- Transnational Corporation of Nigeria Plc

Transcription

ANNuAL REPORT
For the year ended 31 December 2013
Transnational Corporation of Nigeria Plc
CONTENT
Group Overview
2
Our Businesses
5
Results at a Glance
6
List of Directors, Officers and Professional Advisers
7
Board of Directors
9
Executive Management
10
Chairman’s Statement
15
Chief Executive Officer’s Report
18
Corporate Governance Report
25
Directors’ Report
28
Statement of Directors’ Responsibilities
29
Report of the Audit Committee
30
Report of the Independent Auditors
32
Statement of Financial Position
33
Statement of Comprehensive Income
34
Statement of Changes in Equity
35
Statement of Cash Flows
36
Notes to the Financial Statements
36
1
General information
36
2
Summary of significant accounting policies
36
2.1
Basis of preparation
37
2.1.1
Going concern
37
2.1.2
Changes in accounting policy and disclosures
37
2.2
Consolidation
39
2.3
Segment reporting
39
2.4
Foreign currency translation
39
2.5
Property, plant and equipment
40
2.6
Intangible assets
41
2.7
Investment properties
41
2.8
Impairment of non-financial assets
41
2.9
Financial instruments
42
2.9.1
Classification
42
2.9.2
Recognition and measurement
43
2.10
Offsetting financial instruments
43
2.11
Impairment of financial assets
44
2.12
Inventories
44
2.13
Trade receivables
44
2.14
Cash, cash equivalents and bank overdrafts
44
2.15
Borrowings
44
2.16
Borrowing costs
44
2.17
Trade payables
44
2.18
Current and deferred tax
45
2.19
Employee benefits
46
2.20
Revenue recognition
46
2.21
Leases
46
2.22
Dividend distribution
TRANSCORP
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ANNuAL REPORT 2013
47
47
47
3
2.23
Share capital
2.24
Treasury shares
Financial risk management
47
3.1
Financial risk factors
50
3.2
Capital risk management
3.3
Fair value estimation
50
51
4
Critical accounting estimates and judgements
51
5
Segmental analysis
54
6
55
7
Intangible assets
56
8
Investment property
56
9
Investment in subsidiaries
60
10
Deferred tax
60
11
Pre-paid lease rental
61
12
Inventories
61
13
Trade and other receivables
61
14
Debt and equity securities
62
15
Cash and cash equivalents
62
16
Trade and other payables
62
17
Taxation
63
18
Borrowings
64
19
Financial instruments and fair values
65
20
Advance deposits
66
21
Retirement benefit obligation
66
22
Revenue
67
23
Cost of sales
67
24
Other operating income
67
25
Administrative and general expenses
68
26
Particulars of directors and staff
69
27
Finance income and costs
69
28
Earnings per share
70
29
Share capital
71
30
Non-controlling interest
71
31
Prior period adjustment
72
32
Cash generated from operating activities
72
33
Capital commitments and contingent liabilities
72
34
Subsequent events
72
35
Related parties
74
Value-added Statement
75
Five-year Financial Summary
76
Notice of Annual General Meeting
Attached Proxy form
Attached Shareholders’ E-Service application form
IBC
Corporate information
IV
GROuP OVERVIEW
OuR VISION
To create sustainable value for our stakeholders in our chosen markets.
OuR MISSION
To build a conglomerate of successful businesses underpinned by excellence, execution and entrepreneurship.
ABOuT TRANSCORP
Transnational Corporation of Nigeria Plc (Transcorp), is an investment company that focuses on acquiring and managing strategic
businesses that create long-term shareholder returns and socio-economic impact. The company has interests in four business sectors:
Power, Oil and Gas, Hospitality and Agriculture.
Incorporated on 16 November, 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.
Transcorp’s 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.
OuR CORE VALuES H.E.I.R.S
Hard Work
•
•
•
Passionate about extraordinary results
Discipline
Commitment to excellence
Emotional Intelligence
•
•
Self-awareness and emotional self-control
Respect for others
Integrity
•
•
•
Delivering on your promise
Exceeding expectations
Living the brand
Resilience
•
•
•
Can-do spirit
Breakthrough thinking
Following-through to ensure results
Synergy
•
•
1
Collaborating with colleagues
Leveraging group relationships
TRANSCORP
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ANNuAL REPORT 2013
OuR BuSINESSES
POWER
ENERGy
Transcorp ughelli Power Limited
Transcorp Energy Limited
Transcorp Ughelli Power Limited (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.
