Presentation to Investors & Analysts - Transcorp · 2019-10-31 · Growth Agenda 300,000...

1

Presentation to Investors & AnalystsThird 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 maymake forward-looking statements orally to analysts, investors, the media and others. All such statements are intended to be forward lookingstatements. 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 typicallyidentified 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 andspecific. In the light of uncertainties related to the financial, economic and regulatory environments, such risks and uncertainties – many ofwhich are beyond the Group’s control and the effects of which are difficult to predict – may cause actual results to differ materially from theexpectations expressed in the forward-looking statements. Risk factors that could cause such differences include, exchange rate, marketexchange, and interest rate, operational, reputational, insurance, strategic, regulatory, legal, environmental, and other risks. All such factorsshould 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 forward-looking statements.

• Any forward looking statements contained in this presentation represent the views of management only as at 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 this presentation were obtained from several sources that the Group believes are reliable. Whilst Transcorp has takenall reasonable care to ensure the accuracy of the information herein, neither Transcorp nor any of its subsidiaries/affiliates makesrepresentation or warranty, express or implied, as to the accuracy and correctness of the information. Thus, users are hereby advised toexercise caution in attempting to place reliance on these information and carry out further research or seek the opinion of professionaladvisers before reaching conclusions regarding their investment decisions.

www.transcorpnigeria.com

OVERVIEW OPERATING

ENVIRONMENT

GROUP FINANCIAL

OVERVIEWSEGMENT REVIEW OUTLOOK

AWARDS, CSR & OTHER SOCIAL ENGAGEMENT

4 10 14 17 38 43

OVERVIEW

5

With an Aggressive Growth Agenda

300,000Shareholders with commanding presence in the Power, Energy & Hospitality sectors.

Listed Company with approximately

Improving Lives, Transforming Nigeria

With a

Purpose

of

Deeply rooted values are

the 3Es of

Execution, Enterprise and

Excellence


About TranscorpA diversified conglomerate…

6

Operational Efficiency

Growth Capacity

Return on Investments

Sound Corporate

Governance

Our Investment Philosophy


Long-term

Shareholder ReturnsSocio-economic

Impact

…guided by a sound investment philosophy

7www.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 theleading 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

8

PHASE THREE2019 - 2025

PHASE TWO2012 - 2018

PHASE ONE2004 - 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 of

oil and gas in OPL 281

▪ Acquire new oil & gas assets

21 3

Our Journey


…as evidenced by our enviable milestones

9

Valentine Ozigbo

President/CEOHelen Iwuchukwu

Group Company

Secretary

Christopher Ezeafulukwe

Executive DirectorMutiu Bakare

Group CFO

Chinweugo Nwafor

Group Head,

Internal Audit

Napoleon Esemudje

Director of ResourcesOwen 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


OPERATING ENVIRONMENT

11

Overview of the Global EconomyGrowth 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 or

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

12

…signaling a possible growth upside on the local scene

_ _ _ _ _ __

201 million4

populationMedian 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


201m 4 Population

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

Source: statisticstimes.com

GDP 2018US$ billions

52

56

84

90

115

118

188

249

377

397

Ghana

Tanzania

Ethopia

Kenya

Angola

Morocco

Algeria

Egypt

South Africa

Nigeria

13

However, major macroeconomic variables look positive…

Key Macroeconomic Indicators


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

of 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

64.671.4 73.0

64.3 60.565.1

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


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


Total Assets 312,954 297,140

Total Liabilities 201,606 191,787

Shareholders’ Fund 111,348 105,353


• 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 andtechnical issues have largely been resolved.

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

17

SEGMENT REVIEW: POWER

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The sector remains challenged

46%*Population that has no access to grids

1.4/7.0WEF’s scoring in terms of quality of electricity supply

Ranked 136thout 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


Segment Review - Power

19

03

02

01

Increased Electricity Generation

Nigeria recorded peak generation of5,375MW in Q1 2019. Also, the total electricitygenerated for the period was 8,951,869 MWh,which is 0.8% more than the level ofgeneration during Q4 2018

Improved Transmission Network Efficiency

The Transmission Loss Factor (TLF) decreasedin Q1 2019, maintaining at an average of7.56% which is lower than the 8.05% industry(MYTO) reference loss factor. This is attributedto the significant system upgrades by TCN.

