526,635 474,313 Unearned income 87,733 147,461 - - Deposit from guests 136,676 123,316 - - VAT payable - 73,798 - - Dividend payable 346,414 691,437 - - Deposit for shares 2,410,000 2,410,000 - - Due to related companies 21,329 46,613 7,760,222 7,173,666 34,024,204 20,097,690 8,286,857 7,647,979 17 Taxation Income tax 1,176,141 1,924,066-153,285 Education tax 76,660 130,917 - - 1,252,801 2,054,983-153,285 Tax on franked investment income 172,338 324,194 172,338 324,194 Deferred tax (Note 10) - (1,091,205) - - Tax write back - - - - 1,425,139 1,287,972 172,338 477,479 The movement in tax payable is as follows: At 1 January 5,695,106 5,984,570 202,198 224,137 Provision for the period 1,425,139 2,054,983 172,338 477,479 Adjustment - - - - Payment during the period (2,737,160) (2,344,447) (161,024) (499,418) At period end 4,383,085 5,695,106 213,512 202,198 18 Borrowings Falling due within a year Bank borrowings 14,173,782 12,125,454 5,309,039 5,627,440 Unsecured bond - 3,238,531 - - 14,173,782 15,363,985 5,309,039 5,627,440 Falling due after one year Bank borrowings 62,254,759 45,530,943 13,176,886 10,045,155 Unsecured bond 19,552,095 16,313,564 - - 81,806,854 61,844,507 13,176,886 10,045,155 Total 95,980,636 77,208,492 18,485,925 15,672,595 14
For the nine months ended 19 Advance deposits & company Sacoil / Equity, Energy and Resource (EER) farm-in fees 1,875,000 1,875,000 20 Revenue The group derives the following types of revenue: Rooms 7,347,431 7,096,888 - - Food & Beverage 3,136,494 2,511,865 - - Shop rental 509,087 506,595 - - Service charge 11,262 10,327 - - Laundry 466,657 336,753 - - Juice Concentrate 15,791 105,131 - - Dividend income - - 1,723,376 2,271,384 Capacity charge 10,634,038 14,090,532 - - Energy sent out 19,687,716 5,621,766 - - Ancillary services 112,574 145,349 - - All recognised revenue were generated in Nigeria. 41,921,050 30,425,206 1,723,376 2,271,384 21 Cost of sales Rooms 18,786 15,987 Staff costs 2,534,896 2,393,303 Food and beverage 902,600 693,834 Natural gas and fuel costs 15,290,310 5,923,108 Direct materials 2,469 77,660 Other direct expenses 432,715 327,963 Repairs and maintenance 1,115,798 1,255,171 Depreciation 1,614,544 1,403,551 Insurance 145,248 121,148 Other operating departments 24,288 20,826 22 Other income 22,081,654 12,247,880 Dividend income on equity securities 289,008-289,008 - Management fees from subsidiaries - - 525,100 - Profit on fixed asset disposal 2,627 - - - Profit from disposal of AFS equity securities Other income/(losses) 72,427 1,169,084 65,314 883,144 23 Other (losses)/gains - net 364,062 1,169,084 879,422 883,144 Included in profit or loss Fair value gain on equity securities - - Foreign exchange (loss) / gain 347,008-347,008 - - - Included in other comprehensive income Fair value gain on equity securities 398,999-398,999-15
For the nine months ended 24 Administrative and general expenses Staff costs 1,485,369 1,571,376 289,711 282,485 Depreciation 769,953 815,114 11,843 11,912 Amortisation 9,870 378 227 378 Auditors' remuneration 65,295 62,345 31,083 30,534 Management and incentive fees 1,281,047 1,517,640 304,791 256,664 Professional fees 199,322 320,081 104,439 190,485 Director's remuneration 254,057 200,958 85,805 56,606 Rent and rates 45,702 36,241 22,500 12,500 Loss on asset disposal 912-912 - Repairs and maintenance 410,622 525,444 3,743 3,843 Advertising 17,101 211,756 973 6,485 Service benefits 413,850 201,839 - - Insurance 12,972 12,168 10,989 10,886 Eletricity and diesel cost 831,569 663,454 8,003 6,421 Travel and accommodation 186,037 225,815 74,811 74,457 Licenses and fees 47,134 34,212 47,109 34,018 Business development 303,562 - - - Bank charges 93,271 155,513 512 25,584 Impairment provision of fixed income investment 255,126-255,126 - Provision for bad debts 489,531 - - - Donations - - - - CSR cost 300.00-300.00 - Other operating expenses 1,794,224 1,753,169 70,048 136,749 8,966,826 8,307,505 1,322,925 1,140,007-25 Finance costs and income Finance costs: Interest expense on loans 6,702,527 4,793,136 2,330,795 1,620,045 Foreign exchange loss on financing activities 18,450,385 - - - 25,152,912 4,793,136 2,330,795 1,620,045 Finance income: Interest income - fixed income investment - - - - Interest on loan 786,283 942,522 1,018,182 844,310 Finance income 786,283 942,522 1,018,182 844,310 Net finance costs/(income) 24,366,629 3,850,614 1,312,613 775,736 26 Net foreign exchange (losses)/gains The exchange differences charged/credited to the income statement are included as follows: Other (losses)/gains - net 347,008 - - - Finance costs 18,450,385 - - - 18,797,393 - - - The movement in foreign exchange differences is as result of the decline in the value of the Nigerian Naira against the US Dollars by N109/$1 from December to 30 September. 16
