TRANSCORP - Transnational Corporation of Nigeria Plc

Transcription

Transnational Corporation of Nigeria Plc
TRANSCORP
TRANSCORP
TRANSCORP 1
CONTENT
3. Group Overview
4. Our Businesses
7. Results at a Glance
8. List of Directors, Officers and Professional Advisers
9. Board of Directors
10. CEOs of Subsidiaries
11. Executive Management
12. Chairman’s Statement
16. President/CEO’s Report
19. Corporate Governance Report
26. Report on the outcome of Independent Evaluation of the Board of Directors
27. Directors’ Report
31. Statement of Directors’ Responsibilities
32. Report of the Audit Committee
33. Report of the Independent Auditors
35. Statement of Financial Position
36. Statement of Comprehensive Income
37. Statement of Changes in Equity
38. Statement of Cash Flows
39. Notes to the Financial Statements
39. 1. General information
39. 2. Summary of significant accounting policies
39. 2.1 Basis of preparation
41. 2.2 Consolidation
42. 2.3 Segment reporting
42. 2.4 Foreign currency translation
42. 2.5 Property, plant and equipment
43. 2.6 Intangible assets
44. 2.7 Investment properties
45. 2.8 Impairment of non-financial assets
45. 2.9 Financial instruments
46. 2.10 Off setting financial instruments
46. 2.11 Impairment of financial assets
46. 2.12 Inventories
46. 2.13 Trade receivables
47. 2.14 Cash, cash equivalents and bank overdrafts
47. 2.15 Borrowings
47. 2.16 Borrowing costs
47. 2.17 Trade payables
47. 2.18 Current and deferred tax
48. 2.19 Employee benefits
48. 2.20 Revenue recognition
49. 2.21Leases
49. 2.22 Dividend distribution
50. 2.23 Share capital
50. 2.24 Treasury shares
50. 3. Financial risk management
50. 3.1 Financial risk factors
54. 3.2 Capital risk management
54. 3.3 Fair value estimation
55. 4. Critical accounting estimates and judgements
55. 4.1 Critical accounting policies and key sources of estimation uncertainty
56. 4.2 Critical judgement in applying the entity’s accounting policies
2014 Group Annual Report and Financial Statements
2
56.5. Segmental analysis
59.6. Property, plant and equipment
60.7. Intangible assets
62.8. Investment property
63.9. Investment in subsidiaries
66.10. Deferred tax
66.11. Pre-paid lease rental
67.12. Inventories
67.13. Trade and other receivables
68.14. Debt and equity securities
68.15. Cash and cash equivalents
69.16. Trade and other payables
69.17. Taxation
70.18. Borrowings
71.19. Financial instruments and fair values
74.20. Advance deposits
74.21. Revenue
75.22. Cost of sales
75.23. Other income
75.24. Other (losses)/gains-net
76.25. Administrative and general expenses
76.26. Particulars of directors and staff
78.27. Finance income and costs
78.28. Net foreign exchange (losses)/gains
79.29. Earnings per share
79.30. Share capital
80.31. Non-controlling interest
81.32. Cash generated from operating activities
81.33. Capital commitments and contingent liabilities
82.34. Transactions with non-controlling interests
83.35.
Initial Public Offer for Transcorp Hotels Plc
83.36. Subsequent events
83.37. Related parties
86. Value-added Statement
87. Five-year Financial Summary
88. Notice of Annual General Meeting
Attached Proxy form
Attached Shareholders’ E-Service application form
Attached E- Dividend Mandate/Replacement Form
Attached Shareholder Data Form
IBC Corporate information
TRANSCORP
TRANSCORP 3
GROUP OVERVIEW
ABOUT TRANSCORP
Transnational Corporation of Nigeria Plc (Transcorp) is a leading diversified conglomerate. We focus on acquiring and managing strategic businesses that create long term shareholder returns and socio-economic impact. Our business interests
are in four strategic sectors: Power, Oil & Gas, Hospitality and Agriculture.
Incorporated on November 16, 2004 and quoted on the Nigerian Stock Exchange, Transcorp has a shareholder base of
about 300,000 investors, the largest of which is Heirs Holdings Limited, a pan-African proprietary investment company.
Our notable businesses include the award-winning Transcorp Hilton Hotel, Abuja; Transcorp Hotels, Calabar; Teragro Commodities Limited, operator of Teragro Benfruit Plant – Nigeria’s first-of-its-kind juice concentrate plant; Transcorp Ughelli
Power Limited which acquired Ughelli Power Plc, owner of the 972MW Ughelli Power Plant and Transcorp Energy Limited,
operator of OPL 281.
VISION
To create sustainable value for our stakeholders in our chosen markets.
MISSION
To build a conglomerate of successful businesses underpinned by excellence, execution and entrepreneurship.
CORE VALUES- HEIRS
Hardwork
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Passionate about extraordinary results
Discipline
Commitment to excellence
Emotional Intelligence
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Self-awareness and emotional self-control
Respect for others
Integrity
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Delivering on your promise
Exceeding expectations
Living the brand
Resilience
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Can do Spirit
Breakthrough thinking
Following-through to ensure results
Synergy
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Collaborating with colleagues
Leveraging group relationships
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TRANSCORP
OUR BUSINESS
HOSPITALITY
Transcorp Hotels Plc
Transcorp Hotels Plc is the hospitality subsidiary of Transnational Corporation of Nigeria Plc (Transcorp). The company
is focused on consolidating all hospitality businesses of the
Transcorp Group and providing strategic management to
drive the execution of its strategy.
Transcorp Hotels Plc aims to build Africa’s choice hospitality
assets, starting from Nigeria but building a strong footprint
in high population cities across the West Africa region. With
an award-winning property in Abuja; the Transcorp Hilton
Hotel Abuja, a destination hotel in Calabar; Transcorp Hotels
Calabar, and planned properties in Lagos and Port Harcourt,
Transcorp Hotels Plc continues to achieve excellence within
the hospitality industry and develop strategies in the medium to long term that position the company as a key industry
player on the continent.
World Travel Awards as Nigeria’s Leading Hotel. In 2014, the
hotel repeated this feat again winning the award as Nigeria’s
Leading Hotel 2014, and additionally, won Nigeria’s Leading
Meetings, Incentives, Conventions and Exhibitions (MICE)
Hotel 2014, also awarded by the World Travel Awards.
Transcorp Hotels, Calabar
The 146-room Transcorp Hotels, Calabar, is a premier destination hotel in Calabar, Cross River State, which is fast becoming
the destination stop for vacations and conferences in Nigeria.
The hotel is located in the heart of Calabar and is a wellknown landmark for both locals and visitors. It is the perfect
meeting ground for business and pleasure. Transcorp Hotels,
Calabar, also provides outstanding conferencing facilities:
fine dining, 24-hour room service, a fitness centre, complimentary airport pick up, complimentary Wi-Fi connection in
all guest rooms and guest discounts with local merchants.
Transcorp Hilton Hotel, Abuja
Transcorp Hilton Hotel is situated in the heart of Nigeria’s
Federal Capital Territory, a 40-minute drive from the Nnamdi
Azikiwe International Airport, Abuja. It is a 670–room, 5-star
hotel that provides luxury accommodation, exotic cuisine,
fully equipped meeting rooms and leisure facilities to
business travellers and tourists from all over the world. The
hotel offers the benefit of the international-standard guest
reward programme, Hilton Honors, which awards points
and miles to members who stay at any of the Hilton Group’s
3,700 hotels world-wide, and airline miles in partnership
with over 50 airlines.
Under Transcorp’s effective leadership, the Transcorp Hilton
Hotel was named the best Hilton Hotel in Africa, Middle East
and Asia for the year 2010. The hotel was also named the
winner of Hilton Worldwide Prize for the 2012 GC& E (Group
Conference and Events) Sales Team of the year for the Middle
East and Africa regions. In 2013, the hotel won the prestigious
Transcorp continues to develop strategies in the medium
and long term that will consistently position the hotel as a
key player in the hospitality industry.
Transcorp Hotels Port Harcourt
Transcorp Hotels Plc has signed an agreement with Hilton
Worldwide, to develop a 250-guestroom Hilton Hotels &
Resorts-branded property in Nigeria’s garden city, Port
Harcourt. The proposed Transcorp Hilton Port Harcourt will
be situated at Evo Road in the city and will be a full-service,
upscale hotel featuring almost 1,400sqm of state-of-the art
conference facilities and meeting rooms, alongside stylish
and creative leisure facilities including six restaurants and
bars, a gym, spa, pools, and tennis and squash courts, all
targeting Nigeria’s burgeoning middle class.
TRANSCORP 5
AGRICULTURE
Teragro Commodities Limited
Teragro Commodities Limited is the agribusiness subsidiary of
Transnational Corporation of Nigeria Plc. We leverage on advanced
technology in food processing to produce high quality agricultural
products including orange and pineapple concentrates, mango
purees and orange peel oil for industrial markets.
Incorporated in 2008, the company is the operator of the 26,500
metric tonne capacity Teragro Benfruit Plant in Benue State, Nigeria’s
first-of-its-kind juice concentrate plant.
Transcorp Hotels Ikoyi
Building on its successful years of partnership, Transcorp
has executed a Management Agreement with the Hilton
Worldwide for the development of a 300-room five-star
Transcorp Hilton in Ikoyi Lagos. The proposed Transcorp
Hilton Lagos will be the Hilton Group’s second hotel in Nigeria by Transcorp, following the award-winning Transcorp
Teragro and its products are certified by the National Agency for Food
and Drugs Administration (NAFDAC) of Nigeria and the Global Food
Safety Initiative (GFSI) with ISO 9001:2008 and FSSC 22000:2005.
Our high quality fruit juice concentrates include:
- 65* Brix Aseptic Packed Orange Juice Concentrate
- 15* Brix Aseptic Packed Mango Puree
- 60* Brix Aseptic Packed Pineapple Concentrate
Teragro currently supplies fruit juice concentrates to a large number
of beverage companies in Nigeria.
Hilton Hotel Abuja, which is one of the leaders in Hilton’s
global network.
OIL AND GAS
Transcorp Energy Limited
Fully owned subsidiary was established in 2008 to spearhead
Transcorp’s push into the energy sector as well as focus on
upstream petroleum development.
Transcorp recently signed a Production Sharing Contract
(PSC) with the Nigerian National Petroleum Corporation
POWER
(NNPC) for the development of its oil block OPL 281.
Transcorp Ughelli Power Limited
OPL 281 is located in Delta State, Nigeria.
(TUPL) is a subsidiary of Transnational Corporation of Nigeria Plc
(Transcorp). The company is a leader in the Nigerian power space
and drives Transcorp’s strategic interests in the Power sector.
On September 25, 2012, TUPL won the bid for the acquisition of
Ughelli Power Plc, one of the six power generation companies of
the Power Holding Company of Nigeria (PHCN) privatised by the
Federal Government of Nigeria. On August 21, 2013, TUPL made full
payment of US$300 million to the Bureau of Public Enterprises (BPE),
representing 100 per cent of TUPL’s bid price for the plant.
Following the acquisition, TUPL has increased the available capacity
at Ughelli Power Plant from 160 MW (November 2013) to 610 MW
(December 2014). TUPL’s medium term plan is to increase generating
capacity at the plant to over 2,500 MW in the next three years.
6 Transnational Corporation of Nigeria Plc
TRANSCORP
Cross section of Transnational Corporation of Nigeria Plc (Transcorp) Shareholders during the 2014 Annual General Meeting in Lagos
Transcorp Hotels Plc and Hilton Worldwide in agreement to develop
Transcorp Hilton Port-Harcourt
Facts behind the Offer presentation to stockbrokers by Transcorp Hotels Plc
Inaugural Annual General Meeting (AGM) of Transcorp Ughelli Power Limited
Transcorp named the most compliant company
by the Nigerian Stock Exchange
Chairman of Transcorp Plc at the West African Power Investors
Conference (WAPIC) in Lagos
TRANSCORP 7
RESULTS AT A GLANCE
Increased/
2014
2013(Decreased)
Group N’Million N’Million %
For the year ended 31 December
Gross earnings 41,338
18,825
120
Administrative expenses
12,281
9,213
33
Profit before tax
7,732
9,032
(14)
Profit after tax
3,304
6,957
(53)
As at 31 December
Non-current assets
134,743
122,212
10
Current assets
36,012
27,253
32
Total assets
170,755
149,464
14
Share capital
19,361
19,361
Shareholders fund
89,755
86,677
4
Per Share data
Earnings per share (Kobo)
0.19
12.17
(98)
Net assets per share (Kobo)
232
262
(11)
Number of employees
1925
1902
Increased/
2014
2013(Decreased)
Company
N’Million N’Million %
For the year ended 31 December
Gross Earnings 6,335
2,142
196
1,983
2,275
(13)
Profit before tax
3,287
3, 187
(3)
Profit after tax
2,478
2,821
(12)
As at 31 December
Non-current assets
34,278
36,267
(5)
Current assets
19,964
12,813
56
Total assets
54,242
49,080
11
Share capital
19,360
19,361
Shareholders’ fund
33,461
32,919
2
Per Share data
Earnings per share (Kobo)
6.40
8.52
(25)
Net assets per share (Kobo)
86
99
(13)
Number of employees
23
24
(4)
Financial highlights
Group
• Gross earnings
• Profit after tax • Headline earnings per share
• Return on equity •
Total assets
Company
• Gross earnings
• Profit after tax • Headline earnings per share • Return on equity • Total assets
N41.3 billion
N3.3 billion
0.19k
3.75%
N170.8 billion
N6.3 billion
N2.5 billion
6.40k
7.41%
N54.2 billion
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TRANSCORP
LIST OF DIRECTORS, OFFICERS & PROFESSIONAL ADVISERS
Directors
Tony O. Elumelu, CON
Emmanuel N. Nnorom
Olorogun O’tega Emerhor, OON
Kayode Fasola
Stanley Lawson
Chibundu Edozie
Abdulquadir Jeli Bello
Chairman
President/CEO
Director
Director
Director
Director
Director
Company Secretary
Chinedu N. Eze
Registered Office
38 Glover Road (Formerly 22B)
Ikoyi, Lagos
Auditors
PricewaterhouseCoopers
252E Muri Okunola Street
Victoria Island
Lagos
Registrars and Transfer Office
Africa Prudential Registrars Plc.
220B Ikorodu Road
Palmgrove
Lagos
Tel: 01-4612373-76
TRANSCORP 9
BOARD OF DIRECTORS
1
2
3
4
1. Tony O. Elumelu, CON (Chairman)
An entrepreneur, a philanthropist and the Chairman
of Heirs Holdings Limited. He also serves as Chairman
of Transcorp. Mr. Elumelu is the author and leading
proponent of the philosophy he calls Africapitalism,
which is the private sector’s commitment to Africa’s
development through long-term investment in strategic
sectors of the economy that drive economic prosperity
and social wealth. In 2011, he established The Tony
Elumelu Foundation, an African-funded philanthropic
organization focused on supporting entrepreneurs in
Africa by enhancing the competitiveness of the private
sector.
Mr. Elumelu has received numerous honours, board and
committee appointments and in 2012, he was awarded
the National Honour of Commander of the Order of the
Niger for his service in promoting private enterprise.
In 2013, Mr. Elumelu received the Leadership Award
in Business and Philanthropy from the Africa-America
Institute (AAI) Awards. He was also named African
Business Icon at the 2013 African Business Awards.
2. Emmanuel N. Nnorom (President/CEO)
Prior to joining Transcorp, he was COO of Heirs Holdings
Group. He also served as CEO of UBA Africa, overseeing
United Bank for Africa’s operations outside Nigeria and
executing corporate strategy in 18 African countries.
Other senior roles within UBA included Group COO UBA,
followed by his appointment as UBA’s Group CFO, with
responsibility for Finance and Risk.
He is a qualified chartered accountant, and brings over 3
decades of professional experience in the corporate and
financial sectors, working with publicly listed companies.
He is an alumnus of Oxford University’s Templeton
College, and a Prize winner and Fellow of the Institute
of Chartered Accountants of Nigeria.
3. Chibundu Edozie (Non-Executive Director)
Has over 20 years’ experience in the capital market and
investment banking industry and is currently the Group
deputy managing director of BGL Plc
Holds a Bachelor of Science degree in Geology and
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Mining from the University of Jos and is an alumnus of the New
York Institute of Finance, IMD and Lagos Business School.
4. Olorogun O’tega Emerhor (Non-Executive Director)
Known as a turnaround expert due to his involvement/leadership
in many turnaround assignments both in the banking and
manufacturing sectors.
Holds a first class degree in Accounting from The University of
Nigeria, a Fellow of the Institute of Chartered Accountants of
Nigeria (ICAN), the Institute of Credit and Risk Management of
Nigeria and the Academy for Entrepreneurial Studies, respectively.
He is also a member of the Institute of Marketing Consultants.
5. Stanley Lawson (Non-Executive Director)
A multi-disciplinary professional with cognate experience spanning
over three decades in the energy and financial services sectors.
He is currently is a non-executive director of the Central Bank of
Nigeria.
Holds an M.Sc degree in Petroleum Geology and an MBA Finance,
both from the University of Ibadan.
6. Kayode Fasola (Non-Executive Director)
Has over 22 years’ cognate experience covering all facets of banking
and business strategy.
Holds a B.Sc degree in Agricultural Economics from the University of
Ibadan and an MBA in Finance from Obafemi Awolowo University,
Ile-Ife. He also holds an MBA in Banking from Ladoke Akintola
University Ogbomosho. He is an alumnus of the prestigious Lagos
Business School and the London Business School.
7. Abdulqadir Jeli Bello (Non-Executive Director)
An experienced financial professional with over 20 years extensive
experience in the banking and financial services industry.
Holds a B.Sc in Accounting from the Bayero University Kano and
an ACA Certificate from the Institute of Chartered Accountants of
Nigeria.
He also has a certificate in Science, Technology and Society in
Foundations of Nigeria Culture.
He has attended several courses in Nigeria and Europe in areas
like Corporate Banking Strategy, International Oil Supply,
Transportation, Refining and Trading and Advance Project Finance.
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CEOs OF SUBSIDIARIES
Valentine Ozigbo
Chief Executive Officer, Transcorp Hotels Plc
Has over 20 years’ rich and varied experience in banking (commercial, retail,
investment and international), business development and transformation and
more recently hospitality asset development and management.
Holds a B.Sc. in Accounting and an MBA in Banking and Finance from the University
of Nigeria, Nsukka. Graduated from the Lancaster University, UK with a Distinction
in M.Sc. Finance. A Fellow of the Institute of Chartered Accountants of Nigeria and
an Associate Member of the Chartered Institute of Taxation of Nigeria.
Dupe Olusola
Chief Executive Officer, Teragro Commodities Limited
Has over 17 years’ experience in Banking, Private Equity, Developmental Business
Consulting and Asset Management.
Holds a BA in Economics from the University of Leicester, UK and an MA in
Development Economics from the University of Kent at Canterbury as well as
Investor Relations Certification from the UK.
Adeoye Fadeyibi
Chief Executive Officer, Transcorp Ughelli Power Limited
Has deep experience in power generation with core expertise in gas turbine
technology, design, installation and commissioning, operations and maintenance
and power plant services.
Has a degree in Mechanical Engineering from New York State University and has
attended several technical and management trainings from the General Electric
Power Systems University and Management Learning Programs. Completed the
Lean Six Sigma training, and participated in the first lean process for power services.
Tony Chukwueke
Director, Transcorp Energy Limited
Responsible for leading a team of specialists to develop the Company’s Energy
Portfolio including the acquisition of the 972 MW capacity Ughelli Power Plc. He
has over 35 years global oil and gas experience in the upstream and downstream
sectors.
He holds a B.Sc in Physics, an M.Sc in Applied Geophysics and a Ph.D in Geology,
all from the University of Nigeria Nsukka.
Tony is also the Technical Director of Tenoil Petroleum and Energy Services, an
indigenous Nigerian Oil and Gas exploration and production firm wholly owned
by Heirs Holdings Group. He provides support and consultancy services to several
oil and gas investors in Nigeria and around the world.
TRANSCORP
TRANSCORP 11
EXECUTIVE MANAGEMENT
Ibikunle Oriola
Chief Finance Officer
Has over 13 years of corporate experience spanning public-private partnership advisory,
project finance, financial modelling, mergers and acquisitions, transaction management
and capital raising.
Holds a second class upper degree in Finance from the University of Lagos. Won a Merit
Award for 2nd best overall performance in Foundation Examination of the Institute of
Chartered Accountants of Nigeria and is an associate of the Institute. Has attended
professional trainings in the UK, Belgium, Hungary, South Africa, and the U.A.E.
Janet Mbu
Group Counsel
Has broad corporate and commercial legal experience gained across different industry
sectors with a particular focus on debt/equity capital raising transactions, corporate
governance and general commercial work.
She holds a B.A. in History from Sussex University and has a postgraduate diploma in
law (CPE) from City University, London. She attended the College of Law, London and
trained as a solicitor with City firm, Allen & Overy. She is a member of the UK Law Society
and student member of the Institute of Chartered Secretaries and Administrators.
Chinazor Ibe
Head, Internal Audit
She has varied experience in internal audit and control, quality assurance, compliance
and process reviews, accounting/financial reporting, and corporate governance.
Prior to joining Transcorp, Chinazor worked in accounting firm, KPMG, as a Manager
within the risk advisory group.
Chinazor holds a second class upper degree in Accounting from the University of AdoEkiti and is an Associate of the Institute of Chartered Accountants of Nigeria.
Chinedu N. Eze
Company Secretary
Has over a decade of corporate, commercial, legal and company secretarial experience
in the Banking and Finance industry.
Holds an LL.B degree from the University of Nigeria, an LL.M degree from the University
of Lagos and another LL.M from the University of British Columbia (UBC), Vancouver,
Canada as a recipient of the fellowship of the Law Foundation of British Columbia and
graduating with a Class One standing. He is a Member of the Nigerian Bar Association; an
Associate of the Chartered Institute of Arbitrators (UK & Nigeria), an Associate Member
of the Institute of Capital Market Registrars and a Member of the UK Environmental
Law Association.
Jewel Okwechime
Head Business Development & Project Monitoring
She has over 15 years experience working in and consulting for clients in the oil and gas
sector. She also has extensive experience in corporate advisory, business development
and investor relations.
Holds a Bachelor’s degree in Technology from the Halton College, Cheshire, England and
a Masters of Engineering in Chemical and Bio-process Engineering from the University
of Surrey, Guildford, Surrey, England.
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CHAIRMAN’S STATEMENT
for the year ended 31 December 2014
TRANSCORP
TRANSCORP 13
Distinguished Shareholders, Members of the Board of
possibility that the US Fed will leave interest rates at zero
Directors, Ladies and Gentlemen, I am pleased to welcome
(0%) in the short term. The success of the US Fed in keeping
you to the 9th Annual General Meeting of Transnational
rates at 0% will depend largely on how robust US consumer
Corporation of Nigeria Plc (“Transcorp”) and present the
spending becomes in the light of lower oil prices.
operating results and key achievements for the financial
year ended December 2014.
Growth in the Euro Zone continues to be challenging due
to the weak domestic demand and existing structural
Highlights of 2014 Financial Performance
Transcorp continued on its growth trajectory and achieved
strong revenue increase for the corporate centre (“the
Company”) and its consolidated subsidiaries (“the Group”)
despite a challenging operating environment.
In 2014, gross earnings for the Group increased by 120% to
N41.3 billion from N18.8 billion in 2013. The Company’s gross
earnings increased 196% from N2.1 billion to N6.3 billion.
This impressive revenue growth reflects the first full year of
earnings from our power business.
Group operating profit grew from N10.2 billion in 2013 to
N13.6 billion in 2014. However, the Company’s operating
profit declined by 11% to N3.5 billion (2013:N3.9 billion) due
to fair value losses on listed equity portfolio.
issues both legacies of the global financial crisis. In a bid
to stimulate growth, the ECB began a new asset purchase
programme in October 2014. The programme is scheduled
to last for at least two years with the potential to add €1
trillion into the Euro Zone economy.
In key emerging markets a combination of geo-political and
country specific risks contributed to a mixed scorecard. The
downward trend in global oil prices, coupled with inflation
and currency pressures led to a slowdown in the Brazilian
Economy. In Russia, weak oil prices coupled with EU and US
sanctions and Russia’s retaliation to the sanctions weakened
the Rouble and pushed up domestic prices. India’s successful
transition resulted in an increase in provisional GDP growth
figures on the back of increased business confidence in the
new government’s ability to push through pro-business
Group PBT declined by 14% in 2014 as a result of significant
reforms.
increase in net finance cost. Group PAT in 2014 declined to
The Local Economy
N3.3 billion (2013:N6.9 billion) on the back of higher tax
charge from the full first year of operations of TUPL. The
Company’s PBT increased by 3% in the current year to N3.3
billion (2013:N3.2 billion). Company PAT in 2014 declined by
12% to N2.5 billion (2013: N2.8 billion).
In 2014, the Group’s total assets grew by 14% to N170.8
billion from N149.4 billion in the prior year. Similarly, total
assets of the company increased 11% to N54.2 billion from
N49.1 billion in 2014.