Increased Generation Capacity

Total energy generation rose by 0.8% with 8.9percentage points increase in generation capacityutilization arising from reduction in the constraints ofinsufficient gas supply, transmission and distributionnetworks, and water management at thehydropower stations.

Approved Performance Improvement Plan (PiP) Guidelines for Discos by NERC

The PiP is to address the inefficiencies inthe Discos. The process is to address thetechnical and operational challengesimpacting the operational efficienciesof the Discos.

04

…with some positive results recorded in the sector



Source: NERC Quarterly Report 2019

20

Factors affecting our power business


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 linepressure.

➢ Ughelli East gas plant was completely shut down forstatutory maintenance from 26th May, 2019 to 2nd June, 2019and for emergency maintenance in July 2019.

➢ NGC 18-inch gas pipeline was vandalized in June and July2019.

• Gas supply was largely on a best endeavour basis as it was notcontractual.

WAY FORWARD▪ We have recorded significant improvement in the level of

gas supply in Q3 2019. We have made significant progresson the activation of the Gas Supply and AggregationAgreement (GSAA) with the gas suppliers by executingnecessary agreements with all parties.

▪ This Agreement places a contractual obligation on the gassuppliers to supply a minimum of 124mmscf to TPL on dailybasis.

▪ We intend to optimize the opportunities from theactivation of the agreement. This will result in increase inmega watts generated and allowance for full payment oncapacity.

▪ We are equally exploring additional affordable gas supplyfrom other gas producers.

▪ Our long term strategy is to produce the gas requirementfrom our OPL 281 assets which is located close to thepower plant.

…having identified a number of these issues

21



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 of 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

22



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


Financial Highlights - Power

Income Statement

N Million Q3 2019 Q3 2018


Revenue 43,601 67,190





N Million Q3 2019 FY 2018


Total Assets 161,368 150,380



• Revenue from the power segmentdeclined by 35% y/y as a result of theGas, Transmission and technical issueshighlighted earlier.

• Total Asset Increased by 7% YTD* as aresult of the refurbishment ofgenerating turbines. This would lead toincrease in generation and revenue inthe years ahead.

COMMENT

*Year-To-Date

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

24

Segment Review – Power


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


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

444371 350 322 291

Jan-19

382 341 321 303 281

Feb-19

*The Metric used here is Average Generated Capacity MwH

459385 328 307 292

Mar-19

419

305 302 299 292

Apr-19

430333 291 284 267

May-19

461

332254 246 228

Jun-19

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

421350

265 260 238

Jul-19

376 359 338289 289

Aug-19

461332

254 246 228

Sept-19

TPLEGBIN SHIRORO JEBBA AZURA

TPLEGBIN SHIRORO KAINJI JEBBA

TPLEGBIN JEBBA KAINJI ODUKPANITPL

TPL

TPLTPL

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


26

SEGMENT REVIEW: HOSPITALITY

27

One of the fastest growing sectors globally

8%

South America

North America

Africa

Australia

EuropeMiddle-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


Segment Review - Hospitality

28

With increasing prospect for success…

RecreationFood &

BeverageLodging

Travel &

Tourism

• The hospitality sector is one of the fastest-growing sectors in the world. The sector hascontinued 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 ordestinations 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 identifynumerous opportunities in secondary markets, reflecting a broader search for higher-yieldinvestments.

$86bnGlobal revenue

$7.6trGlobal revenue

$570bnGlobal revenue

$70bnGlobal revenue

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


Hospitality

Industry Figures

Total Export earnings from International Tourism

5,372.2*

1.8bnExpected

International Travelers by 2030

Expected number of new jobs to be created by 2029

GLOBAL

INDUSTRY

FIGURES

5,372.2*

$1.7 Tn


29

MILLENIALS

DIGITAL MEDIA

INFLUENCE

RISING MIDDLE

CLASS

GLOBAL CONNECTIVITY

According to the WTTC*,there will be 2+ billion newmiddle-class consumers withinthe next 20 years translatinginto more travelers visitingmore hotels around the world.