For the nine months ended 27 Earnings per share Basic earnings/ loss per share is calculated by dividing the profit/ loss attributable to equity holders of the by the weighted average number of ordinary shares in issue during the year excluding ordinary shares purchased by the and held as treasury shares. Profit attributable to shareholders (7,569,039) 3,003,106 (205,078) 1,011,648 Weighted average number of ordinary shares in issue 39,796,580 38,720,997 38,720,997 38,720,997 Basic earnings/ loss per share (Kobo) (19.02) 7.76 (0.53) 2.61 Diluted earnings/ loss per share (Kobo) (19.02) 7.76 (0.53) 2.61 28 Share capital a Authorised: 45,000,000,000 ordinary shares of 50kobo each 22,500,000 22,500,000 22,500,000 22,500,000 Allotted, called up and fully paid: and Number of shares (thousands) Ordinary shares Total At 1 January 38,720,997 19,360,499 19,360,499 Bonus Issue 1,936,049 968,025 At 40,657,046 20,328,524 19,360,499 b Share premium At 1 January 7,213,368 7,213,368 7,213,368 7,213,368 Bonus Issue (968,025) (968,025) At 6,245,343 7,213,368 6,245,343 7,213,368 c Treasury shares Treasury shares represent the 's shares held by the Employee Share Scheme as at 29 Non controlling Interest Transcorp Hotels Plc (THP) Transcorp Ughelli Power Limited (TUPL) Transcorp Hotels Ikoyi Limited At 1 January 26,326,106 7,399,429 840 33,726,375 THP profit for the year 452,573 - - 452,573 TPL profit for the year - (6,692,663) - (6,692,663) At 26,778,679 706,766 840 27,486,285 30 Cash generated from operating activities Profit before tax (12,782,989) 7,188,291 (32,740) 1,238,786 Adjustment for non cash items Depreciation of fixed assets 2,384,497 2,218,665 11,843 11,912 Profit on disposal of AFS equity securities 24,092-24,092 - (Profit) /Loss on assets disposal 912 912 Loss write-back from AFS reserves 226,661-226,661 - Amortization of intangible assets 9,870 378 227 378 Fair value gain on equity securities (398,999) 63,366 (398,999) - Provision for debt securities 255,126-255,126 - Amortization of prepaid lease rental - 22,500 - - Finance cost 25,152,912 4,793,136 2,330,795 1,620,045 Finance income (786,283) (942,522) (1,018,182) (844,310) Foreign exchange loss/gain (347,008) (266,672) - - 17
For the nine months ended 31 Cash generated from operating activities (continued) Other adjustments to reconcile expenses for the year to cash from operating activities Increase in debtors and prepayment (17,149,316) (2,500,638) (3,660,291) (1,263,959) Increase in inventory (47,699) (2,482,809) - - Increase in payables and accrued expenses 14,790,350 3,197,825 811,806 (3,016,479) Net cash generated from/(used in) operations 11,332,126 11,291,519 (1,448,750) (2,253,627) 32 Related parties a Related entities Heirs Holding Limited Heirs Holding Limited is a company controlled by the group's key management personnel. Transcorp entered into a technical services agreement with Heirs Holding Limited for the latter s provision of corporate and financial advisory services, governance support, brand and communications services and business development support. A technical services agreement was also entered into between Transcorp Power Limited and Heirs Holdings Limited. Tony Elumelu Foundation Tony Elumelu Foundation is a company controlled by the group's key management personnel. The Foundation carries out various Corporate Social Responsibility (CSR) activities on behalf of Transcorp Power Limited. Tenoil Petroleum and Energy Services Tenoil Petroleum and Energy Services is a company controlled by the group's key management personnel. Tenoil disposed part of its interest in Transcorp Power Limited (TPL) to Transcorp Plc. Consideration for the disposal was used to reduce amount receivable from the counter-party as at date of disposal. The outstanding receivable balance as at balance sheet date is deemed recoverable. Nembe Creek Oil Limited Nembe Creek Oil Limited is a company controlled by the group's key management personnel. Other subsidiaries The enter into a Technical and Management services agreement with Transcorp Hotels Plc and Transcorp Power Limited. As stipulated in the signed agreement, the earns management fee of 5% of profit before tax of Transcorp Hotels Plc and Transcorp Power Limited. Other intercompany balances relates to payment made or received on behalf of the company's subsidiaries. b Key management personnel Name Designation Name Designation Mr. Tony Elumelu, MFR Chairman Mr. Stanley Inye Lawson Director Mr. Emmanuel N. Nnorom President/CEO Mr. Chibundu Edozie Director Olorogun Otega Emerhor, OON Director Alhaji Abdulquadir Jeli Bello Director Mr. Kayode Fasola Director 18