For the first half of 2014, the economy recorded favourable
performance with rebasing of the country’s GDP, oil prices
reaching a peak of US$115 per barrel and equity market
capitalization reaching a historic high of N14 trillion. The
rebasing of the GDP effectively increased the size of the
economy by 89.2% to N80.2 trillion (US$509.9 billion). A
breakdown of the figures reveals that services sector is the
biggest contributor to GDP underscoring the diversification
of the Nigerian economy. While the rebased GDP numbers
have given a clearer picture on the structure of the Nigerian
The Global Economy
Against the expectations of a much stronger performance,
global economic conditions in 2014 remained weak. In the
economy, it also revealed weakness and leakages in Nigeria’s
tax collection system.
US, Euro Zone and Japan, the growth in private spending
The second half of the year was challenging as a slump in
was feeble, as these economies began to slowly adjust to
global oil prices led to severe pressure on the Naira. Despite
the after effects of massive balance adjustments of the
aggressive tightening and well as various control measures
previous year. One notable feature in the global economy
employed by the CBN to provide support for the currency,
for the year was the divergence in monetary policy stance
the Naira was eventually devalued in the official foreign
between the US Federal Reserve (US Fed) and the European
exchange market. Negative sentiments on the back of
Central Bank (ECB).
weak half-year results by companies and macro-economic
Motivated by positive trends in economic data, the US
effectively ended its Quantitative Easing programme in
October 2014. Although most economic indicators continue
to point to the recovery of the US economy, there is a
headwinds in the form of the oil price slump and a weakened
currency saw the equities market close the year as the second
worst performer among its peers with a negative 16.1%
year-on-year return.
14
TRANSCORP
The CBN maintained a tight interest rate policy in 2014, as the
benchmark interest rate, the MPR, was kept at 12% for most
part of the year. The MPR closed the year at 13% as result of
the persistent downward pressure on crude oil prices and
the attendant pressures on the Naira. The tight interest rate
regime is expected to continue in 2015 mainly on the back
of weaker oil prices.
Notwithstanding the challenges and uncertainties created
by the oil price shock, Nigeria’s long term outlook remains
positive on the back of significant opportunities for
private sector involvement in the development of power
transmission facilities, refineries, gas infrastructure and the
Chairman Tony O. Elumelu, CON congratulates the MD/CEO, Adeoye
Fadeyibi and his team on more than tripling Ughelli generation capacity
in the first year since take over
rail transport sector. Embarking on structural reforms that
Oil & Gas
allows private sector participation in these opportunities
We are in the final stages of securing approval to commence
will open additional investment prospects that will improve
our drilling programme. We expect to begin exploratory
the competitiveness of the Nigerian economy and lead to
drilling on our oil block, OPL 281 before the end of 2015.
sustainable long term growth.
Our ambitions are clear in this space as we want to build
Board Changes
a fully integrated energy company, owning, producing,
At the last AGM held on March 31, 2014, Mohammed Nasir
distributing and utilising the gas that is Nigeria’s most
Umar resigned from the Board of the Company. On behalf
valuable long-term natural resource, for significantly
of the staff, management, the Board of Directors and our
enhanced power generation.
shareholders, I would like to thank him for his invaluable
Hospitality
contributions to the growth of the Company and wish
him success in his future endeavours. On April 1, 2014,
Abdulquadir Jeli Bello was appointed to the Board of the
Company. Mr Emmanuel Nnorom was appointed President/
CEO of the Company and formally took office on September
1, 2014 replacing Obinna Ufudo who led the Company since
2011. I would like to thank Obinna Ufudo for laying a strong
foundation of good governance and achieving significant
financial returns for the Company. It is my expectation that
In fulfilment of my commitment to you Transcorp
shareholders that the Group will unlock the value inherent
in its subsidiaries, Transcorp Hotels Plc, our hospitality
subsidiary was successfully listed on the main board of the
Nigerian Stock Exchange after an Initial Public Offer. This step
underscores our commitment to ensuring that we create a
portfolio of world-class hotels in the country as it provides us
with the financial muscle required to develop these projects.
Emmanuel Nnorom will accelerate growth in all spheres of
In line with its expansion goals, Transcorp Hotels Plc signed
our business with a clear objective of achieving US$1 billion
an agreement with Hilton Worldwide, to develop a 250
in profits by 2018.
guestroom Hilton Hotels & Resorts-branded property in
Significant Achievements in 2014 and Outlook for 2015
Port Harcourt. The Transcorp Hilton Port Harcourt will be
a full-service, upscale hotel featuring almost 1,400sqm of
Power
state-of-the art conference facilities and meeting rooms,
Our ambition of generating at least a quarter of Nigeria’s
alongside stylish and creative leisure facilities.
power consumption remains firmly on course as we continue
In 2015, we will commence the upgrade of the Transcorp
to consolidate the gains made at the Ughelli Power Plant.
Hilton Abuja. The upgrade will completely transform
Power output at the plant increased from 342MW on
the existing facilities and amenities at the hotel and on
December 31, 2013 to 610MW by December 31, 2014, as we
completion position the hotel as the clear leader in Nigeria’s
diligently executed our rehabilitation programme. Our goal is
hospitality industry. In addition, we expect to commence
to increase output at the plant to 850MW by December 2015.
construction of the 300 room Transcorp Hilton Ikoyi after
securing all the required permits.
TRANSCORP 15
Conclusion
Despite the challenging operating environment of the
past year, we remain resolute in our determination to
deliver on our vision of building a conglomerate of
successful businesses. We are poised to take advantage
of all the opportunities that will arise in the course of
2015 and are committed to delivering on all our projects.
I would like to thank you our shareholders for your
continued support. I would also like to thank the
(l-r) Mrs. Sally Mbanefo (DG of NTDC), Valentine Ozigbo, MD/CEO,
Transcorp Hotels Plc and Graham Cooke, founder of World Travel
Awards (WTA) during the presentation of the WTA trophy to
Transcorp Hilton Hotel at the Excel Centre in London
Management and Staff of the Company for their hard
work, loyalty and commitment. I am confident that with
your support 2015 will be a successful year.
Thank you.
TONY O. ELUMELU, CON
Chairman, Board of Directors
Facts Behind the Figures presentation by the Board and Management
of Transcorp Hotels Plc at the Nigerian Stock Exchange, Lagos
Agriculture
During the year, Teragro our agribusiness subsidiary closed
commercial negotiations with a leading multinational
beverage producer for the supply of fruit juice concentrates.
The company’s products continue to enjoy patronage
from a variety of fruit juice producers in the country. Using
Teragro as a platform, we aim to create a fully integrated
agro-allied business that ensures that value added
processing occurs here in Nigeria.
Terago’s Fruit Juice delivery truck
16
TRANSCORP
PRESIDENT/CEO’S REPORT
Economic and Sectoral Overview
The operating environment in 2014 was difficult owing to
unfavourable macroeconomic headwinds and industry specific
challenges. The fall in oil prices took a heavy toll on the Nigerian
economy as the Naira was devalued at the official window. Post
devaluation, the Central Bank of Nigeria (CBN) has employed various
control measures to try and curb demand for the dollar. These
measures have provided minimal support to the Naira. The oil price
fall, Naira devaluation and weak earnings by companies all dragged
the Nigerian Stock Exchange (NSE) to close the year with a negative
return of 16.1%.
In the course of the year, the Nigerian economy was adversely
affected by the Ebola Virus Disease outbreak. Though its impact was
muted relative to the three worst affected countries-Sierra Leone,
Guinea & Liberia-it still caused noticeable decline in travel, tourism
and trade. According to World Bank, the effect of the outbreak on
Nigeria’s GDP for 2014 is estimated at $186 million.
Despite the significant achievements recorded in the power sector
Emmanuel N. Nnorom
Distinguished Shareholders
It is my utmost pleasure to welcome you to the 9th
Annual General Meeting of your Company, Transnational
Corporation of Nigeria Plc (“Transcorp”). I am pleased to
present your Company’s financial and operating results for
the year ended 31 December 2014.
Introduction
You may recall that in 2011, my predecessor, Mr. Obinna
Ufudo set out a comprehensive agenda to restructure
Transcorp for accelerated growth and profitability. I am
happy to report to you that within 3 years; the company has
been transformed from an ailing enterprise into an emerging
investment powerhouse achieving significant financial
returns for all stakeholders.
so far, the delay in the take-off of the Transitional Electricity Market
(TEM) affected revenue accruable to market participants. When it
commences, the TEM will ensure that all contractual obligations,
rules and processes among market participants are strictly enforced.
This will lead to efficient and sustainable investment in the industry.
Operating Results & Financial Performance Review
Revenue
Gross earnings for the Group in 2014 increased significantly by 120%
to N41.3 billion from N18.8 billion in 2013. This impressive growth
comes largely from the impact of a full year of operations of our
power business, Ughelli Power Plc which accounts for 65% of total
gross earnings in 2014. The revenue growth was achieved following
substantial increase in available capacity at our power plant to
610MW in December 2014 (November 2013:130MW). The Company’s
gross earnings also increased by 196% from N2.1 billion to N6.3 billion
largely due to dividend income realised from the power business.
I am humbled at the opportunity to lead Transcorp through
the next phase of its growth. I appreciate the support of
the Board, staff and shareholders and am emboldened by
the trust reposed in me. I am confident of the medium to
long term fundamentals of our businesses and elated at the
pillars of growth laid so far to take advantage of the various
unique opportunities ahead of us. My immediate focus is to
continue the turnaround story of Transcorp with the drive
of developing new businesses to achieve an end-game of
realising a $1billion Group Profit before tax by Full Year 2018.
I am pleased to say that we have made giant strides in 2015
for all our businesses setting the necessary foundation to
surpass this target.
Gross Earnings
2014
2013
Company
Group
102030
4050 Nbn
TRANSCORP 17
Profit
Assets
The Group’s gross profit increased by 92% to N27.6 billion
in 2014 (2013:N14.3 billion) following strong revenue
growth and operational efficiency garnered from our power
business.
In 2014, the Group’s total assets grew by 14% to N170.8 billion
from N149.4 billion in the prior year. Similarly, total assets of
the Company increased by 11% to N54.2 billion from N49.1
billion in 2014.
Group operating profit grew from N10.2 billion in 2013 to
N13.6 billion in 2014. However, the Company’s operating
profit declined slightly by 11% to N3.4 billion (2013:N3.8
billion) due to fair value losses on listed equity portfolios.
Group PBT declined by 14% to N7.7 billion from N9.0 billion
recorded in 2013 as a result of net finance costs related to
the acquisition finance loan for TUPL. The finance cost grew
by 208% to N7.8 Billion (2013:N2.5 billion) due to foreign
exchange loss on the acquisition finance of TUPL following
the devaluation of the naira and the recognition of full year
of debt finance costs on the loan. Other factors that limited
PBT growth include delayed implementation of TEM and
reduced occupancy in our hotel business due to security
challenges and the Ebola Virus outbreak in some countries in
West Africa. However, the Company’s PBT increased slightly
by 3% to N3.2 billion (2013: N3.1 billion) due to lower net
finance cost in 2014.
Incremental tax exposure from TUPL reduced the Group’s PAT
in 2014 to N3.3 billion (2013: N6.9 billion). The Company’s
PAT also declined slightly by 12% to N2.4 billion (2013: N2.8
billion) due to increased withholding tax on revenues earned
by the Company.
Under the guidance of the Board, we have commenced a
number of restructuring measures to address the Group’s
exposures to the various issues that have affected financial
performance in 2014.
2014
2013
Company
Group
2
4
6
8
2014
2013
Company
Group
50 100
150
200Nbn
Key Business Achievements in 2014 & Outlook for 2015
Power
Since takeover of the Ughelli Power Plc, we have deliberately
repositioned it for significant growth as evidenced by the
aggressive ramp up in capacity from 160MW to 610MW
as end of December 2014. This makes the power plant the
fastest growing privatised power asset in the country.
Transcorp investment in Ughelli Power Plc was adjudged the
“Power Transaction of the Year” at the awards night during the
11th edition of the West Africa Power Industry Convention
(WAPIC) held in Lagos. The panel of judges commended our
efforts at recovering generating capacity and remodelling
the power station.
Oil and gas
The Group took significant strides in actualising its vision as
a significant oil and gas asset owner by finalising its rights
on OPL 281 through the execution of a production sharing
contract with NNPC.
OPL 281 offers significant oil and gas reserves necessary to
diversify the Group’s earning base and also to anchor the
Group’s integrated energy master plan specifically due to
its abundant gas reserves.
Profit Before Tax
Dividends
Total Assets
10 Nbn
Following from the performance of the company, your
Board is proposing a dividend of 6kobo per share. This is the
second year that your company is paying dividends after the
restructuring.
We have since moved forward in our programme of activities
by advancing required seismic studies (data gathering,
interpretation and reprocessing) towards geophysical and
geological evaluations to lead to a well drilling proposal.
In addition, we have commenced an early stage community
engagement for proper needs assessments for the host
community. We are finalising on a choice of an operational
base prior to commencement of the exploratory drilling
campaign for the oil block.
18
TRANSCORP
PRESIDENT/CEO’S REPORT continued
Hospitality
Outlook
Our award winning flagship hotel, Transcorp Hilton Abuja
We cannot rest on the laurels of 2014 as we need to challenge
continued from the 2013 heights by successfully hosting
the World Economic Forum for Africa (WEFA) in 2014. It was
an unprecedented convergence of political and business
leaders across the globe. The event was adjudged the best
World Economic Forum event outside of Davos, Switzerland.
The Hotel also won the World Travel Awards (WTA) for
Nigeria’s leading hotel in 2014, the second consecutive
accolade in two years. In addition, Transcorp Hilton also won
2014 WTA award as the leading MICE (Meetings, Incentives,
Conventions and Exhibitions) hotel in Nigeria.
Transcorp Hotels has set a transformational agenda for its
business growth over the next 3 years and as such it requires
access to capital to make it a reality. To this end, the company
was successfully listed on the Nigeria Stock Exchange raising
N4.2bn from its IPO.
The company is in the final process of securing necessary
building permits for the development of the Transcorp
Hilton Ikoyi and signed management contract with Hilton
International for the development and management of the
Transcorp Hilton Port Harcourt.
Lastly in pushing its goal of intra sector diversification,
Transcorp Hotels signed an MOU with an International fast
food chain for a regional expansion of the latter’s Quick
Service Restaurant brand.
Agriculture
We continue to make appreciable progress in our efforts at
promoting value-added agricultural processing in Nigeria
through our fruit juice concentrate business. I am happy
to report to you that our fruit juice concentrates enjoy
patronage from the leading fruit juice producers in Nigeria.
In line with our long term plans for the business, we are
currently in discussions with potential technical partners
on setting up a world class orange orchard that will provide
high quality fruits for our processing plant.
ourselves to continue to demonstrate our strength in execution
achieving our outlined growth targets while increasing
profitability to build a financially strong and true conglomerate.
In 2015, we will:
• Pursue our generation capacity recovery programme and
are on course to deliver 850MW by December 2015. A large
number of our Hitachi H25 engines will be subject to major
inspections and maintenance in 2015 while we expect two
of our Frame 9 turbines (over 115MW each) to be brought
on stream during the year. We are also pursuing a number
of expansion opportunities to allow us fulfil our strategic
imperative of a capacity of 2,500MW by 2018. We expect that
the commencement of TEM will provide a proper commercial
framework that validates our investments in the expansion
of our available capacity.
• ·In the 4th quarter, expect to commence exploratory
drilling operation which is a critical milestone to achieving
commercial exploitation of OPL 281.
• ·Commence the upgrade of the Transcorp Hilton Hotel, Abuja.
This will involve the refurbishment of rooms, installation of
new power lift, redesign of the public areas, external civil
works and installation of power generation facilities. In
addition, the development of the Transcorp Hilton Ikoyi is
expected to begin in earnest upon conclusion of all final
building permits and licenses. The foundation and piling work
is also expected to be significantly progressed in 2015.
• ·Deepen our relationship with existing customers while
converting new juice producers. Teragro will embark on a
number of initiatives to improve its product quality while
achieving cost efficiency to allow it increase market share.
Closing
For Transcorp, 2015 is another chapter in our journey to be the
foremost conglomerate in Nigeria. We will continue to focus on
delivering exceptional value for all our stakeholders. Let me use
this opportunity to thank you for the unwavering support you
NSE President Compliance Award
gave my predecessor. I believe with your support & co-operation,
In December 2014, Transcorp was presented with the
we will achieve accelerated growth in all spheres of our business.
Nigerian Stock Exchange President Award for the most
Thank you.
compliant listed firm on the Exchange. This award is a
remarkable attestation to the transformation that we have
achieved in our governance standards in the last three years.
We will continue to institute processes and practices that
EMMANUEL N. NNOROM
conform to international best practice.
PRESIDENT/CEO
CORPORATE GOVERNANCE REPORT
TRANSCORP 19
Transnational Corporation of Nigeria Plc (“Transcorp” or “the Company”) is committed to high standards of Corporate
Governance. At Transcorp, the principles of good corporate governance are at the centre of our business and an important
ingredient in creating and sustaining value for our key stakeholders. During the year ended December 31 2014, Transcorp
complied with the provisions of the Code of Corporate Governance issued by the Securities & Exchange Commission (SEC)
and all laws regulating corporate governance.
1.Overview
During the year under review, the Company further entrenched good corporate governance practices. This is in line
with our conviction that corporate governance practices should be a proactive and self-propagated practice that
will enhance performance and uphold the Company’s brand equity, rather than a knee-jerk response to regulatory
impositions and sanctions. Consequently, we have continued to work relentlessly towards improving not only the Group’s
financial performance but also the self-induced good corporate governance practices without which such financial
performances cannot be sustained in the long run. To help the Board realise these objectives are the Nominations &
Governance Committee (NGC) and Finance & Investment Committee (FIC).
•
•
•
•
Our corporate governance policies approved by the Board of Directors remained operational throughout the period
under review. These are:
Group Policy Governance Framework
This framework explains the governance laws applicable to the Company’s businesses. It provides for policy development
and application, policy classification, review and revision as well as policy deviations and guiding templates.
Board Governance and Board Committees Governance Charter
This charter provides the governance frame work for the Group Board and Board Committees, which framework would
promote effective governance of the Group.
Executive Management Charter
This charter provides for the Executive Management Committee (EMC) of the Company – its composition, role, terms
of reference, proceedings and general governance framework.
Subsidiary Governance Charter
The Subsidiary Governance Charter provides for Group subsidiary governance, subsidiary boards of directors, subsidiary
governance structure, subsidiary board committees, executive management and organization structure.
2. Board of Directors
2.1General
The Board of Directors consists of seven members made up of one executive and six non-executive directors. In
accordance with the provisions of the Companies and Allied Matters Act, Cap C20, Laws of the Federation of Nigeria
2004 (CAMA) and the Board Governance Charter of the Company, the Chairman of the Board of Directors presides over
Board proceedings. The Board meets at least four times in a year. However, during the year under review the Board
met five times. The details of Directors’ attendance of Board meetings are disclosed on page 22 of the Annual Report.
The Board establishes formal delegations of authority, defining the limits of Management’s power and authority and
delegating to Management certain powers to run the day-to-day operations of the Company. The delegation of authority
conforms to statutory limitations specifying responsibilities of the Board that cannot be delegated to Management.
Any responsibility not delegated remains with the Board and its committees. The Company has continued to benefit
tremendously from the wealth of experience of its Directors, all successful individuals who have distinguished themselves
in their chosen fields.
2.2 Membership of the Board
During the year under review, a number of changes took place at the Board level. Alhaji Mohammed Nasir Umar retired
at the Board meeting of March 31 2014 while Mr. Abdulqadir Jeli Bello was appointed to the Board effective April 1
2014.
20
CORPORATE GOVERNANCE REPORT continued
TRANSCORP
Consequent upon the foregoing, the Board of Directors of the Company comprised of the following as at the end of the year:
Mr. Tony O. Elumelu, CON
Chairman
Appointed: 2011
Tony O. Elumelu is an entrepreneur, a philanthropist and the Chairman of Heirs Holdings Limited. He also serves as Chairman of
Transcorp.
In his early career, Mr Elumelu made a name for himself by turning the nearly bankrupt Standard Trust Bank into a top-five player in
Nigeria. In 2005 he led the largest merger in the banking sector in sub-Saharan Africa, acquiring United Bank for Africa (UBA). In five
years he transformed it from a single-country bank to a pan-African institution with over 7 million customers in 19 African countries.
Following his retirement from UBA in 2010, Mr. Elumelu set up Heirs Holdings Group and founded The Tony Elumelu Foundation,
an Africa-based and African-funded philanthropic organization dedicated to the promotion of entrepreneurship in Africa through
interventions in the areas of business leadership, policy and access to finance.
He serves as a member of the USAID’s Private Capital Group for Africa Partners Forum. He sits on the Nigerian President’s Agricultural
Transformation Implementation Council and serves as Co-Chair of the Aspen Institute Dialogue Series on Global Food Security.
He played a leading role in the formation of the National Competitiveness Council of Nigeria and now serves as its vice chairman.
He chairs the Ministerial Committee to establish world-class hospitals and diagnostic centres across Nigeria, at the invitation of
the Federal Government.
Mr. Elumelu is the author and leading proponent of the philosophy he calls “Africapitalism,” which is the private sector’s commitment
to Africa’s development through long-term investment in strategic sectors of the economy that drive economic prosperity and
social wealth.
In 2003 the Federal Government of Nigeria conferred the national honour of Member of the Federal Republic on Mr. Elumelu. In
2012 he was awarded the National Honour of Commander of the Order of the Niger for his service in promoting private enterprise.
In 2013, Mr. Elumelu received the Leadership Award in Business and Philanthropy from the Africa-America Institute (AAI) Awards.
He was also named African Business Icon at the 2013 African Business Awards.
Emmanuel N. Nnorom
President/CEO
Appointed: 2013
Emmanuel N. Nnorom was appointed President/CEO in September 2014. He was the President/COO of Heirs Holdings until his
appointment in an executive capacity. Prior to joining the Heirs Holdings Group, Emmanuel served as CEO of UBA Africa, overseeing
United Bank for Africa’s operations outside Nigeria and executing corporate strategy in 18 African countries. Other senior roles
within UBA included Group COO UBA, followed by his appointment as UBA’s Group CFO, with responsibility for Finance and Risk.
Emmanuel is a qualified chartered accountant, and brings over 3 decades of professional experience in the corporate and financial
sectors, working with publicly listed companies. He is an alumnus of Oxford University’s Templeton College, and a Prize winner and
Fellow of the Institute of Chartered Accountants of Nigeria.
Non Executive Director
Appointed: 2007
Olorogun O’tega Emerhor holds a First Class Degree Honours from the University of Nigeria, Nsukka. He is a fellow of the Institute
of Chartered Accountants of Nigeria (ICAN), Institute of Credit and Risk Management of Nigeria and Academy for Entrepreneurial
Studies. He is also a member of the Institute of Marketing Consultants.
Olorogun Emerhor is presently the Group CEO of Standard Alliance Group; Chairman, Transcorp Hotels Plc, owners of Transcorp
Hilton hotel, Abuja; Chairman, Synetics Technologies Ltd and Heroes Group. He trained as a chartered accountant with the renowned
PricewaterhouseCoopers and has worked in several banks like Citi Bank, Fidelity Bank Plc, GT Bank. He was the Managing Director
of erstwhile Crystal Bank, now part of UBA.
TRANSCORP 21
Mr. Kayode Fasola
Appointed: 2009
Mr. Kayode Fasola is a member of the Nomination and Governance Committee as well as the Finance and Investment
Committee of the Board. He is also a member of the Statutory Audit Committee of the Company.
He holds a B.Sc (Agricultural Economics) degree from University of Ibadan and an MBA (Finance) degree from Obafemi
Awolowo University, Ile-Ife. Mr. Fasola also holds an MBA (Banking) degree from Ladoke Akintola University, Ogbomosho.
He is an alumnus of the prestigious Lagos Business School and the London Business School. An Associate member of the
Chartered Institute of Management and National Institute of Marketing of Nigeria, Mr. Fasola is an Honorary Senior Member,
Chartered Institute of Bankers of Nigeria.
He is a professional banker with over 20 years’ cognate experience covering all facets of banking and business strategy. He
was at various times the Directorate Head of Commercial Banking and Public Sector and the Regional Executive in charge
of South West Business Group in Wema Bank Plc.
Mr. Stanley Lawson
Appointed: 2011
Mr. Stanley I. Lawson holds an M.Sc degree in Petroleum Geology and an MBA degree in Finance both from the University
of Ibadan.
He is the Managing Partner of Financial Advisory and Investment Consultants; an oil & gas-sector focused financial advisory
services firm. He is a widely respected expert with multi-disciplinary professional experience spanning over three decades in
the energy and financial sectors. He spent the early years of his career as a Resident Geologist/Drilling Engineer after which
he proceeded to the Banking/Finance Industry where he spent over 17 years rising to the position of Managing Director/
Chief Executive of African Express Bank in 2003. In December 2004, Mr. Lawson was appointed Group Executive Director,
Finance and Accounts at the Nigerian National Petroleum Corporation (NNPC), a position he held for almost five years. He
had core responsibilities for funding, budgeting and cash flow planning of the oil industry. He is currently a nonexecutive
director on the Board of the Central Bank of Nigeria.