Digital technology is bringingplaces and experiences closerto people than before. This ispossibly going to disrupt theindustry and Transcorp Hotelsis at the forefront of thischange locally.

19%* of travelers in 2018 wereMillennials, a number which isprojected to even grow further.Millennials are poised to take thehospitality industry by storm asglobally connected and curioustravelers.

The prolific use of social mediaapps and the rise of socialinfluencers have engenderednew behaviors amongstmillennials.

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

Source: *World Travels & Tourism Council




Financial Highlights-Hospitality


Q3 2019 FY 2018


Total Assets 111,861 111,277



Income Statement

Q3 2019 Q3 2018


Revenue 14,677 12,671




• Revenue from the hospitality

segment ramped up by 16% y-o-y

on the strength of 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 of

the renovation, thus accounting for

a reduced PBT.

COMMENT

Revenue for the hospitality business is buoyed by strong fundamentals…


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)

32

Segment Review – Hospitality


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

33

SEGMENT REVIEW: OIL & GAS

34

XXXXXX

$58.92Average brent crude oil price for the month of October 2019.

8.82%Industry Contribution to Nigeria Q2 2019 GDP

>N15TnSectoral Value in terms of Real GDP

N302bn

Estimated total lost income from gas flaring in 2018

40-50Marginal 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 of Saudi output

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 of 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.


Key insights

Key Energy indicators in Nigeria

Segment Review – Oil and Gas

35

The occasional 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 on the

external reserve of the country

and also dampen investors

interest in the upstream sub

sector.

The price ceiling placed by the

government on PMS, has

hampered the economics of

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 of transportation and

distribution network for natural

gas remains a huge challenge

to the development of the

domestic gas value chain.

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

Delay in PIB

Infrastructural

DeficitPrice fluctuations

and price ceilings

Insurgency/pipeline

vandalism

Segment Review – Oil & Gas


36

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

Partnerships

Identification of 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 of the

hydrocarbons (oil & gas) depending

on drilling results;

Expand gas productions

Conversion of OPL to OML2019 -

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


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 EngagementQ1 2020: Commence Exploration

Q3 2019 Actual

Q4 2019 Target


Oil and Gas

39

Strategic fit

Gas Availability

Sufficient EvacuationCapacity

Cost-efficient Capacity Recovery

Eligible Customer Opportunity

01

02

0304

05

Afam Acquisition: Another emerging success story


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 NationalCouncil on Privatisation (NCP) of the Consortium as the Preferred Bidder for Afam Power Plc and Afam FastPower Limited. NCP has also authorized BPE to enter into negotiation with the Consortium regarding theterms 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


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


42

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 initiativethat’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 thetheme, “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, heldwith four women participating in the empowerment program.

International Day of the Girl Child 2019: Transcorp Hilton Abuja hosted, hosted the pupils of Alderwood International SchoolAbuja 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 alliancefor the development of solar mini grids in Nigeria. Our Executive Director, Legal and Business Development, Chris Ezeafulukweand ENGIE Africa’s CEO, Yoven Moorooven at the signing of Memorandum of Understanding (MOU) to herald thispartnership.

2. In line with our commitment to intensify advocacy robust electricity value chain, we participated at the Business Day PowerConference 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 ourplay in the industry.

3. Furthermore, MD/ CEO of Transcorp Hotels Plc Owen Omogiafo, spoke to aspiring female leaders on the theme#SheSeesnoBoundaries.


21 3

…and all stakeholders due to their immense impacts our businesses

Stakeholder Engagement

QUESTIONS

49

Contact: Mutiu Bakare

[email protected]

Adekunle Elumaro

[email protected]

Ejike Alumona

[email protected]

mailto:[email protected]



Thank You

Presentation to Investors & Analysts - Transcorp · 2019-10-31 · Growth Agenda 300,000...

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Transcript of Presentation to Investors & Analysts - Transcorp · 2019-10-31 · Growth Agenda 300,000...