Transcorp Energy Limited is a fully owned subsidiary which
was established in 2008 to spearhead Transcorp’s push into
the energy sector as well as focus on upstream petroleum
development. Transcorp Energy oversees a joint venture
agreement with Sacoil Holdings Limited (Sacoil) to develop its
OPL 281 asset in collaboration with Energy Equity Resources
Limited (EER).
On 25 September 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 21 August 2013, TUPL
made full payment of US$300 million to the Bureau of Public
Enterprises (BPE), representing 100% of TUPL’s bid price for the
plant.
Today, TUPL owns 100% of Ughelli Power Plc, operator of the
972 MW Ughelli power plant, and plans to increase its generating
capacity from 300 MW to over 3 000MW in the next five years.
TUPL plans to make targeted inroads into West Africa and
subsequently the rest of Africa.
2
OuR BuSINESSES continued
HOSPITALITy
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 and Nigeria’s leading
hotel for the year 2013 by 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 well-known landmark for both locals and visitors. It is the perfect meeting ground for
business and pleasure. Transcorp Hotels, Calabar, 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 continues to develop strategies in the medium and long term that will consistently position the hotel as a key player in the
hospitality industry.
AGRICuLTuRE
Teragro Commodities Limited
Teragro Commodities Limited is the agribusiness subsidiary of Transnational Corporation of
Nigeria Plc. The business leverages 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.
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.
Teragro plans to expand its operations and will capitalise on growing opportunities in food
conversion comprising paddy rice to long grain, cassava to sweeteners and full value chain oil
palm business.
3
TRANSCORP
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ANNuAL REPORT 2013
4
RESuLTS AT A GLANCE
Group
For the year ended 31 December
Gross earnings (Revenue, other operating and finance income)
Administrative expenses
Profit before tax
Profit after tax
As at 31 December
Non-current assets
Current assets
Total assets
Share capital
Equity attributable to owners of the parent
Per share data
Earnings per share (Kobo)
Net assets per share (Kobo)
Number of employees
2013
N’m
2012
N’m
Increased/
(Decreased)
%
25 229
9 213
9 032
6 957
15 808
7 523
3 948
2 528
60
22
129
175
122 212
27 253
149 464
19 361
58 226
28 450
74 942
24 615
99 558
12 907
41 858
22 238
63
11
50
50
39
28
12.17
262
1 902
4.04
248
1 527
201
5
25
Company
For the year ended 31 December
Gross earnings (Revenue, other operating and finance income)
Profit before tax
Profit after tax
As at 31 December
Non-current assets
Current assets
Total assets
Share capital
Shareholders’ fund
Per share data
Earnings per share (Kobo)
Net assets per share (Kobo)
Number of employees
2013
N’m
2012
N’m
Increased/
(Decreased)
%
6 778
2 275
3 187
2 821
4 804
1 081
2 875
2 539
41
110
11
11
36 267
12 813
49 080
19 361
32 919
27 918
10 729
38 647
12 907
17 734
30
19
27
50
86
8.52
99
24
9.08
69
21
(6)
45
14
Financial highlights
Group
• Grossearnings(Revenue,otheroperatingandfinanceincome)
• Profitaftertax
• Headlineearningspershare
• Returnonequity
• Totalassets
Company
• Grossearnings(Revenue,otheroperatingandfinanceincome)
• Profitaftertax
• Headlineearningspershare
•
•
5
Returnonequity
Totalassets
TRANSCORP
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ANNuAL REPORT 2013
N25.23 billion
up 175% to N6.96 billion
Earnings per share increased by 201% to 12.17 kobo from
4.04 kobo (restated)
8.0%
N149.46 billion
N6.78 billion
up 11% to N2.82 billion
Earnings per share decreased by 6% to 8.52 kobo from
9.08 Kobo (restated)
8.6%
N49.08 billion
LIST OF DIRECTORS, OFFICERS
AND PROFESSIONAL ADVISERS
Directors
Tony O. Elumelu, CON
Obinna Ufudo
Olorogun O’tega Emerhor, OON
Kayode Fasola
Stanley Lawson
Mohammed Nasir Umar
Chibundu Edozie
Emmanuel N. Nnorom
Chairman
President/CEO
Director
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
Registrar and Transfer Office
Africa Prudential Registrars Plc
220B Ikorodu Road
Palmgrove
Lagos
Tel: 01-4612373-76
[email protected]
6
BOARD OF DIRECTORS
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 organisation 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 AfricaAmerica Institute (AAI) Awards. He was also named African Business Icon at the 2013 African Business Awards.
Obinna ufudo
President/CEO
Holds an M.Sc degree in International Securities, Investment and Banking from the University of Reading,
UK. He also holds an EMBA from the IESE Business School, University of Navarra, Barcelona Spain and a
B.Sc degree in Finance from the Enugu State University of Science and Technology Enugu, Nigeria.