Mr. Lawson has attended several international leadership and management courses. He is presently running a doctoral
programme at the University of Phoenix, Arizona.
Mr. Chibundu Edozie
Appointed: 2011
The Chairman of the Finance and Investment Committee of the Board and a member of the Nomination & Governance
Committee, Mr. Chibundu Edozie holds a Bachelor of Science degree in Geology and Mining from the University of Jos. He
is an alumnus of the New York Institute of Finance, IMD, Switzerland and Lagos Business School.
Mr. Edozie is the Group Deputy Managing Director of BGL Plc overseeing strategic business entities including BGL Asset
Management Limited, BGL Private Equity Limited, BGL Securities Limited and the Investment Banking Group. He also oversees
the international expansion of BGL Plc’s operations. With over 18 years experience in the capital market and investment
banking industry, Mr. Edozie is a consummate professional committed to the growth of the Nigerian capital market alongside
global financial markets.
He is an authorized dealing clerk of the Nigerian Stock Exchange, a Fellow of the Chartered Institute of Stockbrokers and a
past Member of the Governing Council of the Institute. He is also a member of the Nigerian Mining and Geosciences Society.
Mr Edozie also serves as a director on the boards of BGL Asset Management Limited, BGL Private Equity Limited and BGL
Securities Limited, wholly-owned subsidiaries of BGL Plc.
He is on the board of several companies and has received numerous prestigious awards.
22
TRANSCORP
Mr. Abdulqadir Jeli Bello
Appointed: 2014
Abdulquadir Jeli Bello is a member of Nomination & Governance Committee and the Finance and Investment Committee.
Prior to his appointment at Transcorp, he was an Executive Director at United Bank for Africa Plc (UBA) for Risk Management
and Far North business regions. While on the Board of UBA, he deepened the Bank’s Risk Management processes through
introduction of clear manuals on various aspects of Credit and other Risk Management activities. He spent the early years
of his career as a Manager/Branch Manager at Gamji Bank of Nigeria Plc (International Trust Bank Plc).
He holds a B.Sc in Accounting from Bayero University Kano and is an associate member of the Institute of Chartered
Accountants (ICAN). He also has a Certificate in Science, Technology and Society Certificate in Foundations of Nigerian
Culture from the School of General Studies, Bayero University, Kano.
Abdulquadir Bello has attended several international courses on Corporate Banking, Project Finance and Oil & Gas.
2.3 Board Meeting Attendance
Directors Total No. of meetings obliged to attend
Total No. of meetings
attended
5
5
Mr. Emmanuel Nnorom
5
Dates of meetings attended
(dd/mm/yy)
7/2/14, 31/3/14 22/7/14, 23/10/14
5
3
Mr. Kayode Fasola
5
5
31/3/14, 22/7/14 7/2/14, 31/3/14 5
3
N/A
N/A
2
7/2/14
8/12/14
NA
NA
1
23/10/14
NA
NA
1
22/7/14
8/12/14
22/7/14, 8/12/14
5
22/7/14, 23/10/14
N/A
23/10/14
7/2/14, 31/3/14
Mr. Stanley Lawson
5
N/A
8/12/14
4
Mr. Chibundu Edozie
(dd/mm/yy)
8/12/14
7/2/14, 31/3/14
Dates of
meetings not
attended
22/7/14, 23/10/14
5
No. of meetings not attended
7/2/14, 31/3/14 22/7/14, 23/10/14
8/12/14
Alhaji Abdulqadir Jeli Bello
(Appointed 1 April 2014)
2
23/10/14, 8/12/14
Mr. Obinna Ufudo
3
3
(Resigned 1 September 2014)
7/2/14, 31/3/14
22/7/14
NA
NA
Mohammed Nasir Umar
(Resigned 31 March 2014)
7/2/14, 31/3/14
NA
NA
N/A means “Not Applicable”.
2
2
2.4 Board Committees & Executive Management Committee
(a) Nomination & Governance Committee (formerly Establishment Committee)
The functions of the Nomination & Governance Committee (NGC) include the following:
• •
•
Establish procedures for the nomination of Directors.
Advise and recommend to the Board the composition of the Board.
Approve recruitments, promotions, redeployments and disengagements for the Company/Group heads of
departments. that make up the Executive Management Committee.
TRANSCORP 23
•
•
•
•
•
•
Review and evaluate the skills of members of the Board.
Recommend to the Board compensation for all staff of the Company and subsidiary Boards. Advise the Board on corporate governance standards and policies.
Review and approve all human resources and governance policies for the Group.
Review and recommend to the Board and Shareholders any changes to the memorandum and articles of association.
Evaluate and appraise the performance of the Board and Board Committees and its members annually in
conjunction with consultants.
During the year, the Committee, amongst other things, continued to work in line with its mandate and made recommendations
to the Board on the functions stated above and other issues, which in the opinion of the Committee deserved the attention
of the Board.
The Committee comprises the following:
1. Mr. Kayode Fasola
- Chairman1
2. Mr. Chibundu Edozie
- Member
3. Mr. Abdulqadir Jeli Bello - Member
The table below shows the frequency of meetings of NGC and members’ attendance
Directors Total No. of Total No. of meetings obliged meetings
to attend
attended
Dates of No. of Dates of
meetings meetings not meetings not
attended
attended
attended
(dd/mm/yy)
(dd/mm/yy)
Mr. Kayode Fasola
3
3
11/3/14, 17/7/14 8/12/14
N/A
N/A
Mr. Chibundu Edozie
3
3
11/3/14, 17/7/14 8/12/14
N/A
N/A
Mr. Abdulqadir Jeli Bello2 1
1
Mr. Emmanuel N. Nnorom3
2
2
8/12/14N/A N/A
11/3/14, 17/7/14
N/A
N/A
(b) Finance and Investment Committee
The functions of the Finance and Investment Committee (FIC) include the following:
•
•
•
•
•
•
•
Discharge the Board’s responsibilities with regard to strategic direction and budgeting.
•
Monitor and evaluate on a regular basis, the qualifications, independence and performance of external and internal
auditors and the financial control departments.
Provide oversight on financial matters and the performance of the Group.
Review and recommend investment opportunities or initiatives to the Board for decision.
Recommend financial and investment decisions within its approved limits.
Assist the Board in fulfilling its oversight responsibilities with regard to audit and control.
Ensure that effective system of financial and internal control is in place.
Monitor and assess the overall integrity of the financial statements and disclosures of the financial condition and
results of the Group.
During the year, the Committee amongst other things, reviewed the Company’s process of accepting credit facilities
from financial institutions, quarterly financial statements, tax related matters, proposed share capital reconstruction,
funding requirements of operating businesses, budgets, progress on legal disputes involving key investments, disposal
of fixed assets, etc. The Committee took certain decisions on the above mentioned matters and made recommendations
to the Board for approval. The Committee comprises:
1.
2.
3.
4.
Mr. Chibundu Edozie
Mr. Emmanuel N. Nnorom
Mr. Kayode Fasola
Mr. Abdulqadir Jeli Bello
-
-
-
-
Chairman
Member
Member
Member
...............................................
Mr. Kayode Fasola was appointed Chairman of the Committee on 23 October 2014 following the appointment of Mr. Emmanuel N. Nnorom to an
executive capacity. Mr. Abdulqadir Jeli Bello was also appointed to the Committee on 23 October 2014
Mr. Abdulqadir Jeli Bello was appointed to the Committee on 23 October 2014.
3
Mr. Emmanuel N. Nnorom was appointed President/CEO on 1 September 2014 and ceased to be a member of the committee on 31/8/14
1
2
24
TRANSCORP
The table below shows the frequency of meetings of FIC and members’ attendance.
Directors
Total No. of Total No. of meetings Obliged meetings
to attend
Attended
Dates No. Dates
of meetings of meetings of meetings
attended
not attendednot attended
(dd/mm/yy) (dd/mm/yy)
Mr. Chibundu Edozie
4
3
7/2/14, 17/7/14
8/12/14
Mr. Emmanuel Nnorom
4
3
17/7/14, 3/10/14, 8/12/14
Mr. Kayode Fasola
4
4
7/2/14, 17/7/14
23/10/14, 8/12/14
3
2
23/10/14, 8/12/14
2
2
7/2/14, 17/7/14
Mr. Obinna Ufudo4
5
Alhaji Mohammed Nasir Umar 1
1
7/2/14
c)
1
23/10/14
1
7/2/14
N/A
N/A
1
17/7/14
N/A
N/A
N/A N/A
The Statutory Audit Committee
The Statutory Audit Committee (SAC) is broadly empowered to, amongst other things; review the Group’s financial reporting
process, its system of audit, internal control and management of financial risk with a view to ensuring compliance with
statutory, regulatory and professional requirements. The Committee, which also reviews the performance of external auditors
to the Company, is chaired by a shareholder and has two other shareholders and three directors as members. In addition
to the powers conferred on it by CAMA, the Committee is empowered to engage the services of independent consultants
in the discharge of its duties. The Committee comprises:
1.
Mr. Matthew Esonanjor
-
Chairman
2.
Alhaji Abu Jimah -
Member
3.
Mr. John Isesele
-
Member
4.
Mr. Kayode Fasola -
Member
5.
Mr. Chibundu Edozie
-
Member
6.
Mr. Abdulqadir Jeli Bello6 -
Member
The table below shows the frequency of meetings of SAC and members’ attendance.
Directors
Total No. of Total No. of meetings Obliged meetings
to attend
Attended
Dates No. Dates
of meetings of meetings of meetings
attended
not attendednot attended
(dd/mm/yy) (dd/mm/yy)
Mr. Matthew Esonanjor
3
3
7/2/14, 12/11/14
8/12/14
N/A
N/A
Alhaji Abu Jimah
3
3
7/2/14, 12/11/14
8/12/14
N/A
N/A
Mr. John Isesele
3
3
7/2/14, 12/11/14
8/12/14
N/A
N/A
Mr. Kayode Fasola
3
3
7/2/14, 12/11/14
8/12/14
N/A
N/A
Mr. Chibundu Edozie
3
2
7/2/14, 12/11/14
1
8/12/14
2
2
12/11/14, 8/12/14
N/A
N/A
...............................................
4
5
6
Mr. Obinna Ufudo resigned on 1 September 2014.
Alhaji Mohammed Nasir Umar resigned on 1 April 2014.
Mr. Abdulquadir Jeli Bello was appointed to the Committee on 8 December 2014 and replaced Mr.
Emmanuel N. Nnorom on the Committee.
TRANSCORP 25
(d) Executive Management Committee
The Executive Management Committee (EMC) is charged with the following responsibilities:
•
•
•
·Articulating the strategy of the Group and recommending same to the Board for approval.
•
·Recommending to the Board the framework or policy for investment; and monitoring the implementation of investment
procedures.
•
•
·In line with Board approvals, outlining of philosophy, policy, objectives and resultant tasks to be accomplished.
•
•
·Preparation of annual financial plans for the approval of the Board and ensuring the achievement of set objectives.
The Executive Management Committee comprises:
·Discussing strategic matters and their impact on the Group’s investment portfolio.
·Articulating the manner through which investment sectors/new business areas and geographies will be chosen and
making recommendations to the Board in that regard.
·Recommending to the Board structures and systems through which activities are arranged, defined and coordinated
in terms of specific objectives.
·Reviewing and approval of the structure and framework for performance reporting of subsidiary companies.
1.President/CEO
2.
Chief Financial Officer
3.
Director of Resources
4. Head, Strategy & Business Transformation
5. Legal Adviser
6.
Commercial Director
7. Chief Internal Auditor
8.
Company Secretary
9. CEOs of Subsidiaries
26
Deloitte
TRANSCORP
Akintola Williams Deloitte
235 Ikorodu Road,
Ilupeju
P.O. Box 965, Marina
Lagos
Nigeria
Tel: +234 (1) 271 7800
Fax: +234 (1) 271 7800
www.deloitte.com/ng
16 March, 2015
The Board of Directors
Transnational Corporation of Nigeria Plc.
38 Glover Road
I koyi Victoria Island
Lagos
Dears Sirs
Report of the Directors of Transnational Corporation of Nigeria Plc on the out come of the
Board Evaluation
In compliance with the requirements of the Securities and Exchange Commission (SEC) Code of Corporate
Governance for listed and public companies in Nigeria (the code) and best practices, our firm, Akintola
Williams Dloitte was engaged to conduct an evaluation of the Board of Directors of Transnational Corporation
of Nigeria Plc (Transcorp or the Company) for the year ended 31 December 2014.
According to the Code, all listed and public companies in Nigeria are required to conduct an annual Board and
Directors’ appraisal covering all aspects of the Board’s structure and composition, responsibilities, processes
and relationships, individual members’ competencies and respective roles in the Board’s performance.
Our evaluation was undertaken based on the information provided by the Company. On the basis of our
work, we conclude that the Board’s performance complied with the standards contained in the Code.
Yours faithfully,
Anthony Olukoju
Partner, Risk Advisory
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by
guarantee (“DTTL”), its network of member firms, and their related entities. DTTL and each of its member
firm are legally separate and independent entities. DTTL (also referred to as “Deloitte Global”) does not
provide services to clients. Please see www.deloitte.com/about for a more detailed description of DTTL and
its member firms.
Akintola Williams Deloitte, a member firm of Deloitte Touche Tohmatsu Limited, is a professional services
organisation that provides audit, tax, consulting, accounting and financial advisory, corporate finance, and
risk advisory services.
TRANSCORP 27
DIRECTOR’S
REPORT
The Directors present their annual report on the affairs of Transnational Corporation of Nigeria Plc (“the Company”) together
with the audited financial statements for the year ended 31 December 2014, to the members of the Company. This report
discloses the state of the Company and the Group.
1. LEGAL FORM
The Company was incorporated on 16 November 2004 as a public limited liability company domiciled in Nigeria in
accordance with the requirements of the Companies and Allied Matters Act. Following a successful initial public offer
(IPO), the Company was in December 2006, listed on the Nigerian Stock Exchange. The shares of the Company have
continued to be traded on the floor of the Exchange. The Company maintains controlling interests in the following
companies, referred to as portfolio companies:
- Capital Leisure and Hospitality Limited
- Transcorp Hotels Plc
- Transcorp Hotels Calabar Limited
- Transcorp Ughelli Power Limited
- Ughelli Power Plc
- Transcorp Energy Limited
- Transcorp Properties Limited
- Teragro Commodities Limited
- Telecommunication Backbone Development Company Limited (in liquidation)
- Allied Commodities Limited (in liquidation)
- Transcorp Telecoms Limited
- Transcorp Trading and Logistic Limited
- Transcorp OPL 281 Nigeria Limited
- Transcorp Staff Share Ownership Trust Company Limited
2. PRINCIPAL ACTIVITIES
The Company’s business is the investment in and operation of portfolio companies in the hospitality, energy and
agriculture sectors. The Company has retained subsidiaries and affiliates providing services and sale of goods in these
sectors.
3. INCORPORATION AND SHARE CAPITAL HISTORY
The initial authorized share capital of the Company at incorporation was N100,000,000 divided into 100,000,000
ordinary shares of N1.00 each. At present, the authorized share capital of the Company is N22,500,000,000 divided into
45,000,000,000 ordinary shares of 50 kobo each, of which N19,360,499,000 divided into 38,720,997,000 ordinary shares
of 50 kobo each is fully paid up. The following changes have taken place in the Company’s authorized and issued Capital:
_________________________________________________________________________________________________
Date
2004
Authorized From
Authorized To
Issued From
Issued To Consideration
UnitsUnitsUnitsUnits
Nil100,000,000
Nil100,000,000
Cash
2006
100,000,000
200,000,00025,000,00050,000,000
Stock Split
2006
200,000,00036,000,000,000
50,000,00018,553,905,526
Cash
2007
36,000,000,00036,000,000,00018,553,905,52625,813,998,283
Cash
2013
36,000,000,00045,000,000,00025,813,998,28325,813,998,283
-
2013
45,000,000,00045,000,000,00025,813,998,28338,720,997,000
Cash
28
TRANSCORP
DIRECTOR’S REPORT continued
4.RESULTS
The Company and Group’s detailed results for the year ended 31 December 2014 are set out on page 35 of this report.
The profit for the year of N3.30 billion (Company- N2.48 billion) has been transferred to the general reserves. The
summarized results are presented below:
GroupCompany
31 December
31 December
31 December 31 December
201420132014
2013
N’000N’000N’000
N’000
Revenue
41,338,136
18,825,278
6,334,884 2,142,000
Gross profit
27,634,528
14,373,743
6,334,884
2,142,000
Profit before taxation
7,731,598
9,032,151
3,287,079
3,186,963
Taxation
(4,427,338)
3,304,260
(2,074,249)
6,957,902
(808,774) (365,951)
Total comprehensive income
Profit attributable to:
Owners of the parent
74,033
4,029,758
Non controlling interest
3,230,227
2,928,144
Total comprehensive income for the year
3,304,260
6,957,902
2,478,305
2,478,305
- 2,478,305
2,821,012
2,821,012
2,821,012
5. DIVIDEND
The Directors are recommending the payment of dividend of 6 kobo per share to the Shareholders.
6. DIRECTORS’ INTERESTS IN CONTRACTS
At the 38th meeting of the Board of Directors of the Company, the Chairman, Mr. Tony Elumelu, CON, declared the
interest of Heirs Holdings Limited in the property lying at No. 38 Glover Road (formerly 22B) Ikoyi, Lagos, which property
currently serves as the Registered Office of the Company. Furthermore, at the 44th meeting of the Board of Directors
of the Company (adopted at the 45th meeting), the Board approved a technical services agreement between the
Company and Heirs Holdings Limited for technical services rendered to the Company by Heirs Holdings Limited. Mr.
Elumelu has shareholding interests in and is the Chairman of Heirs Holdings Limited.
7. DIRECTORS AND THEIR INTERESTS
The Directors who held office during the year, together with their direct and indirect interests in the shares of the
Company as at 31 December 2014, were as follows:
Directors
Direct
Indirect Total No. of Shares Held
%
Mr. Tony Elumelu, CON
1,973,051,468
15,086,865,631*
17,059,917,099
44.059
Mr Emmanuel N. Nnorom
Nil
7,397,097**
7,397,097
0.019
1,012,779141,919,842 142,932,621
0.369
Mr. Obinna Ufudo7
Nil
221,430,773***
221,430,773
0.572
Alhaji Mohammed Nasir Umar8
Nil3,735,500 3,735,500 0.010
Mr. Kayode Fasola
1,500,000
Nil
1,500,000
0.004
Dr. Stanley Inye Lawson
29,450,000
Nil
29,450,000
0.076
Mr. Chibundu Edozie
Nil
10,228,066****
10,228,066
0.026
Mr. Abduquadir Jeli Bello9
500,000 Nil500,0000.001
Total
2,005,514,24715,471,576,909 17,477,091,156
45.135
*Indirectly held through HH Capital and Heirs Holdings Ltd.
** Indirectly held through Vine Foods Ltd.
***Indirectly held through Standard Alliance Insurance Plc.
**** Indirectly held through Imperium Inv. Trust Ltd.
...............................
7
8
9
Resigned 1 September 2014
Resigned effective 1 April 2014
Appointed effective 1 April 2014
TRANSCORP
8. ALTERNATE DIRECTORSHIP
There was no alternate directorship during the year under review.
9. SHAREHOLDING ANALYSIS
The shareholding structure of the Company as at 31 December 2014 was as follows:
Range
No. of Holders
% of total
Units Units %
1 - 999
3,155
1.09
1,399,990
0.01
1,000 - 9,999
215,553
74.25
527,438,623
1.36
10,000 - 99,999
59,231
20.40
1,360,194,216
3.51
100,000 - 999,999
10,620
3.66
2,559,235,819
6.61
1,000,000 - 9,999,999
1,568
0.54
3,418,901,010
8.83
10,000,000 - 99,999,999
125
0.04
3,167,652,681
8.18
100,000,000 - 999,999,999
35
0.01
9,588,635,450
24.76
1,000,000,000 - 9,999,999,999
4
0.00
18,097,539,636
46.74
290,291
100.00
38,720,997,425
100.00
10. SUBSTANTIAL INTEREST IN SHARES
As at December 31 2014, only Mr. Tony O. Elumelu, CON directly and/or indirectly held 5% or more of the issued share
capital of the Company. Mr. Elumelu held a total of 44.06% of the issued share capital of the Company.
11. FIXED ASSETS
Information relating to changes in the fixed assets of the Company is given in Note 6 to the financial statements.
12. EMPLOYMENT OF PHYSICALLY CHALLENGED PERSONS
The Group has a policy of fair consideration of job applications by physically challenged persons having regard to their
abilities and aptitude. The Group’s policy prohibits discrimination against such persons in the recruitment, training and
career development of its employees. In the event of members of staff becoming physically challenged, every effort is
made to ensure that their employment with the Group continues, and that appropriate training is arranged for them.
13. EMPLOYEE HEALTH, SAFETY AND WELFARE
The Group maintains business premises and work environments that guarantee the safety and health of its employees
and other stakeholders. The Group’s rules and practices in these regards are reviewed and tested regularly. Also, the
Group provides free medical insurance for its employees and their families through selected health management
organizations and hospitals.
14. EMPLOYEE TRAINING AND INVOLVEMENT
The Group places a high premium on the development of its manpower and consults with employees on matters
affecting their well-being. Formal and informal channels of communication are employed in keeping staff abreast of
various factors affecting the performance of various businesses in the Group. In-house and external training courses
are carried out at various levels across the business chains in the Group. The Group’s skill base has been extended by
a range of training provided to employees.
15. AWARDS AND DISTINCTION
a. Most Compliant Listed Firm Award
In December 2014, and in recognition of the Company’s enviable corporate governance standards, the Company
won The Nigerian Stock Exchange CEO Award as the Most Compliant Listed Firm on The Nigerian Stock Exchange.
b. Top 100 Companies in Nigeria
The Company was recognized as one of the Top 100 Businesses in Nigeria by the Federal Government of Nigeria.
29
30
TRANSCORP
16. PROHIBITION OF INSIDER TRADING
The Company’s Code of Conduct (in accordance with the extant Nigerian laws and Rules of The Nigerian Stock Exchange)
prohibits employees and Directors from insider trading, dealings and stock tipping when in possession of price-sensitive,
non public information relating to the Company’s business and from sharing or using such insider information.
17. DONATIONS AND GIFT
The Group made donation to victims of the insurgency during the year (N768.5 m). The Group also sets aside (N90.7m)
for various Corporate Social Responsibility activities.
18.AUDITORS
Messrs PricewaterhouseCoopers have indicated their willingness to continue in office as the auditors of the Company
in accordance with section 357(2) of the Companies and Allied Matters Act, 1990 (CAMA).
By Order of the Board
Chinedu N. Eze
Company Secretary
FRC/2013/NBA/00000002586
.............................................................................................................................. TRANSCORP33
..............................................................................................................................
TRANSCORP
Corporation of Nigeria Plc
34 Transnational
Transnational
Corporation of Nigeria Plc
TRANSCORP 35
STATEMENT OF FINANCIAL POSITION
as at 31 December 2014
GroupCompany
31 December 31 December 31 December31 December
2014 2013 20142013
Note N’000 N’000 N’000N’000
ASSETS
Non-current assets
Property, plant and equipment
6
93,518,593
88,586,001
50,955
77,960
Intangible assets
7
38,451,180 31,985,609 5,077,292
5,078,782
Investment property
8
2,738,164 1,575,000 1,600,000
1,575,000
Investment in subsidiaries
9
-
-
27,549,287 29,535,120
Prepaid lease rental (long term)
11
35,000
65,000
-
134,742,937 122,211,610 34,277,534 36,266,862
Current assets
Inventories
12
1,682,224 1,431,175
-
Trade and other receivables
13
27,938,086 8,445,628 16,524,720 4,644,178
Prepaid lease rental (short term)
11
30,000 30,000 - Debt and equity securities
14
3,431,598 8,150,771 3,431,598
8,150,771
Cash and cash equivalents
15
2,930,517
9,195,229
8,118
17,680
36,012,425 27,252,803 19,964,43612,812,629
Total assets
170,755,362 149,464,413 54,241,970 49,079,491
Liabilities
Current liabilities
Trade and other payables 16
13,769,258 6,283,466 6,695,023 4,107,816
Taxation 17
5,984,570 3,921,635 224,137 216,123
Borrowings (short term)
18
10,639,349 3,656,983 2,517,611 762,665
Advance deposits
20
1,875,000 1,875,000 1,875,000 1,875,000
32,268,177 15,737,084 11,311,771 6,961,604
Non-current liabilities
Borrowings (long term)
18
37,138,699 39,452,293 9,469,009 9,198,952
Deferred tax
10
11,593,635 7,598,529 - 48,732,334 47,050,822 9,469,009 9,198,952
Total liabilities
81,000,511 62,787,906 20,780,780 16,160,556
Equity
Ordinary share capital
30
19,360,499 19,360,499 19,360,499 19,360,499
Share premium
30
7,213,368 7,213,368 7,213,368 7,213,368
Treasury shares
30
(137,790)
(25,784)
-
Retained earnings
30,070,219 31,678,187 6,887,323 6,345,068
Equity attributable to owners of the parent 56,506,296 58,226,270 33,461,19032,918,935
31
33,248,555
28,450,237
-
Total equity
89,754,851 86,676,507 33,461,190 32,918,935
Net equity and liabilities
170,755,362 149,464,413 54,241,970 49,079,491
The notes on pages 39 to 85 are an integral part of these financial statements.
The financial statements on pages 35 to 38 were approved and authorised for issue by the Board of Directors on 2 April
2015 and were signed on its behalf by
Tony O. Elumelu CON
Ibikunle Oriola
Emmanuel Nnorom
Chairman Board of Directors
Chief Finance Officer
President, Chief Executive Officer
FRC/2013/CIBN/00000002590
FRC/2013/ICAN/00000004372FRC/2014/ICAN/00000007402
36
TRANSCORP
STATEMENT OF COMPREHENSIVE INCOME
GroupCompany
31 December 31 December 31 December 31 December
201420132014 2013
Note N’000N’000N’000 N’000
Revenue
21 41,338,13618,825,278 6,334,884 2,142,000
Cost of sales
22
(13,703,608)
(4,451,535)
-
-
Gross profit
27,634,528 14,373,743 6,334,884 2,142,000
25(12,281,087)(9,213,184)(1,982,771) (2,274,757)
Other income
23
391,578 1,236,976
1,392,408
1,172,502
Other (losses)/gains - net
24
(2,119,549)
3,852,974
(2,258,500)
2,859,785
Operating profit 13,625,47010,250,509 3,486,021
3,899,530
Finance income
27 1,897,4001,313,5131,219,780
Finance cost
27 (7,791,272)(2,531,871)(1,418,722) (1,316,472)
Net finance cost
(5,893,872)
(1,218,358)
(198,942)
603,905
(712,567)
Profit before taxation 7,731,5989,032,1513,287,079 3,186,963
Taxation
17 (4,427,338)(2,074,249) (808,774)
(365,951)
Profit for the year 3,304,2606,957,9022,478,305 2,821,012
Profit attributable to:
Owners of the parent
74,033
4,029,758
2,478,305
2,821,012
3,230,227
2,928,144 -
-
Total comprehensive income for the year
3,304,260
6,957,902
2,478,305
2,821,012
Attributable to: Owners of the parent 74,033
4,029,758 2,478,305 2,821,012
Non controlling interest 3,230,227 2,928,144
-
-
Basic EPS (kobo)
29
0.19
12.17
6.40
8.52
Diluted EPS (kobo)
29
0.19
12.17
6.40
8.52
The results shown above relate to continuing operations.
TRANSCORP 37
STATEMENT OF CHANGES IN EQUITY
Group
Attributable to owners of the parent
Total NonTotal
Share
Share Treasury
Retained Controlling
Controlling
Equity
CapitalPremium Shares Earnings interest interest
N’000 N’000
N’000 N’000N’000 N’000N’000
Balance at 1 January 2013
12,906,999 27,071,664
-
1,879,727 41,858,390 22,238,254 64,096,644
Share capital reconstruction
- (25,768,702)
-
25,768,702
Rights issue
-
5,910,406
Profit for the year
-
-
-
4,029,758 4,029,758
Dividend paid
-
-
-
-
-
Acquisition of treasury shares
-
-
(25,784)
Increase in subsidiary investment
-
-
19,360,499
7,213,368
19,360,499
7,213,368
(25,784)
Profit for the year
-
-
-
Dividend paid
-
-
-
(1,936,050) (1,936,050)
(4,477,265) (6,413,315)
Acquisition of treasury shares
-
- (112,006)
- (112,006)
- (112,006)
Increase in share capital of subsidiary - THP
-
-
-
-
Dilution of interest in subsidiary - TUPL (Note 34)
-
-
-
462,532
Increase in investment in subsidiary - TUPL (Note 34)
-
-
-
(208,483)
Balance at 31 December 2014
- 12,363,906
2,928,144 (2,058,000) (2,058,000)
(25,784)
- 6,957,902
- - (25,784)
5,341,839 5,341,839
(25,784) 31,678,187 58,226,270 28,450,237 86,676,507
31,678,187 58,226,270
74,033
28,450,237 86,676,507
74,033 3,230,227
- 3,304,260
3,829,613 3,829,613
462,532
2,307,944
2,770,476
(208,483)
(92,201)
(300,684)
19,360,499 7,213,368 (137,790) 30,070,219 56,506,296 33,248,555 89,754,851
Share
Share Retained
Total
CapitalPremium Earnings
N’000N’000 N’000N’000
12,906,999
Share capital reconstruction
Rights issue
- - Company
- 12,363,906
-
6,453,500 Balance at 31 December 2013
- -
27,071,664
(22,244,646)
17,734,017
- (25,768,702)
25,768,702
-
6,453,500 5,910,406
-
12,363,906
-
-
2,821,012
2,821,012
19,360,499 7,213,368 6,345,068 32,918,935
19,360,499 7,213,368 6,345,068 32,918,935
Dividend paid
-
-
(1,936,050)
(1,936,050)
Profit for the year
-
-
2,478,305
2,478,305
19,360,499 7,213,368 6,887,323
33,461,190
Profit for the year
38
TRANSCORP
STATEMENT
OF CASH FLOWS
GroupCompany
2014 20132014 2013
Note(s) N’000 N’000N’000 N’000
Cash flows from operating activities
Cash generated from/(used in) operations
32
10,175,317 (299,012)
(4,179,998)
(2,097,626)
(618,486)
(483,229)
-
-
(1,825,588)
(1,727,504)
(167,272)
(164,559)
Net cash generated from /(used in) operating activities7,731,243 (2,509,745)
(4,347,270)
(2,262,185)
VAT paid
Tax paid
17
Cash flows from investing activities
Interest received
27
1,897,399
1,313,513
1,219,780
603,905
7
(2,390,991)
-
-
-
32
2,726
3,104
2,726
24
8
(1,138,164)
-
-
-
14
2,455,544 10,781,529 2,455,544 2,558,428
Purchase of property, plant and equipment
6
(11,593,133)
(525,934)
(6,206)
Acquisition of subsidiary
9
-
(48,850,000)
Increase in intangible assets
Proceeds from sale of property plant and equipment
Purchase of investment property Fixed income investment - (54,666)
-
Net cash (used in)/generated from investing activities
(10,766,619)(37,277,788)3,671,844 3,107,691
Cash flows from financing activities
Proceeds from borrowings
12,687,507
46,927,292
8,400,000
13,828,397
Repayments of borrowings
(10,890,148)
(17,584,853)
(6,345,252)
(17,584,853)
Dividend paid (1,936,050)
(2,058,000)
(1,936,050)
-
Dividend paid to non-controlling interest
(4,477,265)
-
-
-
Purchase of treasury shares
(112,006)
(25,784)
-
-
Proceeds from sale of equity securities
9,800
-
9,726
-
Investment in subsidiary by NCI
34
2,469,792
5,341,839
1,985,833
(8,246,397)
Proceeds from public offer by NCI - THP
35
3,829,613
-
-
-
Proceeds from rights issue - Transcorp Plc
-
12,363,906
-
12,363,906
(4,919,859)
(2,531,871)
(1,418,722)
(1,316,472)
(3,338,616)
42,432,529 695,535 (955,419)
(6,373,992)
2,644,996 20,109
(109,913)
15
9,195,229 5,549,863 17,680
117,860
24
109,280 1,000,370 (29,671)
9,733
Cash, cash equivalents and bank overdrafts at the end of the year 2,930,517 9,195,229 8,118 17,680
Interest payment
27
Net cash flow (used in)/ generated from financing activities
Net (decrease)/ increase in cash,
cash equivalents and bank overdrafts
Cash, cash equivalents and bank overdrafts
at the beginning of the year
Foreign exchange gain/(loss) on cash
and cash equivalents
TRANSCORP 39
NOTES TO THE FINANCIAL STATEMENTS
1. General information
Transnational Corporation of Nigeria Plc, (“the Company” or “Transcorp”), was incorporated on 16 November, 2004 as a
private limited liability Company domiciled in Nigeria in accordance with the requirements of the Companies and Allied
Matters Act. Following a successful initial public offer (IPO), the Company was in December 2006, listed on the Nigerian
Stock Exchange. The shares of the Company have continued to be traded on the floor of the Exchange. The Company
is domiciled in Nigeria and the address of its registered office is 38, Glover Road, Ikoyi, Lagos, Nigeria.
The Company maintains controlling interests in the following companies. The Company, together with the subsidiaries
are known as the Transcorp Group, (“the Group”)
- Capital Leisure and Hospitality Limited
- Transcorp Hotels Plc (Formerly Transnational Hotels and Tourism Services Limimted)
- Transcorp Hotels Calabar Limited (Formerly Transcorp Metropolitan Hotels and Conferencing Limited)
- Transcorp Ughelli Power Limited
- Ughelli Power Plc
- Transcorp Energy Limited
- Transcorp Properties Limited
- Teragro Commodities Limited
- Telecommunication Backbone Development Company Limited (in liquidation)
-Allied Commodities Limited (in liquidation)
- Transcorp Telecoms Limited
- Transcorp Trading and Logistic Limited
- Transcorp OPL 281 Limited
- Transcorp Staff Share Ownership Trust Company Limited
The Company’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 Company operates.
2. Summary of significant accounting policies
2.1Basis of preparation
The consolidated financial statements have been prepared in accordance with the Companies and Allied Matters Act
(CAMA) and the International Financial Reporting Standards (IFRSs) , including International Accounting Standards
(IAS) and interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC) applicable
to companies reporting under IFRS.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates.
It also requires management to exercise its judgment in the process of applying the Group’s accounting policies. The
areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant
to the consolidated financial statements are disclosed in note 4.
The preparation of financial statements, in conformity with generally accepted accounting principles under IFRS, requires
the directors to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date
of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although
these estimates are based on the directors’ best knowledge of the amounts, events or actions, actual results ultimately
may differ from those estimates.
40
TRANSCORP
NOTES
TO THE FINANCIAL STATEMENTS continued
The financial statements have been prepared on a historical cost basis except for the fair value basis applied to certain
intangible assets, investment property and equity investments.
All values are rounded to the nearest thousand (N’000), except when otherwise indicated.
2.1.1 Going concern
The financial statements have been prepared on a going concern basis. The directors have no doubt that the Company
would remain in existence after 12 months.
2.1.2 Changes in accounting policy and disclosures
(a) New and amended standards adopted by the Group
The following standards have been adopted by the Group for the first time for the financial year beginning on or
after 1 January 2014 and have a material impact on the Group.
Amendment to IAS 32, ‘Financial instruments: Presentation’ on offsetting financial assets and financial liabilities.
This amendment clarifies that the right of set-off must not be contingent on a future event. It must also be legally
enforceable for all counterparties in the normal course of business, as well as in the event of default, insolvency or
bankruptcy. The amendment also considers settlement mechanisms. The amendment did not have a significant
effect on the Group financial statements.
Amendments to IAS 36, ‘Impairment of assets’, on the recoverable amount disclosures for non-financial assets. This
amendment removed certain disclosures of the recoverable amount of CGUs which had been included in IAS 36 by
the issue of IFRS 13.
Other standards, amendments and interpretations which are effective for the financial year beginning on 1 January
2014 are not material to the Group.
(b) New standards, amendments and interpretations not yet adopted
A number of new standards and amendments to standards and interpretations are effective for annual periods
beginning after 1 January 2014, and have not been applied in preparing these consolidated financial statement.
None of these is expected to have a significant effect on the consolidated financial statements of the Group, except
the following set out below:
IFRS 9, ‘Financial instruments’, addresses the classification, measurement and recognition of financial assets and
financial liabilities. The complete version of IFRS 9 was issued in July 2014. It replaces the guidance in IAS 39 that relates
to the classification and measurement of financial instruments. IFRS 9 retains but simplifies the mixed measurement
model and establishes three primary measurement categories for financial assets: amortised cost, fair value through
OCI and fair value through P&L. The standard is effective for accounting periods beginning on or after 1 January 2018.
Early adoption is permitted. The Group is assessing full impact of IFRS 9
IFRS 15, ‘Revenue from contracts with customers’ deals with revenue recognition and establishes principles for
reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of
revenue and cash flows arising from an entity’s contracts with customers. Revenue is recognised when a customer
obtains control of a good or service and thus has the ability to direct the use and obtain the benefits from the good
or service. The standard replaces IAS 18 ‘Revenue’ and IAS 11 ‘Construction contracts’ and related interpretations. The
standard is effective for annual periods beginning on or after 1 January 2017 and earlier application is permitted. The
Group is assessing the impact of IFRS 15.
There are no other IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a material
impact on the Group.
TRANSCORP 41
NOTES
2.2Consolidation
(a) Subsidiaries
Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity
when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability
to affect those returns through its power over the entity. Subsidiaries are accounted for at cost in the separate financial
statements of Transcorp. In the consolidated financial statements, subsidiaries are fully consolidated from the date on
which control is transferred to the Group. They are de-consolidated from the date that control ceases.
The Group applies the acquisition method to account for business combinations. The consideration transferred for
the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of
the acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any
asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and
contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date.
The Group recognises any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either at fair
value or at the present ownership instrument’s proportionate share of the recognised amounts of acquiree’s identifiable
net assets for components that are present and entitle their holders to a proportionate share of net assets in the events
of liquidation. All other components of non-controlling interests are measured at fair value.
Acquisition-related costs are expensed as incurred.
If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s previously held
equity interest in the acquiree is re-measured to fair value at the acquisition date; any gains or losses arising from such
re-measurement are recognised in profit or loss.
Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date. Subsequent
changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognised in
accordance with IAS 39 either in profit or loss or as a change to other comprehensive income.
Contingent consideration that is classified as equity is not re-measured, and its subsequent settlement is accounted for
within equity.
The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisitiondate fair value of any previous equity interest in the acquiree over the fair value of the identifiable net assets acquired is
recorded as goodwill. If the total of consideration transferred, non-controlling interest recognised and previously held
interest measured is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase,
the difference is recognised directly in the income statement.
Inter-Company transactions, balances and unrealised gains on transactions between Group companies are eliminated.
Unrealised losses are also eliminated. When necessary amounts reported by subsidiaries have been adjusted to conform
with the Group’s accounting policies.
(b) Changes in ownership interests in subsidiaries without change of control.
Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions –
that is, as transactions with the owners in their capacity as owners. The difference between fair value of any consideration
paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or
losses on disposals to non-controlling interests are also recorded in equity.
(c) Disposal of subsidiaries
When the Group ceases to have control, any retained interest in the entity is remeasured to its fair value at the date
when control is lost, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying
amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial
asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are
accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts
previously recognised in other comprehensive income are reclassified to profit or loss.
42
TRANSCORP
NOTES
2.3Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating
decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing
performance of the operating segments, has been identified as the Board of Directors of Transcorp.
2.4Foreign currency translation
(a) Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the
primary economic environment in which Transcorp operates (‘the functional currency’). The functional currency of
Transcorp and its subsidiaries is the Nigerian Naira (N). All entities in the Group have the same functional currency.
The consolidated financial statements are also presented in Naira.
(b) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the
dates of the transactions or valuation where items are re-measured. Foreign exchange gains and losses resulting
from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets
and liabilities denominated in foreign currencies are recognised in the income statement. Foreign exchange gains
and losses that relate to borrowings and cash and cash equivalents are presented in the income statement within
‘finance income or costs’. All other foreign exchange gains and losses are presented in the income statement within
‘other (expenses)/income – net’. Translation differences related to changes in amortised cost are recognised in profit
or loss.
2.5Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses.
Cost includes expenditures that are directly attributable to the acquisition of the asset.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only
when it is probable that future economic benefits associated with the item will flow to the Group and the cost can be
measured reliably. All other repairs and maintenance are charged to the income statement during the financial period
in which they are incurred.
Land is not depreciated. Depreciation on other assets is calculated using the straight line method to allocate their costs
or revalued amounts to their residual values over their estimated useful lives, as follows:
•
•
•
•
•
•
Leasehold buildings
5%
Plant and machinery -Turbines
2%
Plant and machinery - Others
10%
Furniture and fittings
20%
Office equipment
10%
Motor vehicles
25%
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting
period.
The Group allocates the amount initially recognized in respect of an item of property, plant and equipment to its
significant parts and depreciates separately each such part. The carrying amount of a replaced part is derecognized
when replaced. Residual values, method of amortization and useful lives of the assets are reviewed annually and
adjusted if appropriate.
Where an indication of impairment exists, an asset’s carrying amount is written down immediately to its recoverable
amount if the asset’s carrying amount is greater than it’s estimated recoverable amount.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised
in the income statement.
TRANSCORP 43
NOTES
2.6Intangible assets
(a) Goodwill
Goodwill arises on the acquisition of subsidiaries and represents the excess of the consideration transferred over Transcorp’s
interest in the net fair value of the net identifiable assets, liabilities and contingent liabilities of the acquiree and the fair
value of the non-controlling interest in the acquiree. For the purpose of impairment testing, goodwill acquired in a business
combination is allocated to each of the cash generating units (CGUs), or Groups of CGUs, that is expected to benefit from
the synergies of the combination. Each unit or Group of units to which the goodwill is allocated represents the lowest level
within the entity at which the goodwill is monitored for internal management purposes. Goodwill is monitored at the
operating segment level.
Goodwill impairment reviews are undertaken annually or more frequently if events or changes in circumstances indicate a
potential impairment. The carrying value of goodwill is compared to the recoverable amount, which is the higher of value
in use and the fair value less costs to sell. Any impairment is recognised immediately as an expense and is not subsequently
reversed.
(b)Computer software
Costs associated with maintaining computer software programmes are recognised as expenses as incurred. Development
costs that are directly attributable to the design and testing of identifiable and unique software products controlled by the
Group are recognised as intangible assets when the following criteria are met:
- it is technically feasible to complete the software product so that it will be available for use;
- the directors intends to complete the software product and use or sell it;
- there is an ability to use or sell the software product;
- it can be demonstrated how the software product will generate probable future economic benefits;
- adequate technical, financial and other resources to complete the development and to use or sell the software product
are available; and
- the expenditure attributable to the software product during its development can be reliably measured.
Directly attributable costs that are capitalised as part of the software product include the software development related
employee costs and an appropriate portion of relevant overheads.
Other development expenditures that do not meet these criteria are recognised as expenses as incurred. Development
costs previously recognised as an expense are not recognised as an asset in a subsequent period.
Computer software development costs recognised as assets are amortised over their estimated useful lives. The estimated
useful lives of the software of the Group is between three to eight years.
c) Oil and natural gas exploration, evaluation and development expenditure
Oil and natural gas exploration, evaluation and development expenditure is accounted for using the “full cost method”.
Costs incurred prior to obtaining legal rights to explore are expensed immediately to the income statement.
(i) Pre-licence costs
Pre-licence costs are expensed in the period in which they are incurred.
(ii) Licence and property acquisition costs
Exploration licence and leasehold property acquisition costs are capitalised within intangible assets and are reviewed at
each reporting date to confirm that there is no indication that the carrying amount exceeds the recoverable amount. This
review includes confirming that exploration drilling is still under way or firmly planned, or that it has been determined, or
work is under way to determine, that the discovery is economically viable based on a range of technical and commercial
considerations and sufficient progress is being made on establishing development plans and timing.
If no future activity is planned, the carrying value of the licence and property acquisition costs is written off to income
statement. Upon recognition of proved reserves and internal approval for development, the relevant expenditure is
transferred to oil and gas properties, after assessing for impairment and amortised over the remaining life of the license.
44
TRANSCORP
NOTES
(iii) Exploration and evaluation costs
Exploration and evaluation activity involves the search for mineral resources, the determination of technical
feasibility and the assessment of commercial viability of an identified resource.
Once the legal right to explore has been acquired, costs directly associated with an exploration well are capitalised
as exploration and evaluation intangible assets until the drilling of the well is complete and the results have been
evaluated. These costs include directly attributable employee remuneration, materials, fuel used, rig costs and
payments made to contractors. If no potentially commercial hydrocarbons are discovered, the exploration asset is
written off as a dry hole. If extractable hydrocarbons are found and, subject to further appraisal activity (e.g., the
drilling of additional wells), are likely to be capable of being commercially developed, the costs continue to be
carried as an intangible asset while sufficient/continued progress is made in assessing the commerciality of the
hydrocarbons. Costs directly associated with appraisal activity undertaken to determine the size, characteristics
and commercial potential of a reservoir following the initial discovery of hydrocarbons, including the costs of
appraisal wells where hydrocarbons were not found, are initially capitalised as an intangible asset.
All such capitalised costs are subject to technical, commercial and management review as well as review for
indicators of impairment at least once a year. This is to confirm the continued intent to develop or otherwise
extract value from the discovery. When this is no longer the case, the costs are written off to income statement.
When proved reserves of oil and natural gas are identified and development is sanctioned by management, the
relevant capitalised expenditure is first assessed for impairment and any impairment loss is recognised, then the
remaining balance is transferred to oil and gas properties. No amortisation is charged during the exploration and
evaluation phase.
For exchanges or parts of exchanges that involve only exploration and evaluation assets, the exchange is accounted
for at the carrying value of the asset given up and no gain or loss is recognized.
iv) Development costs
Expenditure on the construction, installation or completion of infrastructure facilities such as platforms, pipelines
and the drilling of development wells, including unsuccessful development or delineation wells, is capitalised
within oil and gas properties.
2.7Investment properties
Properties that are held for long-term rental yields or for capital appreciation or both, and that are not occupied by
the entities in the consolidated Group, are classified as investment properties.
Recognition of investment properties takes place only when it is probable that the future economic benefits that are
associated with the investment property will flow to the entity and the cost can be measured reliably. This is usually
the day when all risks are transferred.
Investment properties are measured initially at cost, including transaction costs. The carrying amount includes the
cost of replacing parts of an existing investment property at the time the cost was incurred if the recognition criteria
are met; and excludes the costs of day-to-day servicing of an investment property. Subsequent to initial recognition,
investment properties are stated at fair value, which reflects market conditions at the date of the consolidated
statement of financial position.
Gains or losses arising from changes in the fair value of investment properties are included in the consolidated income
statement in the year in which they arise. Subsequent expenditure is included in the asset’s carrying amount only
when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the
item can be measured reliably. All other repairs and maintenance costs are charged to the consolidated profit or loss
during the financial period in which they are incurred The fair value of investment properties is based on the nature, location and condition of the specific asset. The fair
value is obtained from professional third party valuers contracted to perform valuations on behalf of the Group. The
fair value of investment property does not reflect future capital expenditure that will improve or enhance the property
and does not reflect the related future benefits from this future expenditure. These valuations are performed annually
by external appraisers.
TRANSCORP 45
NOTES
2.8 Impairment of non-financial assets
Assets that have an indefinite useful life – for example, goodwill are not subject to amortisation and are tested annually
for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for
the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the
higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets
are Grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Prior
impairments of non-financial assets (other than goodwill) are reviewed for possible reversal at each reporting date.
2.9
Financial instruments
The Group classifies its financial assets in the following categories: at fair value through profit or loss, loans and
receivables, and available for sale. The classification depends on the purpose for which the financial assets were
acquired. Management determines the classification of its financial assets at initial recognition.
2.9.1Classification
The Management determine the classification of its financial instruments at initial recognition.
(a) Financial assets and liabilities at fair value through profit or loss
Financial assets or liabilities at fair value through profit or loss are financial assets or liabilities held for trading.
A financial asset or liability is classified in this category if acquired principally for the purpose of selling in the
short term. Assets in this category are classified as current assets if expected to be realised within 12 months;
otherwise, they are classified as non-current.
(b) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not
quoted in an active market. They are included in current assets, except for maturities greater than 12 months
after the end of the reporting period. These are classified as non-current assets. The Group’s loans and receivables
comprises ‘trade and other receivables’ and ‘cash and cash equivalents’ in the balance sheet.
The Fixed income investments have been classified as loans and receivable. The investments have a tenor of
about 180 days and the company rolls over the investments. Interest income on the fixed income investment
is recognised in the year it occurred as interest income.
(d) Financial liabilities at amortized cost
Financial liabilities at amortized cost include trade payables, bank debt and long-term debt.
2.9.2 Recognition and measurement
(a) Financial assets and liabilities at fair value through profit or loss
Financial instruments in this category are recognized initially and subsequently at fair value. Transaction costs
are expensed in the consolidated statement of income. Gains and losses arising from changes in fair value are
presented in the consolidated statement of income within “other gains and losses (net)” in the period in which
they arise. Non-derivative financial assets and liabilities at fair value through profit or loss are classified as current
except for the portion expected to be realized or paid beyond twelve months of the reporting date, which are
classified as long-term. Interest swaps and warrants are classified as current.