He has held senior level positions in securities trading, investment management and financial
advisory firms.
Emmanuel N. Nnorom
Non-Executive Director
The President/COO of Heirs Holdings. Prior to joining the Heirs Holdings Group, Emmanuel served as CEO of
UBA Africa, overseeing UBA’s Africa operations outside Nigeria and executing corporate strategy in 18 African
countries. Other senior roles within UBA included Group COO, followed by his appointment as Group CFO,
with responsibility for Finance and Risk.
Emmanuel is a chartered accountant, and brings over three 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.
Chibundu Edozie
Holds a Bachelor of Science degree in Geology and Mining from the University of Jos and is an alumnus of
the New York Institute of Finance, IMD and Lagos Business School.
Has over 20 years’ experience in the capital market and investment banking industry.
Olorogun O’tega Emerhor
Known as a turnaround expert due to his involvement/leadership in many turnaround assignments both in
the banking and manufacturing sectors.
Hold 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.
Stanley Lawson
Holds an M.Sc degree in Petroleum Geology and an MBA Finance, both from the University of Ibadan.
A multi-disciplinary professional with cognate experience spanning over three decades in the energy and
financial services sectors.
7
TRANSCORP
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ANNuAL REPORT 2013
Kayode Fasola
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
Ogbomoso. He is an alumnus of the prestigious Lagos Business School and the London Business School.
Has over 22 years’ cognate experience covering all facets of banking and business strategy
Mohammed Nasir umar
Has vast and varied experience in lands and survey matters spanning over a period of 34 years.
Holds an M.Sc degree in Lands and Survey from Ahmadu Bello University, Zaria. A registered surveyor with
the Surveyors Council of Nigeria and a Fellow of the Nigerian Institute of Surveyors.
CEOs OF SuBSIDIARIES
Adeoye Fadeyibi
Chief Executive Officer, Transcorp ughelli Power Limited
Has deep and varied 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 of Transcorp Energy Limited
Responsible for leading a team of specialists to develop the Company’s Energy Portfolio including the recent
acquisition of the 972MW 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 the Heirs Holdings Group. He provides support
and consultancy services to a several oil and gas investors in Nigeria and around the world.
Valentine Ozigbo
Chief Executive Officer, Transnational Hotels and Tourism Services Limited
Has over 18 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.
Dr. Jide Adedeji, Ph.D
Chief Executive Officer, Teragro Commodities Limited
Has over two decades of experience in the food flavour, natural products and consumer packaged goods
industries. An expert in the creation and development of natural flavour ingredients from reactions and
natural sources.
Holds a B.Sc. in Agricultural Biochemistry and Nutrition, an M.Sc. and Post-graduate Diploma in Food Science
and Technology from the University of Ibadan. Earned doctorate and Master’s degrees in Food Science from
Rutgers University in New Jersey, USA.
8
EXECuTIVE MANAGEMENT
The Executive Management of Transcorp comprises the following principal officers:
Ibikunle Oriola
Chief Finance Officer
Has over 13 years of corporate experience spanning public and private partnership advisory, project finance,
financial modelling, mergers and acquisitions, capital raising and corporate strategy.
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. Has
attended professional trainings in the UK, Belgium, Hungary, South Africa and the UAE.
Janet Mbu
Legal Adviser
Has broad corporate and commercial 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.
Dupe Olusola
Director of Resources
Has over 17 years’ experience in Banking, Private Equity, Developmental Business Consulting and Asset
Management.
Holds a B.A. 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.
yemi Okojie
Head, Strategy and Business Transformation
Has extensive experience in Business Transformation, Consulting and Corporate Strategy.
Holds a first class degree in Mechanical Engineering from Brunel University in England and an MBA from
the University of Chicago Booth School of Business, with concentrations in Finance, Strategy and General
Management.
Michelle Matthew-Okojie
Commercial Director
Has over 21 years of professional experience in Strategic Planning, Marketing, Product Management,
Business Development and Sales and Team Management across diverse industry verticals.
Holds a B.Sc degree in Microbiology from the University of Benin. Has attended several international trainings
and is a Member of the International Facility Management Association.
Barnabas umelo
Acting Chief Internal Auditor
Has over 26 years’ professional experience spanning over Banking, Asset Management, International Trade
and Consultancy.
Holds an MBA in Finance and Accounting from Ogun State University. Qualified as a Chartered Accountant
in 1992 and became a Fellow of the Institute in 2005.
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 and Nigeria), an
Associate Member of the Institute of Capital Market Registrars and a Member of the UK Environmental
Law Association.
9
TRANSCORP
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ANNuAL REPORT 2013
CHAIRMAN’S STATEMENT
Distinguished Shareholders,
I am delighted to welcome you all to the 8th Annual General Meeting
of Transnational Corporation of Nigeria Plc (“Transcorp” and or “the
Company”) and to present the Annual Report and the Audited
Financial Statements for the year ended 31 December 2013.
Highlights of Our Performance in 2013
2013 has been a transformational year for our group, and one
of which we can all be justifiably proud. Our management
has begun to show the results of a disciplined execution of
strategy and shareholders have begun to see their rewards.
Transcorp achieved very strong financial and operating
results in FY 2013, as evidenced by growth in key
performance indicators for the Company, as well as
consolidated results of its subsidiaries (“The Group”).
FY 2013 gross earnings of N25.23 billion for the Group
represents an increase of 60% over prior year gross earnings
of N15.81 billion. The Company’s gross earnings increased in
2013 by 41% from N4.80 billion in 2012 to N6.78 billion. This
impressive gross earnings growth translated into significant
operating profit for the Group as 2013 PBT of N9.03 billion represents
129% growth over 2012 PBT of N3.95 billion. Company’s 2013 PBT of
N3.19 billion increased by 11% from N2.88 billion achieved in 2012.
In 2013, the Group’s total assets of N149.46 billion grew by 50%, well ahead of the
N99.56 billion total assets recorded last year. The total assets of the Company increased
to N49.08 billion in 2013 from N38.65 billion in the prior year. The principal cause of asset growth
for the Group and Company was our acquisition of the Ughelli Power Plant, Nigeria’s largest generating facility and where our influence
has already seen a doubling of capacity.
On the back of this very positive result, your directors are proposing a dividend of 5 kobo per share for your approval. This is the first time
since incorporation that your Company will be paying a dividend and marks a significant inflection point.
I believe that we will build on the solid foundation laid over the last couple of years to begin an era of steady and increasing dividend
payment to our shareholders.
The Global Economy
The recovery of the global economy from the financial crisis of 2008 continued on a slow course during the year, with growth projected
to accelerate in 2014. Financial markets across the world continued to benefit from low cost funds throughout the year, as the anticipated
decision by the US Federal Reserve to reduce its monthly asset purchases was only announced in December 2013. The US Federal
Reserve’s quantitative easing has helped to restore growth in the US as the economy recorded a growth rate of 1.6%.
In Europe, weak domestic demand and existing structural issues contributed to sluggish GDP growth of 0.4%. Issues facing policy makers
in the Euro Zone include weak financial markets, high private and public debt and depressed confidence. Despite the challenging
conditions, a number of countries in the Euro Zone are beginning to exhibit signs of recovery. For example, Moody’s has raised its outlook
for Spain from “negative” to “stable” citing real improvement in government finances and the economy. Ireland recorded improvements
in economic performance as unemployment fell while Greece is expected to grow by 0.6% in 2014 after two years of contraction.
In Asia, monetary and fiscal stimuli have re-established the Japanese economy on the path of growth as the Bank of Japan has stated
that country’s economy has entered a phase of moderate recovery. China’s growth rate remained at 7.70%, the same recorded in 2012.
The growth in the Chinese economy can be attributed to strong investment activity recorded in the second half of 2013.
10
CHAIRMAN’S STATEMENT continued
A review of the performance of the major emerging
markets showed mixed results. Russia recorded a
decline in growth from 3.40% recorded in 2012 to
1.50% in 2013. India and Brazil registered increased
growth rates from 3.20% and 1.00% respectively in
2012 to 4.40% and 2.30% in 2013. Despite higher
growth, private capital inflows into Brazil and India
remained sensitive to global financial conditions
particularly monetary policy conditions in the
United States.
Left to right: Tony O. Elumelu, CON, Chairman and Chinedu Eze, Company Secretary, during Transcorp’s
Extraordinary General Meeting
The IMF’s revised growth rate for Sub-Saharan Africa
was 5% for 2013, lower than an initial projection of
5.8%. According to the Fund, the weaker than forecast
growth rate for 2013 reflected both a more adverse
external environment – characterised by rising
financing costs, less dynamic emerging markets,
and less favourable commodity prices – and diverse
domestic factors, including slower investment and
weakening consumer confidence in some cases,
and adverse supply developments in others. These
factors notwithstanding, the continent is forecast to
experience growth rates of 6% and above in 2014,
as possible temporary declines in international
commodity prices are not expected to affect growth
in the continent.