(b) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not
quoted in an active market. They are included in current assets, except for maturities greater than 12 months
after the end of the reporting period. These are classified as non-current assets. The Group’s loans and receivables
comprises ‘trade and other receivables’ and ‘cash and cash equivalents’ in the balance sheet.
The Fixed income investments have been classified as loans and receivable. The investments have a tenor of
about 180 days and the company rolls over the investments. Interest income on the fixed income investment
is recognised in the year it occurred as interest income.
(c) Financial liabilities at amortized cost
Financial liabilities at amortized cost include trade and other payables, advance deposits and long-term debt.
46
TRANSCORP
NOTES
2.10 Offsetting financial instruments
Financial assets and liabilities are offset and the net amount reported in the statement of financial position when
there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis
or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on
future events and must be enforceable in the normal course of business.
2.11 Impairment of financial assets
(a) Assets carried at amortised cost
The Group assesses at the end of each reporting period whether there is objective evidence that a financial
asset or Group of financial assets is impaired. A financial asset or a Group of financial assets is impaired and
impairment losses are incurred only if there is objective evidence of impairment as a result of one or more
events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has
an impact on the estimated future cash flows of the financial asset or Group of financial assets that can be
reliably estimated.
Evidence of impairment may include indications that the debtors or a Group of debtors is experiencing significant
financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter
bankruptcy or other financial reorganisation, and where observable data indicate that there is a measurable
decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate
with defaults.
For loans and receivables category, the amount of the loss is measured as the difference between the asset’s
carrying amount and the present value of estimated future cash flows (excluding future credit losses that have
not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of
the asset is reduced and the amount of the loss is recognised in the consolidated income statement. If a loan or
held-to-maturity investment has a variable interest rate, the discount rate for measuring any impairment loss
is the current effective interest rate determined under the contract. As a practical expedient, the Group may
measure impairment on the basis of an instrument’s fair value using an observable market price.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related
objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor’s
credit rating), the reversal of the previously recognised impairment loss is recognised in the consolidated income
statement.
2.12 Inventories
Inventories are stated at the lower of cost and estimated net realisable value. Cost is determined using the weighted
average method. This includes the cost of raw materials to the Company’s premises and other direct costs. Net
realisable value is the estimated selling price in the ordinary course of business, less selling expenses.
2.13 Trade receivables
Trade receivables are amounts due from customers for products sold or services performed in the ordinary course of
business. Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using
the effective interest rate method, less provision for impairment.
A provision for impairment of trade receivables is established when there is objective evidence that the Group will
not be able to collect all amounts due according to the original terms of the receivables. If collection is expected in
one year or less, they are classified as current assets. If not, they are presented as non-current assets.
2.14 Cash, cash equivalents and bank overdrafts
In the consolidated statement of cash flows, cash and cash equivalents includes cash in hand, deposits held at call
with banks, other short-term highly liquid investments with original maturities of three months or less and bank
overdrafts. In the consolidated balance sheet, bank overdrafts are shown within borrowings in current liabilities.
TRANSCORP 47
NOTES
2.15Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently
carried at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value
is recognised in the income statement over the period of the borrowings using the effective interest method.
Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it
is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down
occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee
is capitalised as a pre-payment for liquidity services and amortised over the period of the facility to which it relates.
2.16 Borrowing costs
General and specific borrowing costs directly attributable to the acquisition, construction or production of qualifying
assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale,
are added to the cost of those assets, (i.e. Capitalised) until such time as the assets are substantially ready for their
intended use or sale.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on
qualifying assets is deducted from the borrowing costs eligible for capitalisation. All other borrowing costs are
recognised in profit or loss in the period in which they are incurred.
2.17 Trade payables
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business
from suppliers. Accounts payables are classified as current liabilities if payment is due within one year or less. If not,
they are presented as non-current liabilities.
Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective
interest method.
2.18 Current and deferred income tax
The tax expense for the period comprises current and deferred tax. Tax is recognised in the income statement, except
to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case the
tax is recognised in other comprehensive income or directly in equity, respectively.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in
the income statement because it excludes items of income or expense that are taxable or deductible in other years
and it further excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated
using tax rates that have been enacted or substantively enacted at the reporting date.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets
and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit,
and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all
taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable
profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are
not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business
combination) of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries except
where the Group is able to control the reversal of the temporary difference and it is probable that the temporary
difference will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is
no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the
asset is realised. Deferred tax is charged or credited to the income statement, except when it relates to items charged
or credited to equity, in which case the deferred tax is also dealt with in equity.
48
TRANSCORP
NOTES
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against
current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends
to settle its current tax liabilities on a net basis. Deferred tax assets and liabilities are presented as non-current in the
statement of financial position.
2.19 Employee benefits
(a) Defined Contribution scheme
The Group operates a defined contribution pension scheme in line with the provisions of the Pension Reform Act
2004. The employer’s contributions are recognised as employee benefit expenses when they are due. The Group
has no further payment obligation once the contributions have been paid.
(b) Profit-sharing and bonus plans
The Group operates a bonus plan where staff are remunerated based on parameters determined by the Board. Bonus
payments are at the discretion of the Board and the expense is recognised as in the year it is incurred. There is no
contractual obligation neither has there been a past practice to create a constructive obligation.
2.20 Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable, and represents amounts receivable for
goods supplied, stated net of discounts, returns and value added taxes. The Group earns revenue from the sale of goods
and services. The Company earns revenue from dividends received.
The Group recognises revenue when the amount of revenue can be reliably measured; when it is probable that future
economic benefits will flow to the entity; and when specific criteria have been met for each of the group’s activities, as
described below.
(a) Income from investments - Corporate centre
(b) Sale of goods - Agriculture
Income from investments is recognized when it is earned. Dividends are recognised in the profit and loss account
on the date the Company’s right to receive payment is established. Interest earned on cash investments in money
market instruments is recognized in the profit and loss account as it accrues evenly over the period of the investment.
The Group manufactures and sells juice concentrates to manufacturers in the food and beverage industry. Recognition
of revenue for concentrates is recognised when it is earned. Revenue is earned when the significant risks and rewards
of ownership have been transferred to the customer or the service has been rendered; control over goods sold has
been transferred, amount of revenue can be reliably measured, costs incurred in respect of the sale can be measured
reliably and the economic benefits associated with the transaction will flow to the company.
(c) Sale of services - Power
The Group operates a power plant that generates electric power for distribution and supply by the distribution
companies. Revenue is recognised in line with the group policy on revenue recognition - when the service has been
rendered, the Group does not retain effective control over the service rendered, the amount of revenue can be
reliably measured, it is probable that future economic benefits will flow to the entity and costs incurred in respect
of the sale can be measured reliably.
Revenue comprises of the net value of services being capacity provided and energy sent out net of trade discounts,
rebates and VAT. Capacity charge is recognised monthly based on the average of available capacity declared at the
beginning of the month. Revenue from energy sent out is calculated on the basis of megawatts of electricity pushed
to the transmission grid. The capacity charge and energy sent out are included in revenue reported in the profit and
loss account.
Revenue is also earned from ancillary services. Revenue earned on ancilliary services relate to services provided
by the Group, other than the primary production of electricity, which is used to operate a stable and secure Power
System including but not limited to reactive power, operating reserve, frequency control and black start capability.
The ancillary services are provided in line with the existing agreement and recognises the revenue in line with its
revenue recognition policy.
TRANSCORP 49
NOTES
Amounts received from customers in advance of receiving the goods or services is recognised as liability in the
statement of financial position described as unearned income.
(d) Sale of services - Hospitality
Revenue comprises the fair value of the consideration received or receivable from the sale of goods and services
in the ordinary course of the Company’s activities. Revenue is recognised when it is probable that the economic
benefits associated with a transaction will flow to the Company and the amount of revenue and associated
costs incurred or to be incurred can be measured reliably.
Revenue includes hotel, entertainment and restaurant revenues, other service fees, rental income and the invoiced
value of goods and services sold less returns and allowances. VAT on revenue transactions are considered to be
a tax collected by the Company as an agent on behalf of the revenue authorities and is excluded from revenue.
Transcorp Hilton Hotel Abuja offers a customer loyalty programme called the Hilton Honours guest reward
programme on behalf of Hilton International. Under this programme, registered members earn points when they
pay for rooms or services at the Hotel. The Group accounts for the points as a separately identifiable component
of the sales transaction in which they are granted (the ‘initial sale’ of rooms or service). The consideration received
or receivable in respect of the initial sale is allocated between the points and the sale of rooms or service with
reference to the fair value of the points. Revenue is measured as the net amount retained by the hotel, i.e. the
difference between the consideration allocated to the award credits and the amount payable to the Hilton
International for supplying the awards.
2.21Leases
Operating lease
Leases in which a significant portion of the risks and rewards of ownership are retained by another party, the lessor, are
classified as operating leases. Payments, including prepayments, made under operating leases (net of any incentives
received from the lessor) are charged to the income statement on a straight-line basis over the period of the lease.
When an operating lease is terminated before the lease period has expired, any payment required to be made to the
lessor by way of penalty is recognised as an expense in the period in which termination takes place.
Finance lease
Leases of items by the Group where the Group has substantially all the risks and rewards of ownership are classified
as finance leases. Finance leases are capitalised at the lease’s commencement at the lower of the fair value of the
asset and the present value of the minimum lease payments.
Each lease payment is allocated between the liability and finance charges. The corresponding rental obligations, net
of finance charges, are included in other longterm payables. The interest element of the finance cost is charged to the
income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance
of the liability for each period. The property, plant and equipment acquired under finance leases is depreciated over
the shorter of the useful life of the asset and the lease term
2.22 Dividend distribution
Dividend distribution to the Group’s shareholders is recognised as a liability in the Group’s financial statements in
the period in which the dividends are approved by the Group’s shareholders. In respect of interim dividends these
are recognised when declared by the Board of Directors.
50
TRANSCORP
NOTES
2.23 Share Capital
Ordinary shares are classified as ‘share capital’ in equity. Any premium received over and above the par value of the
shares is classified as ‘share premium’ in equity.
Where any Group company purchases the company’s equity share capital (treasury shares), the consideration paid,
including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to
the company’s equity holders until the shares are cancelled or reissued. Where such ordinary shares are subsequently
reissued, any consideration received, net of any directly attributable incremental transaction costs and the related
income tax effects, is included in equity attributable to the company’s equity holders.
2.24 Treasury Shares
The cost of the Transcorp Plc’s own equity instruments that has been reacquired (‘treasury shares’) by the Company
or by other members of the consolidated Group is deducted from equity. Gain or loss is not recognised on the
purchase, sale, issue, or cancellation of treasury shares. The difference between the cost and consideration received
is recognised directly in retained earnings.
3
Financial risk management
The group’s activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest
rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk. The Board of Directors has overall
responsibility for the establishment and oversight of the group’s rsik amangement framework. The board has
established the finance and investment committee, who is responsible for developing and monitoring the Group’s
risk management policies. The committee reports regularly to the Board of Directors on its activities.
The Group’s risk management policies are established to identify and analyse the rsisk faced by teh group, to set
appropriate risk limits and controls, and to monitor risks and aherence to limits. Risk management policies and
systems are reviewed regularly by the executive management to reflect changes in the market conditions and the
group’s activities.
The Board oversees how management monitors compliance with the group’s risk management policies and
procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the group.
The Board is supported by various management functions that checks and undertakes both regular and ad hoc
reviews of compliance with established controls and procedures.
3.1
Financial risk factors
The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, interest
rate risk, and price risk), credit risk and liquidity risk. The Group’s overall risk management programme focuses on
the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial
performance. The Group does not hedge any of its risk exposures.
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 Group. Specific risk management
approaches are defined for respective risks such as interest rate risk, credit risk, liquidity and investment risk. The
Group’s overall risk management program seeks to minimize potential adverse effects on the Group’s financial
performance.
(a) Market risk
(i) Foreign exchange risk
Foreign exchange risks arise from future commercial transactions and recognised assets and liabilities. The
Group makes payments and receipts primarily in Nigerian Naira. Periodically however, receipts and payments
are made in other currencies, mostly in the US dollar.
The Group is exposed to risks resulting from fluctuations in foreign currency exchange rates. A material change
in the value of any such foreign currency could result in a material adverse effect on the Group’s cash flow
and future profits. The Group is exposed to exchange rate risk to the extent that balances and transactions
denominated in a currency other than the Nigerian Naira. The Group holds the majority of its cash and cash
equivalents in Naira.
TRANSCORP 51
NOTES
In managing foreign exchange risk, the Group aims to reduce the impact of short-term fluctuations on earnings. The
Group’s significant exposure to currency risk relates to its loan facilities and cash and cash equivalents that are mainly
in US dollars. Although the Group has various measures to mitigate exposure to foreign exchange rate movement
over the longer term, the gains/losses on foreign exchange balances impact on the profit or loss. The group approach
to managing foreign exchange risk is to hold foreign currency bank accounts. The group monitors the movement in
the currency rates on an on-going basis.
At 31 December 2014, the value of cash held in foreign currency was significantly lower than foreign currency
borrowings. Although this constitutes an exposure, the group is comfortable with foreign currency borrowings as
the finance cost savings in the long term is expected to compensate for the high volatility in foreign currency.
The balances denominated in US Dollars as at year end were borrowings and cash and cash equivalent.
The borrowings and cash balances held at year end for the Group are as stated below:
20142013
Borrowings
and cash equivalent USD’000
USD’000
202,233 210,244
1,029 39
The table below shows the impact on the Group’s profit and equity if the exchange rate between the Naira and the
US Dollars had increased or decreased by 10%, with all other variables held constant.
Impact on profit after tax
20142013
N’m
N’m
Effect of 10% strengthening of the US Dollar
(3,405)
(89)
Effect of 10% weakening of the US Dollar
3,405 89
(ii) Price risk
The Group is exposed to equity securities price risk because of investments classified on the statement of financial
position as equity investments held for trading and measured at fair value through profit or loss. The Group is not
exposed to commodity price risk. To manage its price risk arising from investments in equity securities, the Group
engages a third party expert; BGL Asset Management Limited who offers advice on sale and purchase. The company
recorded significant movement in investment in equity securities as a result of a decline in the market unit price of
equity investment. See note 24.The table below summarises the impact of increases/decreases in the price of the
equity securities on the group’s post-tax profit for the year. The analysis is based on the assumption that the NSE all
share index had increased/decreased by 20% with all other variables held constant.
Impact on profit after tax
20142013
N’000
N’000
Effect of 20% increase in market price of equity securities
Effect of 20% decrease in market price of equity securities iii) Cash flow and fair value Interest rate risk
The Group’s interest rate risk arises from short term and long-term borrowings. Borrowings issued at variable rates
expose the group to cash flow interest rate risk which is partially offset by cash held at variable rates.Borrowings
issued at fixed rates expose the Group to fair value interest rate risk. The Group’s policy on managing interest rate
risk is to negotiate favourable terms with the bank(s) to reduce the impact of its exposure to this risk. The interest
rate risk is significantly concentrated with United Bank of Africa(UBA) being the major lender of all borrowings by
the Group. The borrowings are disclosed in note 18.At 31 December 2014, if interest rates on borrowings at that date
had been 1% higher/lower with all other variables held constant, the recalculated post– tax profit of the Group and
company would have been N338.7 million (2013: N326. 6 million) lower/higher, mainly as a result of higher/lower
interest expense on floating rate borrowings.
451,276 904,002
(451,276)
(904,002)
52
TRANSCORP
NOTES
(b) Credit risk
Credit risk arises from cash and cash equivalents, deposits and debt securities with banks and financial institutions
as well as credit exposures to customers, including outstanding receivables and committed transactions. Credit risk
is the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The
Group does not have any significant concentrations of credit risk.
Credit risk is managed by the Chief Executive Officer and the Chief Finance Officer, except for credit risk relating to
trade receivable balances. For deposits, the Group only deals with or invests in independently rated top 10 banks in
Nigeria. The Group analyses the risk profile of the obligor before making investments in debt securities. Investments
are only made when such analysis are deemed satisfactory.
(b) Credit risk (continued)
The credit rating for debt securities held are highlighted below
Credit rating by counter party
GroupCompany
N’000
N’000
BB+
BB+
Fixed income investment
1,175,219
1,175,219
Most of the Group’s trade customers are not independently rated, therefore the quality of the customer is considered
by taking into account its financial position, past experience and other factors. Each subsidiary is responsible for
managing and analysing the credit risk for each of their new customers before standard delivery terms and conditions
are offered. The continuous credit worthiness of the existing customers is analysed periodically based on history of
performance of the obligations and settlement of their debt. The Group does not hold any collateral as security, no
receivables have had their terms renegotiated.
No financial assets are past due except for trade receivables. As at December 31, 2014, trade receivables of N5.3
billion (2013; N4.5 billion million) were fully performing, N13.2 billion (2013; N1.9 billion) were past due but not
impaired and N152.1 million (2013; N140 million) were impaired. The aging analysis of the latter two categories of
receivables is as follows:
Group
2014
N’000
13,197,605 Past due but not impaired
2013
N’000
1,964,903
Up to 3 months 3,646,521 570,104
3 to 6 months 3,946,666 192,474
Over 6 months
5,604,417 1,202,325
Impaired
147,520 139,567
Up to 3 months 101,117 38,600
3 to 6 months
30,428 42,646
Over 6 months
15,975 58,321
The credit quality of trade receivables that are neither past due nor impaired can be assessed by reference to historical
information about default rates
Group Company
2014
2013
2014 2013
N’000
N’000
N’000 N’000
Customers with no history of default
– Receivable from related party – New customers (less than 6 months)
– Existing customers (more than 6 months)
Existing customers with some past defaults
which were fully recovered
Total unimpaired trade receivables 5,320,077 - 4,498,898 - 10,637,057 2,574,895
10,637,057 2,574,895
772 3,460,614 - -
5,319,305 1,038,284 - -
5,968
13,275
5,326,045
4,512,173
10,637,057
2,574,895
TRANSCORP 53
NOTES
Concentration of credit risk is determined by the percentage of trade receivable due from a counterparty in proportion to
the total trade receivables of the Group. Any receivable equal or greater than 25% of the total trade receivable of the Group
is considered significant. For the year ended 31 December 2014, the Group had a significant concentration of credit risk with
one customer. Over 25% of the trade receivable was owing from the government regulated body for power transmission.
The receivable is deemed recoverable as N7.3 billion of the balance oustanding at year end had been paid.
(c) Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. Cash flow
forecasts are prepared by the Group Chief Finance Officer to monitor the Group’s liquidity requirements and ensure it
has sufficient cash to meet operational needs at all times so that the Group does not breach borrowing limits on any
of its borrowing facilities. Such forecasts take into consideration the Group’s committed and expected debt financing
plans, internal and administrative cashflow requirements in arriving at the headroom for investments.
Surplus cash held by the Group over and above the balance required for working capital management are invested
in debt or equity securities. These can be realised in the short term to provide sufficient head-room as determined by
the above-mentioned forecasts.
The table below analyses the Group’s financial liabilities into relevant maturity groupings based on the remaining
period at the reporting date to the contractual maturity date. The amounts disclosed in the table are the contractual
undiscounted cash flows.
GroupBetween
N’000
Less than
6 months
Between 1
Between 2
At 31 December 2014
6 months
and 1 year and 2 years
and 5 years Over 5 years
Trade and other payables
Accruals and other creditors Borrowings
4,916,468
4,810,883 6,461,789 -
- 4,177,560 Between
Less than
6 months
6 months
and 1 year
At 31 December 2013
N’000
N’000
Trade and other payables
Accruals and other creditors Borrowings
750,807 5,532,659 2,074,287 Accruals and other creditors Due to related parties Borrowings
231,408 6,463,615 1,641,045 Accruals and other creditors Due to related parties Borrowings
494,139 3,613,677 904,295 - - 9,107,145 Between 1
and 2 years
N’000
- - 876,566 Between
Less than
6 months
At 31 December 2013
6 months
and 1 year
Between 1
and 2 years
N’000
- - 1,583,413 Between
Less than
6 months
Company
6 months
and 1 year
At 31 December 2014
N’000
N’000
-
- 8,244,511 - - 2,801,481 Between 1
and 2 years
- - 1,818,317 2014 Group Annual Report and Financial Statements
- - 530,242 -
- 23,819,779 5,074,409
Between 2
N’000
N’000
- - 16,881,303 13,463,845
Between 2
N’000
N’000
- - 6,111,892 555,635
Between 2
- - 197,303 6,512,177
54
TRANSCORP
NOTES
3.2Capital risk management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern to in
order to maximise returns for shareholders.
Consistent with others in the industry, the Group monitors capital on a monthly basis using the gearing ratio. This ratio
is calculated as total debt divided by total equity. Total debt is a sum of the short and long term borrowings. Total equity
is calculated as the sum of all equity components of the statement of financial position.
In order to maintain or adjust the capital structure, the Group may increase or reduce its borrowings to obtain an
appropriate gearing ratio.
During 2014, the Group’s strategy, which was unchanged from 2013, was to maintain the gearing ratio not greater than
75% for financing its long term investments in the agriculture, power, oil and gas and hospitality sectors. The gearing
ratios at 31 Dec 2014 and 2013 are as follows
GroupCompany
2014
2013
2014
2013
N’000
N’000
N’000
N’000
Total debt
47,778,048 43,109,276 11,986,620 9,961,617
Less: cash and cash equivalents
(2,930,517)
(9,195,229)
(8,118)
(17,680)
Net debt
44,847,531 33,914,047 11,978,502 9,943,937
Total equity
89,754,851 86,676,507 33,461,190 32,918,935
50%
39%
36%
30%
Gearing ratio
The slight increase in the gearing ratio for the group during 2014 resulted from an increased borrowings during the
year and reduction in cash and cash equivalents from 2013. The reduction in cash and cash equivalents resulted from
payment of diviends during the year and timing of principal loan repayments towards the year end date. Details have
been presented in note 18.
3.3Fair value estimation
The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been
defined as follows:
•
•
Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1).
•
•
Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (Level 3).
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 2).
The following table presents the Group’s financial assets and liabilities that are measured at fair value at 31 December
2014
TRANSCORP 55
NOTES
Assets
Financial assets at fair value through profit or loss
Equity securities at fair value through profit or loss
Total assets
Liabilities
Financial liabilities at amortised cost
Borrowings
Total liabilities
Level 1
Level 2
Level 3
Total
2,256,379
2,256,379
Level 1
-
-
Level 2
-
-
Level 3
2,256,379
2,256,379
Total
-
-
47,778,048
47,778,048
-47,778,048
-47,778,048
The following table presents the Group’s financial assets and liabilities that are measured at fair value at 31 December
2013
Assets
Level 1
Level 2
Level 3
Total
Financial assets at fair value through profit or loss
4,520,008
-
-
4,520,008
Liabilities
Level 1
Level 2
Level 3
Total
Financial liabilities at amortised cost
Borrowings
- 43,109,276
-43,109,276
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 profit or loss.
(b) Financial instruments in level 2
The fair value of financial instruments that are not traded in an active market is determined by using valuation
techniques. These valuation techniques maximise the use of observable market data where it is available and rely
as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are
observable, the instrument is included in level 2.
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 Group has made in the preparation of the financial statements:
Impairment of goodwill
The Group reviews goodwill at least annually and other non-financial assets when there is any indication that the asset
might be impaired. The Group 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.
56
TRANSCORP
NOTES
4.2 Critical judgements in applying the entity’s accounting policies
Consolidation of entities in which the group holds less than 50%
The Group is considered to have de facto control of Transcorp Staff Share Ownership Trust Company Limited (the entity)
even though the Group’s interest is only 1%. Control has been determined based on the following considerations:
I) The Group 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 residual shares in the scheme
belong to the Company.
iii) Transcorp has the ability to use its power to affect the returns from its involvement with the entity
The Group did not provide financial or other support to the subsidiary and management does not have any
intentions to provide financial or other support to the subsidiary.
5 Segmental Analysis
The Group
The chief operating decision-maker has been identified as the Board of Directors of Transcorp. The Board reviews
the Group’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.Hospitality
The hospitality business is made up of its direct subsidiary Transcorp Hotels Plc. (THP) and an indirect subsidiary,
Transcorp Hotels Calabar Limited (THC) which is fully owned by THP. Both entities render hospitality services to
customers
ii.Agriculture
This relates to a subsidiary Teragro Commodities Limited. The subsidiary is engaged in the manufacturing/
processing of fruit concentrates from fruits from which the Group derives revenue.
iii.Power
The power business is made up of its direct subsidiary Transcorp Ughelli Power Limited and an indirect subsidiary,
Ughelli Power Plc which is fully owned by Transcorp Ughelli Power Limited. The subsidiaries are engaged in
generation of electric power.
iv. 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.
v. Corporate Centre
This segment is the parent Company, 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.
TRANSCORP 57
NOTES
Corporate
Hospitality Oil & gas Agriculture
Power
Centre
Total
N’000
N’000
N’000N’000N’000 N’000
As at 31 December 2014
External revenues
15,104,795
-
20,181
26,213,160
-
41,338,136
Inter-segment revenue
-
- - 18,700,000
6,334,884
25,034,884
Reportable segment revenue
15,104,795 - 20,181 44,913,160
6,334,884
66,373,020
Finance income 277,728 379,846 -
742,308
1,234,557
2,634,439
Finance cost
-
357,194 (35,186) (3,437,484) (1,447,189)
(4,562,665)
Depreciation and amortisation
(1,039,769)
- (6,760) (1,797,945)
(25,164)
(2,869,638)
Profit/(loss) before taxation
4,540,000 (151,251) (302,132)
26,657,862 3,183,026
33,927,505
Taxation
(1,319,385)
- - (2,322,905)
(808,774)
(4,451,064)
Segmental Assets
71,618,929 5,430,837
388,482 123,822,851
54,755,419 256,016,518
Segmental Liabilities
18,369,458 5,724,307 1,168,672
71,981,913 21,274,718 118,519,068
Additions to non current assets
1,514,641 2,768,529 33,440 3,301,298 6,206 7,624,114
Corporate
Hospitality Oil & gas Agriculture
Power
centre
Total
N’000
N’000
N’000N’000N’000 N’000
External revenues
15,349,794
-
14,871 3,460,613
-
18,825,278
Inter-segment revenue
- - -
-
2,142,000
2,142,000
Reportable segment revenue
15,349,794
-
14,871
3,460,613
2,142,000 20,967,278
Finance income 402,879 - - 291,311 619,323 1,313,513
Finance cost
- - (34,998) (1,146,231) (1,350,642)
(2,531,871)
Depreciation and amortisation
(1,314,589)
- (19,570)
(168,960)
(15,060)
(1,518,179)
6,144,978 - (198,971)
2,045,416 3,186,963 11,178,386
Taxation
(1,708,298)
- - - (365,951)
(2,074,249)
Segmental Assets
68,316,832 400,507 92,427,636 49,079,491 210,224,466
Segmental Liabilities
24,629,357 847,494 33,977,469 16,160,561 75,614,881
Additions to non current assets
454,819 22,633 40,924,148 54,667 41,456,267
Revenues from transactions with other operating segments relates to dividend income from Transcorp Hotels Plc and
Transcorp Ughelli Power Limited to the Company, Transnational Corporation of Nigeria Plc.
58
TRANSCORP
NOTES
Reconciliations of reportable segment revenues, profit or loss, assets and liabilities.
The totals presented for the Group’s operating segments reconcile to the key financial figures as presented in its financial
statements as follows:
31 December
31 December
2014
2013
N’000
N’000
Revenues
Total revenue for reportable segments
66,373,020
20,967,278
Elimination of inter-segment revenue (i)
(25,034,884)(2,142,000)
Consolidated revenue
41,338,136 18,825,278
Profit or loss
Total profit or loss for reportable segments
33,927,505
11,178,386
Elimination of inter-segment profits (ii)
(26,195,907)(2,146,235)
Consolidated profit before taxation
7,731,598
9,032,151
Assets
Total assets of reportable segments
256,016,518 210,224,466
Consolidation eliminations (iii)
(85,261,156)(60,760,053)
Consolidated total assets
170,755,362
149,464,413
Liabilities
Total liabilities of reportable segments
118,519,068
75,614,881
Consolidation eliminations (iv)
(37,518,557)(12,826,975)
Consolidated total liabilities
81,000,511
62,787,906
The nature of differences between the measurements of the reportable segment’s assets/liabilities and the assets/liabilities
of the Group is as follows:
(i) Elimination of inter-segment revenue relates to dividend income from Transcorp Ughelli Power Plant and Transcorp
Hotels to Transnational Corporation of Nigeria and from Ughelli Power Plc to Transcorp Ughelli Power Limited.
(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 and
Transcorp Ughelli Power Limited in Transcorp Calabar Limited and Ughelli Power Plc respectively accounts for the
consolidation eliminations of total assets of reportable segments. Inter-segment receivables were also eliminated to
arrive at the consolidated total assets.
(iv) Inter-segment payables, dividend payable to segments within the Group and management fees payable to Transnational
Corporation of Nigeria Plc from Transcorp Hotels Plc and Ughelli Power Plc accounts for the consolidation eliminations
in total liabilities of the reportable segments.
TRANSCORP 59
NOTES
Entity-wide Information
The following is an analysis of the Group’s revenue from continuing operations from its major products and services.
31 December
31 December
2014
2013
Analysis of revenue by category.
N’000N’000
Rooms
9,599,537
9,741,880
Food & Beverage
4,283,616
4,406,057
Shop rental
557,477
460,088
Service charge
182,964
356,546
Laundry
90,195
10,554
Other operating revenue
391,006
374,669
Juice Concentrate
20,181
14,871
Capacity charge
11,715,279
1,792,727
Energy sent out
14,007,349
1,667,886
Ancilliary services
490,532
Total
41,338,136
18,825,278
The Group is domiciled in Nigeria where it generates all its external revenue. The total non-current assets of the Group
are all located in Nigeria. No transaction with any external customer accounted for more than 10 per cent of revenue
for all the years presented.
6. Property, plant and equipment
Building &
Plant & Land Improvements Machinery
Group
N’000
Computer & Capital
Furniture Office Motor Work
& Fittings Equipment Vehicles in Progress
Total
N’000N’000N’000N’000
N’000N’000 N’000
Cost
Balance as at 1 January 2014
31,741,886 16,551,253 41,604,752 1,973,888
61,164 513,242
60,521 92,506,706
Additions
18,872
421,1083,949,332 523,357
1,916 108,7436,569,80511,593,133
Reclassification
-
30,855 46,658 7,451
-
-(84,964)
Disposals
-
-
(1,528)
(2,087)
(1,240) (24,795)
-
(29,650)
Impairment*
- (2,339)
(52,636)
-
-
-
-
(54,975)
Adjustment**
- ----
-
(24,128)
(24,128)
Balance as at 31 December 2014 31,760,758 17,000,877
45,546,5782,502,609 61,840 597,1906,521,234
103,991,086
Depreciation and impairment losses
Depreciation
Disposals
Impairment
Balance as at 31 December 2014
Carrying amounts
At 31 December 2013
31,741,886
15,609,619
40,411,456
463,549
33,562
265,408
At 31 December 2014
31,760,758 15,557,142
38,648,420
704,953
42,608
283,478 6,521,234 93,518,593
-
941,634
1,193,296 1,510,339
- 502,266 5,734,135 289,267
-
- (1,091)
(1,950)
-
(165)
(28,182)
- - 1,443,735 6,898,158 1,797,656
27,602 247,834
(7,166) 81,746
(1,204) (15,868)
- -
19,232 313,712
- 3,920,705
-6,600,248
-
(20,113)
-
(28,347)
- 10,472,493
60,521 88,586,001
*Impairment relates to items of property, plant and equipment - generator; that were destroyed during a fire incident
at Transcorp Hotels Calabar. The net book value of the asset, N26.6 million, has been written off to the statement of
comprehensive income as impairment loss. Amount is included as part of operating expense.
**Adjustment includes items of work in progress which did not qualify as property, plant and equipment and therefore
expensed.
60
TRANSCORP
NOTES
ComputerCapital
Building &
Plant & Furniture & Office
Motor
Work in
improvements Machinery & FittingsEquipments Vehicles Progress
Company
N’000 N’000 N’000N’000 N’000 N’000
Cost
26,576
4,880
22,175
26,574
36,120
5,542
Additions
781
952 2,327 1,916 230
-
Reclassifications
-
-
5,542
-
-
(5,542)
Disposals
- (1,528) (2,087)(1,240)(21,995)
-
27,357
4,304
27,957
27,250
14,355
-
Depreciation and impairment losses
2,647
1,186
10,241
16,349
13,484
-
Depreciation for the year
8,013
380
3,217
3,721
8,343
-
Disposals
- (1,091) (1,950)(1,204)(13,068)
-
10,660
475
11,508
18,866
8,759
-
Carrying amounts
At 31 December 2013
23,929
3,694
11,934
10,225
22,636
5,542
At 31 December 2014
16,697
3,829
16,449
8,384
5,596
-
Total
N’000
121,867
6,206
(26,850)
101,223
43,907
23,674
(17,313)
50,268
77,960
50,955
7. Intangible Assets
GroupCompany
Capitalised
Exploration
Oil
and
Oil
ComputerProspecting Evaluation Computer Prospecting
Goodwill
software
License Expenditure
Total
software
License Total
Cost N’000
N’000
N’000
N’000
N’000 N’000
N’000
N’000
At 1 January 2014
26,844,364
123,492 5,075,818
- 32,043,674
12,966
5,075,818 5,088,784
Addition
-
6,128
-
2,384,864
2,390,992
-
-
Re-measurement of goodwill 4,089,779
-
-
-
4,089,779
-
-
30,934,143
129,620 5,075,818
2,384,864 38,524,445
12,966
5,075,818 5,088,784
Accumulated amortisation
and impairment
At 1 January 2014
-
58,065
-
-
58,065
10,002
-
10,002
Amortisation charge (Note 25)
-
15,200 -
-
15,200
1,490
-
1,490
-
73,265
-
-
73,265
11,492
-
11,492
Net book value
Cost
30,934,143 129,620
5,075,8182,384,864
38,524,445 12,9665,075,818
5,088,784
and impairment
-
73,265
--
73,265
11,492-
11,492
At 31 December 2014
30,934,143
56,355 5,075,818
2,384,864 38,451,180
1,474
5,075,818 5,077,292
Net book value
Cost
26,844,364
123,492 5,075,818
- 32,043,674
12,966 5,075,8185,088,784
and impairment
-
58,065
-
-
58,065
10,002
-
10,002
At 31 December 2013
26,844,364
65,427
5,075,818
-
31,985,609
2,964
5,075,818 5,078,782
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 on 2 May 2014. Per the signed 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.
TRANSCORP 61
NOTES
All expenditure related to the exploration and evaluation activities were capitalised during the year. Total expenditure
incurred on exploration and drilling activities was N2.258 billion and N126.214 million was incurred on geological &
geophysical activities.
Goodwill has been allocated to the following CGUs
Transcorp Hotels Calabar (THC)
Transcorp Hotels Plc (THP)
Transcorp Ughelli Power Limited (TUPL)
2014
2013
N’000
N’000
863,163
863,163
20,369,790
20,369,790
9,701,190 5,611,411
30,934,14326,844,364
A re-measurement of the goodwill arising from acquisition of Ughelli Power Plc was done during the year resulting in a
measurement period adjustment as described in IFRS 3. The initial accounting for the business combination was incomplete as
the deferred tax liability of N4.089 billion was not included in determination of net assets as at acquisition date, 1 November
2013. As at date of acquisition, the related tax bases of the corresponding assets and liabilities had not been determined.
The deferred tax liability arose from timing differences and fair valuation of property, plant and equipment. Details of the
re-measurement of goodwill is as follows:
Fair values of assets and liabilities of Ughelli Power Plc as at 1 November 2013
N’000
Non current assets
40,299,376
Inventory819,606
Total assets
Deferred tax liability
Net assets
Purchase consideration
Excess of purchase consideration over equity acquired/Goodwill
369,607
41,488,589
(4,089,779)
37,398,810
47,100,000
9,701,190
The adjustment of N4.089 billion has been made to the carrying amount of Goodwill as at 31 December 2014
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. No
additional goodwill was recorded for the business combination under common control.
In assessing goodwill for impairment at 31 December 2014 and 2013 , the Company 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.
62
TRANSCORP
NOTES
Key assumptions included the following:
31 December 2014
TUPL
Budgeted gross margin %
Weighted average growth rate
Pre-tax discount rate
THC
51%
6%
20%
THP
80%
6%
17.37%
THC
76%
6%
17.37%
31 December 2013
THP
74%
66%
6%
6%
14.19%
17.67%
Possible reasonable changes in key assumptions would not cause the recoverable amount of goodwill to fall below
the carrying value.
8. Investment property
Investment property relates to a piece of land at Rumens road Ikoyi measuring approximately 4,876.151 square meters.
An independent valuation of the Company’s land was performed by Ubosi Eleh and Co to determine the fair value of
the land as at 31 December 2014 and 31 December 2013. The following table analyses the non-financial assets carried
at fair value, by valuation method. The current market prices of the land were used to determine the fair value as at
these dates.
Group
Company
2014
2013
2014
2013
N’000
N’000
N’000
N’000
At 1 January 2014
1,575,000
1,500,000
1,575,000
1,500,000
Additions
1,138,164
-
-
Net gain on fair value adjustment
25,000
75,000
25,000
75,000
At 31 December 2014
2,738,164
1,575,000
1,600,000
1,575,000
Additions during the year relates to purchase of 10,141.19 square meters of land situated at Oromeruezingbu Village, Port
Harcourt for the proposed Transcorp Hotel in Port Harcourt. The land is held to earn rental income. A lease agreement
was entered into on 1 December 2014 with Transcorp Hotels Port Harcourt for a 25 year period. As at 31 December
2014, the rental income earned from the property amounted to N333,000. No other expense was incurred in the year.
Fair value is measured through the following:
– Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1).
– 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 2).
– Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (Level 3).
Fair value measurements at 31 December 2014 using
Value measurements
Quoted prices in active markets for identical assets
observable inputs
Recurring fair (Level 1)
Significant other unobservable inputs
(Level 2)
Land
2,738,164-
-
Significant
(Level3)
There were no transfers between levels 1 and 2 during the year.
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.
TRANSCORP 63
NOTES
9. Investment in Subsidiaries
Company
31 December 2014
N’000
Transcorp Hotel Plc
Transcorp Ughelli Power limited
Other subsidiaries companies
31 December 2013
N’000
19,618,523
7,860,464
70,300
27,549,287 19,618,523
9,808,397
108,200
29,535,120
Movement in investment in subsidiaries is analysed as follows:
Company
31 December 2014
N’000
At 1 January 2014
Additions - cost (9a)
Reduction in equity holding in subsidiary (9b)
At 31 December 2014
31 December 2013
N’000
29,535,120
301,184
(2,287,017)
27,549,287
21,288,723
8,246,397
29,535,120
Company
2014
2013
N’000
N’000
Investments in subsidiary companies eliminated on consolidation is shown below
Transnational Corporation investment in subsidiary:
19,618,523 19,618,523
Transcorp Refining Company Limited
1,000
1,000
Transcorp Telecomms Limited
10,000
10,000
Telecommunications Backbone Development Company Limited
9,900
9,900
9,500
9,500
Transcorp Hotels and Leisure Limited
-
9,500
Transcorp Infrastructure Limited
-
9,500
Transcorp Trading and Logistics Limited
10,000 10,000
Transcorp Commodities Limited
-
9,500
Transcorp Hilton Limited
-
9,900
Allied Commodities Limited
9,500
9,500
9,900
9,900
Transcorp Properties Limited
10,000
10,000
Transcorp Ughelli Power Limited
7,860,464
9,808,397
Transcorp OPL 281 Limited 500
27,549,287
29,535,120
THP investment in subsidiary:
Transcorp Hotels Calabar Limited
1,661,320
1,661,320
TUPL investment in subsidiary:
Ughelli Power Plc
47,100,000
47,100,000
All the subsidiary companies except Transcorp Hotels Plc, Transcorp Hotels Calabar Limited, Transcorp Energy Limited,
Transcorp Properties Limited, Teragro Commodities Limited, Transcorp Employee Share Scheme, Transcorp OPL 281
Limited and Transcorp Ughelli Power Limited are dormant and are undergoing voluntary winding up proceedings.
The subsidiaries to be wound up have no assets, liabilities, income or expenses as these subsidiaries were incorporated
but no further activities were performed. Hence there are no assets held for sale and no income or expenses from
discontinued operations.
64
TRANSCORP
NOTES
a. On 1 January 2014, the company acquired 369,981 shares (representing 0.56% shareholding) in Transcorp Ughelli Power Limited at a
cost of N615.3 per unit share for a total purchase consideration of N300,683,742. Shares were purchased from Tenoil Petroleum Energy
Services Limited. The net assets of TUPL and non-controlling interest as at acquisition date was N16,874,378,000 and N208,482,502
respectively.
On the same date, Transcorp disposed 9,261,215 shares (representing 14% shareholding) to Woodrock Energy Services Limited for a
consideration of N2,770,475,785. The net assets of TUPL and non-controlling interest as at disposition date was N16,874,378,000 and
N2,307,944,214 respectively. See further details in Note 34.
b. A new subsidiary, Transcorp OPL 281 Limited was incorporated during the year. Investment in Transcorp OPL 281 Ltd has been recognised
as an addition during the year.
On the other hand, the company wound up the following inactive subsidiaries during the year;
- Transcorp Hotels and Leisure Limited
- Transcorp Infrastructure Limited
- Transcorp Commodities Limited
- Transcorp Hilton Limited
The winding up accounted for a decrease in investment of N38.4 million
c. Other relevant details of the investments are as follows:
Issued NonShare Capital Parent’s Group ‘s controlling’s
Subsidiaries
Nature of Business (in thousands)
Rendering of hospitality services.
3,800,202
Transcorp Refining Company Ltd Oil and gas consultancy exploration,
refining and marketing.
1,000 Transcorp Telecomms Limited
Distribution of global systems for
mobile communication.
10,000
Telecommunications Backbone Internet service providers browsing
Development Company Limited and e-mail services.
10,000
Teragro Commodities Limited (TRG)Cultivate the soil and grow food,
cash and fodder crops.
10,000 Transcorp Trading and General maritime operations
Logistics Limited
including transportation.
10,000 Transcorp Employee Share Scheme Manages shares ownership scheme
set up for the employees.
10 Allied Commodities Limited
Sale and purchase of wholesale and
retail commodities which the Company
may lawfully deal in.
10,000
Mining, refining and supply merchants
of mining produce.
10,000 Transcorp Properties Limited
Building, contractors, decorators,
merchants and dealers in stone,
sand, lime, iron, etc.
10,000 Transcorp Hotels Calabar Limited Rendering of hospitality services.
7,690 Transcorp Ughelli Power Limited Investment in power generation
55,000 (TUPL)
Transcorp OPL 281 Oil and gas exploration, refining
and marketing.
500 Ughelli Power Plc*
Generation of electric power
5,000
Interest Interest Interest
83%
83%
17%
100%
100%
0%
100%
100%
0%
99%
100%
0%
95%
100%
0%
100%
100%
0%
1%
1%
99%
95%
100%
0%
99%
100%
0%
100%
0%
50.01%
100%
0%
83%
17%
50.01% 49.99%
100%
0%
100%
0%
50.01% 49.99%
* The Group legally owns 100% of Ughelli Power Plc (UPP) but its economic interest in the entity is 50.01%. This is because UPP is a wholly
owned subsidiary of Transcorp Ughelli Power Limited (TUPL) and Transcorp Plc owns 50.01% of TUPL.
All these subsidiaries are incorporated in Nigeria.
TRANSCORP 65
NOTES
d.
Summarised financial information on subsidiaries with material non-controlling interests
Set out below are the summarised financial information for each subsidiary that has non-controlling interests that are
material to the Group.
Transcorp Hotels Group comprises Transcorp Hotels Plc and Transcorp Calabar Limited. On the other hand, TUPL Group
comprises Transcorp Ughelli Power Limited and Ughelli Power Plc.
Summarised balance sheet
Transcorp Ughelli
Transcorp
Power Limited
Hotels Plc (TUPL)
Group
Group
2014
2013 2014
2013
N’000
N’000
N’000
N’000
Current
Asset
16,357,491 16,956,92315,400,867 4,550,570
Liabilities
(10,865,602) (15,351,040)(21,522,444) (3,803,680)
Total current net assets
5,491,889
1,605,883 (6,121,577)
746,890
Non-current
Assets
55,261,438 48,997,53989,721,98446,366,279
Liabilities
(7,503,856)
(7,612,457)(31,759,469)(30,253,341)
Total non-current net assets
47,757,582
41,385,082 57,962,515 16,112,938
Net assets
53,249,471 42,990,96551,840,93816,859,828
Summarised statement of comprehensive income
Revenue
Profit before income tax
Income tax expense
Post-tax profit from continuing operations
Total comprehensive income
Total comprehensive income allocated
to non-controlling interests
Dividends paid to non-controlling interests
15,104,795
4,540,000
(1,319,385)
3,220,615 3,220,615
547,505 478,065
15,349,794 26,213,160
6,144,978
7,957,862
(1,708,298) (2,322,905)
4,436,680
5,634,957
4,436,680
5,634,957 2,173,973
2,058,000
2,816,915
3,999,200
3,460,613
2,154,774
2,154,774
2,154,774
754,171
-
Summarised cash flows
Cash flows from operating activities
Cash generated from operations
(698,759)
Interest paid
-
Income tax paid
(1,954,872)
Net cash (used in)/generated from operating activities
(2,653,631)
Net cash (used)/generated from investing activities
(4,680,682)
Net cash generated from/(used in) financing activities
1,384,039 Net increase/(decrease) in cash and cash equivalents
(5,950,274)
Cash, cash equivalents and bank overdrafts at beginning of year 8,638,855
Cash and cash equivalents at end of year
2,688,581
The information above is the amount before inter-Company eliminations
8,835,697
3,746,721
(540,884)
-
-
(1,202,174)
-
7,633,523
3,746,721
(540,884)
28,034 (3,814,614) (46,535,157)
(4,200,000)
(223,041) 39,099,558
3,461,557
(290,934) (7,976,483)
5,128,648
508,695
8,485,178
8,590,205
217,761
508,695
66
TRANSCORP
NOTES
10. Deferred tax
Group
2014
2013
N’000
N’000
The movement in deferred tax is as follows:
Deferred tax liability
At 1 January 2014
7,598,529
7,279,642
Adjustment to opening balance
4,089,779
Income statement charge (Note 17)
(94,673)
318,887
At 31 December 2014
11,593,635
7,598,529
At 1 January 2013
(Credited)/Charged to
Retirement Accelerated
Fair ValueTax losses
benefit
tax
on charged
obligation depreciation revaluation P
rovisions to P&L N’000
N’000
N’000N’000N’000
(124,489)
700,487
3,859
7,279,642
the income statement
124,489
-
-
194,398
-
318,887
At 31 December 2013
-
700,487
6,784,356
109,827
3,859
7,598,529
At 1 January 2014
- 700,487
6,784,356
109,827
3,859
7,598,529
Adjustment to opening balance (Note 7)
-
4,089,779
-
-
-
4,089,779
Credited to the income statement
-
-
- (94,673)
-
(94,673)
At 31 December 2014
-
4,790,266
3,859
11,593,635
11. Prepaid lease rental
6,784,356 (84,571)
Total
N’000
6,784,356
15,154
Group
2014
2013
N’000N’000
95,000
At 1 January
Utilisation
(30,000)
125,000
(30,000)
At 31 December
65,000
95,000
Less minimum lease payments for the next 12 months
(30,000)
(30,000)
Non current lease payments
35,000
65,000
Non current lease payments has been analysed as follows:
Due between 1 to 5 years
35,000
65,000
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 N30million per annum subject to a renewal option for the lessee of
further terms of 5 years each.
TRANSCORP 67
NOTES
12.Inventories
Food and beverage
Group
31 December
2014
N’000
149,318
Fuel/Lubricant
Engineering spares
31 December
2013
N’000
242,380
86,949
12,186
577,750
409,431
Guest supplies
84,584
171,858
Finished goods
22,438
-
Packaging material
8,952
-
Other sundry stock
752,233 595,320
1,682,224
1,431,175
All inventory are stated at lower of cost and net realisable value. The cost of inventories recognised as an expense and
included in ‘cost of sales’ amounted to N2.87 billion (2013: N1.78 billion).
An impairment charge of N118.3 million (2013: N30.6 million) was recorded on the Group’s inventory in the income
statement. Increase of N87.7 million relates to juice concentrates that expired due to product storage under high
temperature. Amount has been charged to the income statement as operating expense.
13. Trade and other receivables
Trade receivables
GroupCompany
31 December 31 December31 December31 December
2014 201320142013
N’000 N’000N’000N’000
18,659,618 4,754,479
- -
Less: Provision for impairment of trade receivables
-
Trade receivables - net Other receivables
(147,520)
(139,567)
18,512,098 4,614,912
4,776,988
-
Prepayments
1,130,656
3,518,344 Due from related companies (Note 36)
Dividend receivable
-
27,938,086
- 2,770,476
-
10,646,133
-
647,095
-2,337,2501,927,800
8,445,628
16,524,720
139,567
(Recovery)/impairment losses recognised on receivables
-
3,830,716 770,8612,069,283
Group
31 December
2014 N’000
Balance
4,644,178
31 December
2013
N’000
215,520
7,953
(75,953)
147,520
139,567
A significant portion of the increase in trade receivable relates to receivable from the Transmission Company of Nigeria
Plc which is the obligor for revenues due to the power business. The increase is due to the increased operations in 2014
(12 months) as compared to the 3 months operations in the prior year. Payments have been made by TCN subsequent
68
TRANSCORP
NOTES
14. Debt and equity securities
Fixed income investment
Group
Company
31 December 31 December 3
2014 201320142013
N’000 N’000N’000N’000
2,256,379
4,520,008
2,256,379
4,520,008
1,175,219
3,630,763
1,175,219
3,630,763
3,431,598 8,150,7713,431,5988,150,771
See movement in debt and equity securities below:
2014 2013
At 1 January
Additions
Fair value (loss)/gain (Note 24)
Interest on fixed income investment (Note 27)
Liquidation/disposal
Loss on disposal
At 31 December
Fixed income investments and equity securities at fair value through profit or loss represent investments of the Company
under the management of BGL. The original amount invested in equity securities was N1.3 billion (2013: N1.3billion).
These investments have recorded a fair value loss of N2.23 billion (2013: N2.78 billion gain) as at the end of the year
owing to the decline in the stock market.
Changes in fair values of financial assets at fair value through profit or loss are recorded in “other (losses)/gains - net”
in the income statement (Note 24). The fair value of all equity securities is based on their current bid prices in an active
market.
15. Cash and cash equivalents
Cash and bank balance
Equity Fixed income Equity Fixed income
securities
investment securities investment
N’000 N’000N’000N’000
4,520,008
3,630,763 12,456,278
3,238,963
-
-
-2,568,750
(2,253,829)
-
2,777,584
-
249,818
-
135,450
(9,311)
(2,705,362)(10,255,934) (2,312,400)
(489)
- (457,920)
2,256,379
1,175,219
4,520,008
3,630,763
Group Company
1 December31 December
2014 201320142013
N’000 N’000N’000N’000
2,930,517
9,195,229
8,118
17,680
Included in cash and bank balance for the group is balance held at First Bank Nigeria Plc of N210,039,192 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 Company of Nigeria (PHCN).
TRANSCORP 69
NOTES
16. Trade and other payables
Trade creditors
Accruals and other liabilities
Unearned income
Deposit from guests
VAT Payable
Dividend payable
Due to related companies (Note 37)
Group
Company
1 December 3
1 December
2014 201320142013
N’000 N’000N’000N’000
4,916,468
750,807-4,810,883
3,953,448
231,408
144,139
92,331
52,217-162,748 859,611
-
319,677 317,383
-
2,960,492 --506,659
350,000
6,463,615
3,963,677
Total
13,769,258
17.Taxation
6,283,4666,695,0234,107,816
Group
Company
31 December 31 December 31 December 3
1 December
Income tax
Education tax
Tax on franked investment income
Deferred tax (Note 10)
Tax writeback
2014 201320142013
N’000 N’000N’000N’000
3,866,086 1,441,870175,286151,751
99,532
99,292-3,965,618 1,541,162175,286151,751
633,488
214,200
633,488
214,200
(94,673)
318,887
-
(77,095) ---
4,427,338
2,074,249 808,774
365,951
The movement in tax payable is as follows:
At 1 January
Provision for the year
Writeback in the year
Payment during the year
3,921,635 3,965,618
(77,095)
(1,825,588)
4,107,977
1,541,162
-
(1,727,504)
216,123
175,286
-
(167,272)
228,931
151,751
(164,559)
At 31 December
5,984,570
3,921,635
224,137
216,123
A reconciliation between tax expense and the product of accounting profit multiplied by Nigeria’s domestic tax rate for
the years ended 31 December 2013 and 2014 is as follows:
Group
Company
1 December 3
1 December
2014 201320142013
N’000 N’000N’000N’000
Profit before tax
7,731,598 9,032,1513,287,0793,186,963
Tax at Nigeria Corporation
tax rate of 30% (2013: 30%)
2,319,479
2,709,645
986,124
956,089
Education tax
99,532 99,292
-
633,488
214,200
633,488
214,200
Income not subjected to tax
-
(1,563,523)
- (1,563,523)
Tax losses for which no deferred
income tax asset was recognised
(228,368)
(228,368)
-
Minimum tax adjustments
1,603,207
843,003
162,935
759,185
Effect of timing differences
-
- (983,099)
Tax charge for the year
4,427,338
2,074,249
799,448
365,951
70
TRANSCORP
NOTES
18.Borrowings
a. Borrowings falling due within a year
b. Borrowings falling due after one year
Group
Company
2014 201320142013
N’000 N’000N’000N’000
10,639,349
3,656,983
2,517,611
762,665
37,138,699
39,452,293
9,469,009
9,198,952
47,778,048
43,109,276 11,986,620
9,961,617
c. The Group’s borrowings are analysed below:
OutstandingOutstanding
Principal/
Principal/
drawdown drawdown
Principal
Loan
Other terms/
Interestas at 31 Dec as at 31 Dec.
Purpose
(N’000) Type
Tenor
Security
rate
2014
2013
To restructure 4,400,000 Term Loan 8 years and
Pledge of investment 17% per 2,264,613 2,153,898
the existing credit (Restructured) 2 months in treasury bill held annum
obligation of (repayment
the Company from which were March 2013)
provided to support its investments in Oil & Gas and Hospitality businesses
amounting to not
less than N1.2b.
Pledge of the
Company’s direct/
indirect shareholding
in Transcorp Hotels
Tripartite legal
mortgage over Metro
Hotels property
To finance the 12,500,000 Term Loan
Company’s investment in target sectors
7 years
inclusive of 12 months
moratorium
Negative charge on
fixed and floating
assets of the
Company.
17 % per 8,311,821 4,000,000
annum
To augment the 1,000,000 Revolving
Company’s overdraft
working capital facility
requirements 365 days
repayable on demand;
available for
5 years
Negative charge
on fixed and floating assets
of the Company.
17 % per
annum
To provide 3,000,000 Revolving
5 years with
working capital term loan
180 days support to the review cycle
Company business
Irrevocable
domiciliation of
specific contract
to repay drawdown
17 % per 1,102,823 3,000,000
annum
To finance the 180,000 Medium 5 years
staff share term loan
scheme
Charge on Transcorp investment in Akwa Ibom State note
worth N300m
providing 120%
cover
17% per 137,647 194,561
annum
To buy Target
36,012,500 Acquisition 7 years
(Ughelli Power Plc) finance
from Vendor (BPE and Ministry of Finance)
- $215 million
Share charge, Deed of Corporate Guanrantee,
the assignment of
contracts agreement
and Trust Deed
Libor plus
8.5%
33,877,287
33,383,050
To finance the 6,700,000 Import import of turbine Finance equipment and Facility
guarantee payments.
The returns from sale of energy by Ughelli Power Plc
16%
per
annum
1,416,407
-
Mortage debenture on Transcorp’s virgin land. 7% per
annum
497,735 -
3 years hundred
and 180 days
where a letter
credit has
been raised
To finance 500,000 Revolving
4 years
working capital overdraft
requirement facility
including purchase of raw materials and plant maintenance
169,715
377,767
Legal charge on
the equipment
to be financed
64,292,500 47,778,048
43,109,276
TRANSCORP 71
NOTES
19. Financial Instruments and fair values
Measurement Categories
The following table shows the carrying values of financial assets and liabilities for each of these categories at December
31, 2014 and 2013.
Group
Financial Assets
Debt securities
Equity securities
31 December 2014
N’000N’000 N’000
N’000
Loans and
Held for Total Carrying Fair value
receivables
trading
amount
26,807,430
-
26,807,430 26,807,430
1,175,219
-
1,175,219
1,175,219
-
2,256,379 2,256,379 2,256,379
2,930,517
-
2,930,517
2,930,517
30,913,166
2,256,379 33,169,545
33,169,545
31 December 2014
N’000
Other financial
Financial Liabilities
N’000
Fair value
Liabilities at
amortised cost
Trade payables and other liabilities
13,769,258 Advance deposits
13,769,258
1,875,000
1,875,000
Borrowings
47,778,048 45,029,599
63,422,306 60,673,857
Group
Financial Assets 31 December 2013
N’000N’000 N’000
N’000
Loans and Held for Total Carrying
Fair value
receivables
trading
Amount
4,614,912
Debt securities
Equity securities
-
4,614,912
4,614,912
3,630,763
-
3,630,763
3,620,763
-
4,520,008 4,520,008
4,520,008
9,195,229 -
9,195,229
17,440,904 4,520,008 21,960,912
9,195,229
21,950,912
31 December 2013
N’000
N’000
Other financial
liabilities at Fair value
amortised cost
Trade payables
Advance deposits 6,283,466 6,283,466
1,875,000 1,875,000
Borrowings
43,109,27653,444,938
51,267,742
61,603,404
72
TRANSCORP
NOTES
31 December 2014
Company
Financial Assets Trade and other receivables
Debt securities
Equity securities
N’000N’000 N’000
Loans and Held for Total Carrying
receivables
15,753,859
trading
-
1,175,219
Fair value
Amount
15,753,859
- N’000
15,753,859
1,175,219
1,175,219
-
2,256,379
2,256,379
2,256,379
8,118
-
8,118
8,118
16,937,196 2,256,379 19,193,575
19,193,575
31 December 2014
N’000
N’000
Other financial
liabilities at
Fair value
amortised cost
Trade payables
6,695,023
Advance deposits 6,695,023
1,875,000
1,875,000
Borrowings
11,986,620 11,588,598
20,556,643 20,158,621
Company
Financial Assets
31 December 2013
N’000
Loans and 2,574,895 Debt securities
Equity securities
trading
Fair value
Amount
2,574,895
2,574,895
3,630,763
-
3,630,763
3,630,763
-
4,520,008
4,520,008
4,520,008
17,680
-
17,680
6,223,338 4,520,008 10,743,346
17,680
10,743,346
31 December 2013
N’000
Other financial
liabilities at
N’000
-
N’000
Held for Total Carrying
receivables
N’000
N’000
Fair value
amortised cost
Trade Payables
4,107,816
4,107,816
Advance deposits
1,875,000
1,875,000
Borrowings
9,961,61716,602,782
15,944,433
22,585,598
TRANSCORP 73
NOTES
Fair values, including valuation methods and assumptions
The following table shows the assets on the balance sheet that are measured at fair value in a hierarchy that is based on
significance of the inputs used in making the measurements.
Level 1 - Quoted prices (unadjusted) in active markets for identical assets
Level 2 - Inputs other than quoted prices included within level 1 that are observable for the asset, either directly (that is,
as prices) or indirectly (that is, derived from prices)
Level 3 - Inputs for the asset that are not based on observable market data (that is, unobservable inputs).
There were no transfer of financial assets between fair value levels of hierarchy.
Fair value Hierarchy
31 December
31 December
2014
2013
Group
N’000N’000
Equity investments held for trading
Level 1
2,256,379
4,520,008
Level 1
2,256,379
4,520,008
Company
Equity investments held for trading
The table below shows other financial instruments not measured at fair value but which the fair values have been
disclosed:
Group
2014
2013
Assets
N’000N’000
Loans and receivables
Level 3
26,807,430
4,614,912
Debt securities
Level 2
1,175,219
3,620,763
Total assets
27,982,649
8,235,675
Liabilities
Other financial liabilities at amortised cost
Level 3
2014
2013
N’000
N’000
13,769,258
6,283,466
Advance deposits
Level 3
1,875,000
1,875,000
Borrowings
Level 2
45,029,599
53,444,938
Total liabilities
60,673,85761,603,404
Company
2014
2013
Assets
N’000N’000
Loans and receivables
Level 3
Debt securities
Level 2
Total assets
Liabilities
15,753,859
2,574,895
1,175,219
3,630,763
16,929,0786,205,658
31 December
31 December
2014
2013
N’000
N’000
Other financial liabilities at amortised cost
Level 3
6,695,023
4,107,816
Advance deposits
Level 3
1,875,000
1,875,000
Borrowings
Level 2
11,986,620
9,961,617
Total liabilities
20,556,64315,944,433
74
TRANSCORP
NOTES
The methods and assumptions used in estimating fair value are as follows:
• Cash and cash equivalents, debt securities, trade
• Equity investments are carried at fair value based on market prices as at the reporting date.
• The fair values of borrowings are based on cash flows discounted using a rate based on the borrowing rate of 17%
• The rate used is the average interest rate obtainable from commercial banks and has been determined as a level 2
and other receivables and trade and other payables are highly
liquid investments which are due on demand or within one year.
(2013: 16.5%) for the naira denominated loans and 8.76% (2013: 8.76%) for the dollar denominated loans.
measure within the fair value hierarchy.
20 Advance deposits
Advance deposits of N1.875 billion (2013: N1.875 billion) from EER relates to an advance payment of $12.5million received from EER/Sacoil as farm-in fees for Oil Prospecting License (OPL 281).
The PSC was signed on 2 May 2014. However, Sacoil has since given a notice to discontinue its interest in the oil
prospecting license, OPL 281. Transcorp Plc is engaging with Sacoil on details of its exit from the arrangement.
21.Revenue
GroupCompany
31 December
31 December
2014
2013
2014
2013
N’000
N’000
N’000
N’000
Rooms
9,599,537
9,741,880
-
-
Food & Beverage
4,283,616
4,406,057
-
-
Shop rental
557,477
460,088
-
-
Service charge
182,964
356,546
-
-
Laundry
Other operating revenue
Juice Concentrate
-
-
391,006
90,195
374,669
10,554
-
-
20,181
14,871
-
-
Dividend income
-
-
6,334,884
2,142,000
Capacity charge
11,715,279
1,792,727
-
-
Energy sent out
14,007,349
1,667,886
-
-
Ancillary services
490,532
-
-
-
41,338,136
18,825,278
6,334,884 2,142,000
All the revenue was generated in Nigeria. The increase in revenue earned from capacity charge and energy sent out
by 553% and 740% respectively was due to the full year operations of Ughelli Power Plc in 2014 compared to two
months operations in 2013.
TRANSCORP
NOTES
22. Cost of salesGroup
2014
2013
N’000
N’000
Rooms
707,980
598,687
Staff costs ( Note 26)
1,749,052
1,189,535
Food and beverage
1,576,049
1,581,288
Natural gas and fuel costs
3,237,185
721,941
Direct materials
14,322
-
Direct labour
2,505
-
Other direct expenses
Repairs and maintenance
Depreciation
106,939
-
1,276,631
115,100
4,517,127
162,177
Insurance
133,304
-
Other operating departments
382,514
82,807
13,703,608 4,451,535
23. Other income
Dividend Income on equity securities
Management fees from subsidiaries
Commission received
Income on partial disposal of sub
Profit on fixed asset disposal
Other Income
Group
31 December
31 December
2014
2013
N’000
N’000
240,602
-
240,602
-
-
-
525,250
-
10,187
267,833
10,187
267,833
-
-
521,860
-
542
346
-
-
94,509
904,669
140,247
Company
2014
2013
N’000
N’000
391,578
968,797
1,236,976
1,392,408 1,172,502
24. Other (losses)/gains - netGroup Company
2014
2013
2014
2013
N’000
N’000
N’000
N’000
Fair value (loss)/gain on equity securities
Fair value gain on Investment Properties
Foreign exchange gain/(loss) (Note 28)
(2,253,829)
2,777,603
(2,253,829)
2,777,603
25,000 75,000
25,000
75,000
109,280
1,000,371
(29,671)
7,182
(2,119,549)
3,852,974
(2,258,500) 2,859,785
A significant portion (82%) of the Group’s equity portfolio is its investment in UBA shares. The market price of the equity
security decreased by 52% from N8.9 in December 2013 to N4.30 in December 2014 whereas the share price recorded
a 95% increase (increase of N4.34) from December 2012 to 2013.
The changes in the market price of the UBA share resulted in a downward movement of N4.9 billion in the fair value
gain/loss. This contributed significantly to the movement of the fair value gains/loss on equity securities from a gain of
N2.8 billion in 2013 to N2.2 billion loss in 2014. Measures put in place by management to mitigate against its price risk
has been disclosed in Note 3.1(ii).
75
76
TRANSCORP
NOTES
25. Administrative and general expenses GroupCompany
31 December 31 December31 2014
2013
N’000
N’000
December 31 December
2014
2013
N’000
N’000
Staff costs (Note 26)
2,254,631 1,469,882 557,762 365,260
Depreciation
2,083,116
1,344,640
23,674 15,060
Amortisation
Auditors’ remuneration
15,200
12,838
110,119
95,000
1,490
35,000
1,476
35,000
Management fees
1,688,901
1,724,283
388,889
700,000
Professional fees
415,255
182,662
172,500
208,711
Director’s remuneration (Note 26)
574,245
436,879
346,994
212,564
51,244
70,648
41,796
41,332
6,811
10,107
6,811
10,107
605,173
880,297
Rent & Rates
Loss on asset disposal
Repairs & Maintenance Advertising
Group Service benefits
Insurance
29,878
295,004
12,365
-
-
-
7,712
15,539
607,032
723,669
6,540
14,048
206,278
203,001
70,827
82,115
23,867
15,696
22,681
14,621
459,553
160,532
12,663
80,007
95,362
75,997
27,052
27,468
-
31,200
-
31,200
Travel and accommodation
Licenses and fees
Marketing and Business promotions
Bank charges
Acquisition expenses on investments
Donations/CSR cost*
Other operating expenses
18,418
10,312
14,887
Energy cost
16,930
3,613
15,428
859,262
-
-
-
1,883,226
1,742,007
244,402
395,050
12,281,087
9,213,184
1,982,771 2,274,757
Other operating expenses include costs incurred on security services, subscription & fees, public relations, lease rentals.
*The donation included N768m to the Fund for the internally displaced persons.
26. Particulars of directors and staff
a. The average number of persons, (excluding directors), employed by the Group and Company during the year was
as follows:
GroupCompany
31 December
31 December
2014
2013
Number Number Managerial
Senior staff
52
440
39
333
2014
2013
Number Number
8
8
5
6
Others
1,433
1,530
10
10
1,925
1,902
23
24
TRANSCORP
NOTES
b.
The table below shows the number of employees (excluding directors), who earned over N240,000 as emoluments in
the year and were within the bands stated.
GroupCompany
31 December
31 December
2014
2013
2014
2013
Number Number Number Number
N240,001 - N500,000
773
678
-
-
N500,001 - N1,000,000
661
742
4
6
N1,000,001 - N2,000,000
227
212
-
-
N2,000,001 - N4,000,000
172
183
6
4
Above N4,000,000
92
87
13
14
1,925
1,902
23
24
c.
Staff costs for the above persons (excluding Directors):
GroupCompany
31 December
31 December
2014
2013
2014
2013
N’000
N’000
N’000
N’000
Salaries and wages
3,822,071 2,168,644
544,442
355,620
Gratuity net charge
-
368,648
-
-
Defined contribution cost d. Analysis of staff costs:
181,612
122,125 13,320 9,640
4,003,683 2,659,417
557,762 365,260
GroupCompany
31 December
31 December
2014
2013
2014
2013
N’000
N’000
N’000
N’000
Cost of revenue
1,749,052
1,189,535
-
-
Administrative and general expenses
2,254,631 1,469,882
557,762
365,260
4,003,683 2,659,417
557,762
365,260
e.
Emoluments of directors
The remuneration paid to the Directors of the Company was:
GroupCompany
31 December
31 December
2014
2013
2014
2013
N’000
N’000
N’000
N’000
Salaries
Fees
Defined contribution
Benefits in kind
192,987 138,507
192,987
62,638
11,365 1,541 159,421
9,915 10,975
1,427
1,541
1,427
368,352
137,524 142,551
137,524
574,245 436,879
346,994 212,564
Amount paid to the highest paid director 192,987 65,750 192,987 61,477
Chairman’s emoluments
Fees
1,600
1,600 1,600 1,600
Benefit in kind 132,293 43,879
132,293 43,879
133,893
45,479 133,893 45,479
77
78
TRANSCORP
NOTES
The number of directors of the Group (including the highest paid Director) whose remuneration, excluding pension
contributions in respect of services to the Company fell within the following ranges:
Less than N10,000,000
GroupCompany
31 December
31 December
2014
2013
2014
2013
Number
Number
Number
Number
21 7
2
-
Over N10,000,000
11 10
32
17
8
10
9
9
27. Finance costs and income
Interest expense on loans relate to cost of bank borrowings during the year. The breakdown of interest income is as
shown below:
Finance costs:
Interest expense on loans
Foreign exchange loss
GroupCompany
31 December
31 December
2014
2013
2014
2013
N’000
N’000
N’000
N’000
(4,919,859)
(2,531,871)
(1,418,722)
(1,316,472)
on financing activities (Note 28)
(2,871,413)
-
-
-
Finance costs
(7,791,272)
(2,531,871)
(1,418,722)
(1,316,472)
Finance income:
Interest income - Fixed income investment
249,818
1,313,186
249,818 603,593
Interest on loan
695,587
-
965,007
-
Interest on fixed deposits
218,696
-
- Interest on bank deposits
62,856
-
- -
Interest to unwind discounted receivable
650,647
-
-
-
-
Others
19,796 327
4,955 312
Finance income
1,897,400
1,313,513
1,219,780 603,905
Net finance costs
(5,893,872)
(1,218,358)
(198,942)
(712,567)
28. Net foreign exchange (losses)/gains
The exchange differences charged/credited to the income statement are included as follows:
Other (losses)/gains - net (Note 24)
Finance costs and income (Note 27)
GroupCompany
31 December
31 December 31 December 31 December
2014
2013
2014
2013
N’000
N’000
N’000
N’000
109,280 1,000,371
(2,871,413)
-
(2,762,133)
1,000,371 (29,671)
- (29,671)
7,182
7,182
The movement in foreign exchange differences is as result of the decline in the value of the Nigerian Naira against the
US Dollars by N12/$1 from December 2013 to December 2014.
TRANSCORP
NOTES
29. Earnings per share
Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted
average number of ordinary shares in issue during the year excluding ordinary shares purchased by the Company and
held as treasury shares.
Profit attributable to shareholders
Weighted average number
GroupCompany
2014
2013
2014
2013
N’000
N’000
N’000
N’000
74,033 4,029,758
2,478,305 2,821,012
33,123,990
of ordinary shares in issue
38,720,997 33,123,990
38,720,997 Basic Earnings per share (Kobo)
0.19
12.17
6.40
8.52
Diluted Earnings per share (Kobo)
0.19
12.17
6.40
8.52
30. Share capital
a.Authorised:
45,000,000,000 ordinary shares of 50kobo each
Allotted, called up and fully paid:
GroupCompany
2014
22,500,000
2013
22,500,000
2014
22,500,000
2013
22,500,000
Group and Company
Number of shares
Ordinary (thousands)
shares
N’000
N’000
Total
At 1 January 2014
38,720,997
19,360,499
19,360,499
At 31 December 2014
38,720,997
19,360,499
19,360,499
b. Share premium
At 1 January
Share reconstruction
GroupCompany
2014
2013
2014
2013
N’000
N’000
N’000
N’000
7,213,368
27,071,664
- (25,768,702)
7,213,368
27,071,664
- (25,768,702)
Right issue
- 6,453,500 -
6,453,500
Transaction cost
- (543,094)
-
(543,094)
At 31 December
7,213,368 7,213,368
7,213,368
A share reconstruction scheme was approved and implemented in 2012. In 2011, the Company commenced the
process of investigating and reconciling the proceeds received or receivable for its issued share capital to enable it
confirm the completeness and accuracy of its share premium. As at 31 December 2012, the Company had obtained
the approval of the Securities and Exchange Commission (SEC) and a court sanction permitting the Company to hold
a meeting of its members to pass a resolution approving the balance in the share capital and share premium accounts
as at 31 December 2011 as complete and accurate. The extraordinary general meeting (EGM) was held 30 January
2013 and the Shareholders of the Company passed a resolution approving the balances as complete and accurate.
7,213,368 79
80
TRANSCORP
NOTES
c. Treasury shares
Treasury shares represent the Company’s shares held by the Employee Share Scheme as at 31 December 2014. The
scheme was discontinued during the year. All shares not yet paid for by allotees, amounting to N112 million, were
returned to the Scheme.
31. Non-Controlling Interest
Transcorp
Ughelli
Power
Transcorp Hotels Plc Limited
(Transcorp Hotels)
(TUPL)
Group
Opening Balance
Transcorp Hotels Profit for the year
TUPL profit for the year
NCI share of dividend declared
Increase in investment in TUPL -
(92,201)
(92,201)
Decrease in investment in TUPL
-
2,307,944
2,307,944
Increase in Transcorp Hotels share capital
3,829,613
-
3,829,613
22,484,479
5,965,758
28,450,237
413,312
-
413,312
-
2,816,915
2,816,915
(478,065)
(3,999,200)
(4,477,265)
26,249,339 6,999,216 33,248,555
TRANSCORP 81
NOTES
32. Cash generated from operating activities
31 December
2014
N’000
Profit before tax
GroupCompany
31 December 31 December 31 December
2013
2014
2013
N’000
N’000
N’000
7,731,598 9,032,151
3,287,079
3,186,963
6,600,248
1,506,817
23,674
15,060
6,811 9,761
6,811
10,107
Adjustment for non cash items
Depreciation of fixed assets (Note 6)
Loss on disposal of property plant and equipment Loss on disposal of intangible asset
Amortization of intangible assets
Fair value gain - Investment Property
Fair value gains/(losses) on equity securities (Note 24)
Amortization of prepaid lease rental
Impairment of property, plant and equipment
Finance cost (Note 27)
Finance income (Note 27)
-
57,042
-
-
15,200
12,838 1,490
1,476
(25,000)
(75,000)
(25,000)
(75,000)
2,253,829
(3,237,059)
2,253,829
(3,237,059)
30,000
30,000
-
-
50,756
-
-
-
4,919,859
2,531,871
1,418,722
1,316,472
(1,897,400)
(1,313,513)
(1,219,780)
(603,905)
(633,488)
(214,200)
(633,488)
(214,200)
Foreign exchange loss/(gain)
2,762,133
(1,000,371)
-
(9,733)
(19,492,458)
(6,378,131)
(11,880,542)
(1,620,381)
Other adjustments to reconcile expenses
for the year to cash from operating activities
(Increase) in debtors and prepayment
(Increase) in inventory
(251,048)
(724,341)
-
-
Increase in payables and accrued expenses
8,104,277
1,044,729
2,587,207
(867,426)
(Decrease) in retirement benefit obligation
-
(1,581,606)
-
-
Net cash generated from/(used in) operations
10,175,317
(299,012) (4,179,998)(2,097,626)
In the statement of cash flows, proceeds from sale of property plant and equipment comprise:
Net book amount
Loss on disposal of property plant and equipment Proceeds from sale of property plant and equipment
9,537
12,865
9,537
10,131
(6,811) (9,761)
(6,811)
(10,107)
2,726
3,104 2,726
24
33. Capital commitments and contingent liabilities
The group has committed N1.7 billion in capital expenditure for hotel expansion.
There were no material litigation s in the ordinary course of business as at the balance sheet date. The directors are of the
opinion that all known liabilities which are relevant in assessing the state of affair of the Company have been taken into
consideration in the preparation of these statements.
Ughelli Power Plc (UPP) made an application for the grant of pioneer status to the Nigerian Investment Promotion Commission
(NICP) effective January 1, 2014. The Federal Government announced that all Power Holding Company of Nigeria (PHCN) assts
successor companies will have pioneer status as part of the incentives proffered during the privatisation of PHCN assets in
2013. The application made by UPP is to avail itself of the incentive. The application is reasonably advanced and should be
concluded before the end of 2015. If the pioneer application is granted to take effect from 1 January 2014, the expected tax
savings as at 31 December 2014 will be N5.6 billion.
82
TRANSCORP
NOTES
The company also made an application for excess dividend tax exemption to the Federal Inland Revenue Service (FIRS)
on 11 August 2014 to avoid multiple taxes from the group structure. This was to take advantage of a similar exemption
that was granted to holding companies in the banking industry. The revenue authority has resolved to determine the
application alongside other similar applications filed with respect to the same issue. The determination will require
the approval of the Board of the FIRS and it is expected that the response will be positive. If the excess dividend tax
exemption application is granted, the expected tax savings as at 31 December 2014 from the exemption will be N413.5
million.
34. Transactions with non-controlling interests
a) Acquisition of additional interest in a subsidiary
On 1 January 2014, the company acquired 0.5% of the issued shares of Transcorp Ughelli Power Limited (TUPL)
from Tenoil Petroleum Energy Service Limited for a purchase consideration of N300.8 million. The carrying amount
of the non-controlling interests in TUPL on the date of acquisition was N92.2 million. The Group derecognised
non-controlling interests of N92.2 million and recorded a decrease in equity attributable to owners of the parent
of N208.5 million. The effect of changes in the ownership interest of TUPL on the equity attributable to owners of
the company during the year is summarised as follows:
Carrying amount of non-controlling interests acquired
31 December
2013
N’000
92,201 -
Consideration paid to non-controlling interests
(300,684)
-
Excess of consideration paid recognised in parent’s equity
(208,483)
-
b) Disposal of interest in a subsidiary without loss of control
On 1 January 2014, the company disposed of a 13.7% interest out of the 63.7% interest held in TUPL at a consideration
of N2.77 billion. The carrying amount of the non-controlling interests in TUPL on the date of disposal was N6.1
billion (representing 36% interest). This resulted in an increase in non-controlling interests of N2.3 billion and an
increase in equity attributable to owners of the parent of N462.5 million. The effect of changes in the ownership
interest of TUPL on the equity attributable to owners of the company during the year is summarised as follows:
Carrying amount of non-controlling interests disposed of
Consideration received from non-controlling interests
Increase in parent’s equity
There were no transactions with non-controlling interests in 2013
31 December 2014
N’000
31 December
2014
N’000
(2,307,944)
31 December
2013
N’000
-
2,770,476
-
462,532
-
c) Effects of transactions with non-controlling interests on the equity attributable to owners of the parent for the
year ended 31 December 2014
31 December
2014
N’000
Changes in equity attributable to shareholders of the company arising from:
–
Acquisition of additional interests in a subsidiary
–
Disposal of interests in a subsidiary without loss of control
Net effect on parent’s equity
31 December
2013
N’000
(208,483)
-
462,532
-
254,049
-
TRANSCORP 83
NOTES
35. Initial Public Offer for Transcorp Hotels Plc. (Transcorp Hotels)
The authorized share capital of Transcorp Hotels Plc was increased in March 2014 from N10 million (made up of 10,000,000
ordinary shares of N1 each) to N30 million (made up of 30,000,000 ordinary shares of N1 each) by the creation of an additional
20,000,000 ordinary shares of N1each. On 31 March 2014, Board issued a resolution to do a share split, thus converted the
30,000,000 ordinary shares of N1 each to 60,000,000 ordinary shares of 50 kobo.
The Company’s authorized share capital was subsequently increased in June 2014, to N7.5 billion (made up of 15,000,000,000
ordinary shares of 50 kobo each) by the creation of an additional 14,940,000,000 ordinary shares of 50 kobo.
In September 2014, Transcorp Hotels declared an initial public offering of 800 million ordinary shares of 50 kobo each at
N10 per share. The offer was not fully subscribed; a total of 418,403,900 shares at 50k each were subscribed for at N10. Total
proceeds from the public offer was N4,184,039,000 out of which N354,426,405 was incurred on share issue expenses. These
expenses have been netted off with the proceeds resulting in a net proceeds of N3,829,612,595 The ordinary shares issued
have the same rights as the other shares in issue.
36. Subsequent events
No subsequent event after the balance sheet date came to the notice of the directors, which would materially affect the
position shown by the financial statements on the balance sheet date.
37. Related parties
a. Heirs Holding Limited
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. The terms of the technical service agreement are established on an “arms length basis”.
A technical services agreement was also entered into between Ughelli Power Plc and Heirs Holdings Limited. The terms
of the agreement are similar to that of Transcorp Plc and were established on an “arms length basis”.
Tony Elumelu Foundation
The Tony Elumelu Foundation carries out various Corporate Social Responsibility (CSR) activities on behalf of Ughelli
Power Plc.
Tenoil Petroleum and Energy Services
Tenoil disposed part of its interest in Transcorp Ughelli Power Limited (TUPL) to Transcorp Plc. Consideration for the
disposal was used to reduce amount receivable from the counter-party as at date of disposal. Terms of the sale were
establised on an “arms length basis” and the outstanding receivable balance as at balance sheet date is deemed
recoverable.
b. Key Management Personnel
Name
DesignationName
Designation
Mr. Tony Elumelu, CON Chairman
Mr. Stanley Inye Lawson
Director
President/CEO
Mr. Chibundu Edozie
Director
Olorogun Otega Emerhor, OON
Director
Alhaji Abdulquadir Jeli Bello
Director
Mr. Kayode Fasola
Director
Mr. Ibikunle Oriola
CFO
c. Subsidiaries
Details of the subsidiaries have been disclosed in note 9c.
84
TRANSCORP
NOTES
d. Related party transactions
Nature of Name of Party
Nature of Relationship
Group
Heirs Holding Limited
Outstanding
NetOutstanding
balance as
value of
balance as at
at 1 January Transactions
31December
Transactions
2014
in 2014
2014
Common key management Receivable
-
2,290,424
2,290,424
1,702,000
(1,360,977)
341,023
personnel
Tenoil Petroleum and
Common key management Receivable
Energy Services
personnel Nembe Creek Oil Common key management Receivable
Company Limited
personnel
-
886,897
886,897
3,518,344
Tony Elumelu Foundation
Common key management Corporate
-
77,806
77,806
350,000
77,806
427,806
3,949
1,047
506,659
personnel
Social
Responsibility
Common key management Technical Heirs Holding Limited
personnel Service Fees
Nembe Creek Oil
Common key management Payable
Company Limited
personnel
Company
Transcorp Ughelli Power - Subsidiary
Receivable
5,627
4,221,675
4,227,302
Subsidiary
Receivable
55,256
(55,256)
-
Limited
Teragro Commodities Limited Subsidiary
Receivable
329,567
313,304 642,871
Receivable
154,649
2,623,673
2,778,322
Transcorp Staff Share Ownership
Trust Company Limited
Subsidiary
Receivable
21,805
358,038
379,843
Transcorp OPL 281 Limited
Subsidiary
Receivable
-
302,855
302,855
Transcorp Hotels Calabar Subsidiary
Receivable
-
15,356
15,356
Subsidiary
Limited
Ughelli Power Plc
Sub-subsidiary
Receivable
80,191
(80,191)
-
Tenoil Petroleum and Controlled by key
Receivable
1,704,294
(300,683)
1,403,611
Energy Services
management personnel
Nembe Creek Controlled by key Receivable
-
886,897
886,897
Oil Company Limited
management personnel
10,637,057
TRANSCORP 85
NOTES
Outstanding
Nature of Name of Party
Nature of Relationship
Net value ofOutstanding
balance at Transactions balance at 31
1 January
in 2014
December
Transactions
2014
2014
Subsidiary
Payable
1,000
-
1,000
Subsidiary
Payable
10,000
-
10,000
(Inactive) Subsidiary
Payable
9,900
-
9,900
Subsidiary
Payable
9,500
-
9,500
Subsidiary
Payable
9,900
-
9,900
Subsidiary
Payable
9,500
(9,500)
-
Subsidiary
Payable
9,500
(9,500)
-
Subsidiary
Payable
10,000
Subsidiary
Payable
9,500
(9,500)
-
Subsidiary
Payable
9,900
(9,900)
-
Subsidiary
Payable
9,500
Transcorp Refining
Company Limited (Inactive)
Transcorp Telecomms
Limited (Inactive) Telecommunications Backbone
Development Company Limited
Transcorp Hotels and Leisure
Limited (Inactive)
Transcorp Infrastructure
Limited (Inactive)
Transcorp Trading and
Logistics Limited (Inactive)
-
10,000
Transcorp Commodities
Limited (Inactive)
Transcorp Hilton Limited (Inactive)
Allied Commodities Limited
(Inactive)
-
9,500
Transcorp Properties Limited
Subsidiary
Payable
10,000
-
10,000
Subsidiary
Payable
3,505,477
2,461,007
5,966,484
Transcorp OPL 281 Limited
Subsidiary
Payable
-
500
500
Ughelli Power Plc
Sub-subsidiary
Payable
-
76,831
76,831
Heirs Holding Limited
Controlled by
key management Technical
personnel
Service Fees
350,000
-
350,000
6,463,615
None of the transactions incorporate special terms and conditions and no guarantees were given or received. The amounts
outstanding are unsecured and will be settled in cash. No expense has been recognised in the current or prior years for bad or
doubtful debts in respect of the amounts owed by related parties.
There are no future commitments or obligation by or to any related party.
86
TRANSCORP
VALUE-ADDED
STATEMENT
Group Company
20142013
2014
2013
N’000% N’000%
N’000
%
N’000
%
Revenue
Other income 41,338,136
18,825,278
6,334,884
2,142,000
169,429
6,403,463
353,688
4,636,192
41,507,565
25,228,741
6,688,572
6,778,192
Bought in services
- Local
- Foreign
21,691,343
8,420,519
1,594,157
1,894,757
1,077,966
1,077,966 - -
22,769,309
9,498,485
1,594,157
1,894,757
Value added
18,738,256
15,730,256
5,094,415
4,883,435
Distribution
Employees
Salaried and benefits
4,003,68321%2,659,41717%364,940 7%
364,9407%
Provider of funds
Interest
4,919,85926%2,531,87116%
1,418,722 28%
1,316,472
27%
Government
Taxation 4,427,338 24%
2,074,249 13%
2,083,116 11%
1,506,817 10%
3,304,260
18%
6,957,902 44%
2,478,305 49%
2,821,012
58%
18,738,256
100%15,
730,256
100%
5,094,415100%
4,883,435
100%
808,774 16%
365,951
7%
15,060 0%
The Future
Depreciation Retained profit
23,674 0%
TRANSCORP
87
FIVE-YEAR
FINANACIAL SUMMARY
The Group
2014
Balance sheet
201320122011 2010
N’000N’000N’000 N’000
N’000
Non-current asset
134,742,937
Current asset
122,211,610
50,988,839
51,472,274
36,012,42527,252,80324,615,363
(16,596,345)
9,999,811
12,639,122
Current liabilities (32,268,177)
(48,732,334)(47,050,822)(17,572,910) (10,117,056)(9,904,171)
Net assets
(15,737,084)
49,541,451
(10,396,285) (14,299,524)
89,754,85186,676,50741,434,947 40,958,744
37,976,878
Capital and reserves
Share capital 19,360,499 19,360,499 12,906,999
12,906,999
Share premium
7,213,368 7,213,368 27,071,664 27,071,664 27,071,664
Treasury shares
(137,790)
(25,784)
-
Revenue reserves
30,070,219
31,678,187
(9,677,738)
Non-controlling interest 33,248,555 28,450,237 11,134,022
89,754,85186,676,50741,434,947 40,958,744
37,976,878
-
12,906,999
-
(11,218,968) (13,135,563)
12,199,049
11,133,778
Comprehensive income
Revenue
41,338,13618,825,27813,244,845 13,901,453
13,927,551
7,731,598
Taxation
9,032,151
3,948,215
4,605,925
(4,427,338)(2,074,249)(1,420,467)
Profit after taxation
6,908,216
1,255,696 (1,518,430)
3,304,260 6,957,902 2,527,748 5,861,624 5,389,786
Other comprehensive income for the year,net of tax
-
-
182,953
(157,534)
-
Total comprehensive income for the year, net of tax
3,304,260
6,957,902
2,710,701
5,704,090
5,389,786
0.2
12.2
4.4
7.7
12.0
Non-current asset 34,277,534
36,266,862
27,917,466
22,204,720
19,871,753
Current asset
19,964,43612,812,62910,729,254
Basic earnings per share (kobo)
Company
Balance sheet
Current liabilities
2,044,9262,427,863
(11,311,771)
(6,961,604)
(10,909,276)
(6,949,841) (6,728,791)
(9,469,009)
(9,198,952)
(10,003,427)
(2,104,965) (1,327,844)
Net assets
33,461,190 32,918,935 17,734,017 15,194,840 19,360,499 19,360,499 12,906,999 12,906,999 12,906,999
7,213,368
7,213,368
27,071,664
27,071,664 27,071,664
6,887,323
6,345,068
(22,244,646)
(24,783,823) (25,735,682)
33,461,190 32,918,935 17,734,017 15,194,840 14,242,981
14,242,981
Capital and reserves
Share capital
Share premium
Revenue reserves
Comprehensive income
Revenue
6,334,884 2,142,000 2,325,697 2,833,333 2,382,396
3,287,079 3,186,963 2,874,600 1,313,375 3,456,849
Taxation
(808,774)(365,951)(335,423) (361,516)
(132,590)
Profit after taxation
2,478,305
2,821,012
2,539,177
951,859
3,324,259
The balances for 2014, 2013, 2012 and 2011 have been stated in accordance with International Financial Reporting Standard (IFRS) as
issued by the International Accounting Standard Board (IASB). The balance sheet balances for 2010 have been stated in accordance
with IFRS and the profit and loss in accordance with local GAAP.
88
TRANSCORP
NOTICE OF ANNUAL GENERAL MEETING
Transnational Corporation of Nigeria
Plc
stamped proxy form must be deposited at the registered
office of the Registrar, Africa Prudential Registrars Plc,
220B Ikorodu Road, Palmgrove, Lagos not less than 48
hours before the time fixed for the meeting. A blank proxy
form is attached to the Annual Report.
NOTICE IS HEREBY GIVEN that the Ninth Annual General
Meeting (“AGM”) of Transnational Corporation of Nigeria
Plc (“the Company”) will hold on Friday, 8 May 2015 at The
Congress Hall, Transcorp Hilton Abuja, 1 Aguiyi-Ironsi Street,
Maitama, FCT Abuja at 10.00 am to transact the following
businesses:
2. CLOSURE OF REGISTER
ORDINARY BUSINESS
1. To receive the Audited Financial Statements of the
Company for the year ended 31 December 2014 and the
Reports of the Directors, Auditors and Audit Committee
thereon;
3. DIVIDEND WARRANTS
2. To declare a dividend;
3. To re-elect retiring Directors;
4. To authorise the Directors to fix the remuneration of the
Auditors;
5. To elect/re-elect shareholders’ representatives on the
Statutory Audit Committee;
SPECIAL BUSINESS
SPECIAL RESOLUTIONS
a. That on the recommendation of the Board of Directors
and subject to obtaining regulatory approvals,
including but not limited to the Securities and
Exchange Commission (“SEC”), the Directors be and
are hereby authorized to invest in or acquire or divest
from any business entity in furtherance to the objects
of the Company.
b. That subject to regulatory approval, the Directors
be and are hereby authorized to appoint such
advisers, professionals and parties that they deem
necessary, upon such terms and conditions that the
Directors may deem appropriate with regard to the
aforementioned investments and acquisitions.
c. That the Board of Directors be and is hereby
empowered and authorized to carry out as it deems
appropriate and in accordance with any relevant
laws thereto, any actions, including but not limited
to restructuring, reconstruction and business
arrangement exercise and actions for the Company
as may be necessary to achieve competitive business
advantage and/or comply with any legislation and/or
directives and guidelines from the SEC.
d. That the Directors be and are hereby authorized to
take all steps and do all acts that they deem necessary
for the successful implementation of the above stated
resolutions.
NOTES
1.PROXY
A member entitled to attend and vote at the AGM is
entitled to appoint a proxy to attend and vote in his/her
stead. A proxy need not be a member of the Company.
For the appointment to be valid, a completed and duly
If the dividend recommended by the Directors is
approved, dividend warrants will be posted on 11 May
2015 to all shareholders whose names appear in the
Company’s Register of Members at the close of business
on Tuesday, 21 April 2015.
4. AUDIT COMMITTEE
6. To approve the appointment of a Director;
7. To consider and if thought fit pass the following as special
resolutions:
For the purpose of qualifying for dividend and attendance
to the AGM, the Register of Members and transfer books
of the Company will be closed from Wednesday, 22 April
2015 to Friday, 24 April 2015, both dates inclusive.
In accordance with Section 359(5) of the Companies and
Allied Matters Act, Cap C20, LFN, 2004, any member may
nominate a shareholder for election as a member of the
Audit Committee by giving notice in writing of such
nomination to the Company Secretary at least 21 days
before the AGM.
5.E-DIVIDEND
Notice is hereby given to all shareholders to open bank
accounts, stockbroking accounts and CSCS accounts for
the purpose of dividend. A detachable application form
for e-dividend is attached to this Annual Report to enable
all shareholders to furnish particulars of their accounts
to the Registrar as soon as possible.
6. BIOGRAPHICAL DETAILS OF DIRECTORS FOR REELECTION AND FOR APPROVAL
The biographical details of Directors standing for
re-election or whose appointment is sought to be
approved are provided in the Annual Report 2014 and
the Company’s website: www.transcorpnigeria.com.
7. ANNUAL REPORT PUBLISHED ON THE WEBSITE
The electronic version of the Annual Report 2014 will be
hosted on the Company’s website: www.transcorpnigeria.
com.
Dated this 1st day of April 2015.
BY ORDER OF THE BOARD
CHINEDU N. EZE
FRC/2013/NBA/00000002586
Company Secretary
38 Glover Road (Formerly 22b)
Ikoyi
Lagos
TRANSCORP
PROXY FORM
RC. 611238
NINTH ANNUAL GENERAL MEETING TO BE HELD AT 10.00 AM
ON FRIDAY, 8 MAY 2015 AT THE CONGRESS HALL, TRANSCORP
HILTON ABUJA, 1 AGUIYI-IRONSI STREET, MAITAMA, FCT
ABUJA
I/WE _________________________________________ being a
member/members of TRANSNATIONAL CORPORATION OF NIGERIA
PLC, hereby appoint:
__________________________________________
or failing him, the Chairman of the meeting as my/our proxy to
act and vote for me/us and on my/our behalf at the Ninth Annual
General Meeting of the Company to be held on Friday, 8 May 2015
and at any adjournment thereof.
RESOLUTION
To receive the Audited Financial Statements
for the year ended December 31, 2014,
together with the Report of the Directors,
Auditors and Audit Committee thereon.
To approve a dividend of 6 kobo per share.
To re-elect Mr. Kayode Fasola Director of the
Company.
To re-elect Dr. Stanley Lawson Director of
the Company.
To authorize Directors to fix the remuneration
of the Auditors.
To elect/re-elect members of the Audit
Committee.
To approve the appointment of a Director.
That on the recommendation of the Board of
Directors and subject to obtaining regulatory
approvals, including but not limited to the
Securities & Exchange Commission (SEC),
the Board of Directors be and are hereby
authorized to invest in or acquire or divest
from any business entity in furtherance to
the objects of the Company.
A member (Shareholder) who is unable to attend an Annual General
Meeting is allowed by law to vote by proxy. The above proxy form
has been prepared to enable you exercise your right to vote, in case
you cannot personally attend the meeting.
Please sign this proxy form and forward it, so as to reach the
registered office of the Registrar, Africa Prudential Registrars Plc
(Formerly UBA Registrars), 220B Ikorodu Road, Palmgrove, Lagos, not
later than 48 hours before the time fixed for the meeting. If executed
by a Corporation, the Proxy Form must be under its common seal or
under the hand of a duly authorized officer or attorney.
It is a requirement of the law under the Stamp Duties Act, Cap S8,
Laws of the Federation of Nigeria, 2004 that any instrument of proxy
to be used for the purpose of voting by any person entitled to vote at
any meeting of shareholders must be stamped by the Commissioner
for Stamp Duties.
The Proxy must produce the Admission Card below to gain entrance
into the Meeting.
That subject to regulatory approval, the
Directors be and are hereby authorized
to appoint such advisers, professionals
and parties that they deem necessary,
upon such terms and conditions that the
Directors may deem appropriate with regard
to the aforementioned investments and
acquisitions.
That the Board of Directors be and is hereby
empowered and authorized to carry out
as it deems appropriate and in accordance
with any relevant laws thereto, any actions,
including but not limited to restructuring,
reconstruction and business arrangement
exercise and actions for the Company as may
be necessary to achieve competitive business
advantage across the Group and/or comply
with any legislation and/or directives and
guidelines from the SEC.
That the Directors be and are hereby
authorized to take all steps and do all
acts that they deem necessary for the
successful implementation of the above
stated resolutions.
Please indicate with an “X” in the appropriate square
how you wish your votes to be cast on the resolutions
set out above.
TRANSNATIONAL CORPORATION OF NIGERIA PLC
Ninth Annual General Meeting
ADMISSION CARD
Please admit the Shareholder named on this Card or his duly
appointed proxy to the Annual General Meeting of the Company to
be held on Friday, 8 May 2015 at The Congress Hall, Transcorp Hilton
Abuja, 1 Aguiyi-Ironsi Street, Maitama, FCT Abuja.
This admission card must be produced by the Shareholder in order
to gain entrance into the Annual General Meeting.
Name of Shareholder
Address of Shareholder
Number of Shares Held
Signature
FOR
AGAINST
89
90
SHAREHOLDER E-SERVICE FORM
TRANSCORP
E-DIVIDEND MANDATE/REPLACEMENT FORM
TRANSCORP 91
92
SHAREHOLDER DATA FORM
TRANSCORP
TRANSCORP
CORPORATE INFORMATION
Company Registration No. RC 611238
Registered Office
38, Glover Road,
Ikoyi, Lagos, Nigeria
Board of Directors
Mr. Obinna Ufudo
Mr. Kayode Fasola
Alhaji Mohammed Nasir Umar
Mr. Stanley Inye Lawson
Mr. Olorogun O’Tega Emerhor
Mr. Chibundu Edozie
Alhaji Abdulquadir Jeli Bello
AuditorsPricewaterhouseCoopers
Chartered Accountants
Plot 252E Muri Okunola Street
Victoria Island, Lagos
Bankers
United Bank for Africa Plc
First Bank of Nigeria Plc
Company Secretary
Mr Chinedu Eze
38, Glover Road
Ikoyi, Lagos
Registrars
Africa Prudential Registrars Plc
220B Ikorodu Road
Palmgrove, Lagos
Chairman
President/CEO (Appointed on September 1, 2014)
(Resigned on September 1, 2014)
(Resigned on April 1, 2014)
(Appointed April 1, 2014)

TRANSCORP - Transnational Corporation of Nigeria Plc

Transcription

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