The Local Economy
Provisional data from the National Bureau of Statistics
(NBS) indicate that real GDP grew 6.87% in 2013,
compared to 6.58% in 2012. In terms of contribution
to GDP, the agricultural sector was the dominant
contributor accounting for 38.6% followed by
wholesale and retail trade (20.1%), crude petroleum
and natural gas (13.4%) and telecommunication
and post (8.2%). The oil sector’s relative contribution
and importance to GDP dipped during year when
compared to 2012, owing to the increased cases of
production shut-ins due to the rising incidences
of pipeline vandalisation and crude oil theft.
Left to right: Obinna Ufudo, President/CEO, Transcorp, Vice President Nnamadi Sambo and the President
of the Federal Republic of Nigeria, HE, Dr. Goodluck Ebele Jonathan, GCFR, during the official handover of
ownership certificate to Transcorp as the winner of the Ughelli Power Plant bid.
11
TRANSCORP
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ANNuAL REPORT 2013
The Central Bank of Nigeria (CBN) continued with its
tight monetary policy stance in the year, maintaining
its benchmark rate at 12% throughout the year.
The tight monetary stance and a relatively stable
exchange rate regime accounted for moderation in
price levels in the economy as the country recorded
single digit inflation rate throughout the year.
The reduced inflation rate notwithstanding, the
CBN’s tight monetary stance continues to make
borrowing expensive and has reduced the pace of
investment in the country.
The capital market continued its rally as the All-Share
Index (ASI) increased by 47.2% from 28,078.81 on
31 December 2012 to 41,329.19 on 31 December
2013. Market Capitalisation increased by 47.4% from
N8.97 trillion to N13.23 trillion during the same
period. Improved earnings and investor confidence in
macroeconomic management contributed to the rise
in stock prices.
In line with President Goodluck Jonathan’s
Transformation Agenda, substantial progress was
made in the reform of critical sectors of the economy
during the year. In the power sector, the privatisation
of the Power Holding Company Nigeria (PHCN)
Successor Companies was concluded and the new
private sector owners – including our Company
Transcorp – have taken control of the power assets.
The privatisation process has been widely acclaimed
as one of the most comprehensive and transparent
in the history of power sector privatisation globally.
In agriculture, the government’s Agriculture
Transformation Agenda is beginning to yield desired
results as government select programmes is gradually
and increasingly transforming the sector from a
developmental project to a self-sustaining business.
Board Changes
Left to right: Tony O. Elumelu, CON, Chairman, Transcorp, Rudi Jagersbacher, President, Hilton World Wide,
Middle East and Africa Region and Valentine Ozigbo, MD/CEO, Transnational Hotels and Tourism Services
Limited during the management agreement ceremony between Transcorp and Hilton Worldwide for the
development of Transcorp Hilton Hotel Ikoyi, Lagos
At our last Annual General Meeting held on 21 June
2013, Dr. Julius Kpaduwa retired from the Board of
the Company. On 11 December 2013, Ms. Angela
Aneke resigned as a Director of the Company and
on 16 December 2013, Mr. Emmanuel N. Nnorom
was appointed to the Board. On behalf of the
staff, management, the Board of Directors and our
shareholders, I would like to thank Dr. Kpaduwa and
Ms. Aneke for their invaluable contributions to the
growth of the Company and wish them success in
their future endeavours.
Significant Achievements in 2013
and Outlook for 2014
Energy
Transcorp Ughelli Power Limited, a subsidiary of
Transcorp on 1 November 2013, officially took
physical ownership of Ughelli Power Plc, the owner
and operator of the 972MW capacity Ughelli Power
Plant following a handover ceremony hosted by the
Federal Government. Following Transcorp’s takeover
of the plant, power output has more than doubled at
the plant from 160MW on handover date to 360MW
currently. Our goal is to increase output at the Plant
to 700MW by December 2014 by embarking on an
extensive rehabilitation programme.
Tony O. Elumelu, CON Chairman Heirs Holdings and Transnational Corporation of Nigeria Plc and Hon.
Emeka Wogu, Honourable Minister for Labour and Productivity during the official handing over ceremony
of Ughelli Power Plc to Transcorp Ughelli Power Limited on Friday November 1, 2013 at Ughelli, Delta State
12
CHAIRMAN’S STATEMENT continued
Our investment in this sector is transformational,
as it will usher in a new area of economic growth
and development in Nigeria and create economic
prosperity for all our stakeholders.
For our oil and gas business, we have put in place a
world class management team and are committed
to developing the synergies between our natural
resources portfolio and our power interests, creating
an integrated energy approach. We expect to begin
production on our existing oil block, OPL 281 before
the end of 2014.
Hospitality
The proposed Transcorp Hilton Ikoyi Lagos
On 18 September 2013, Transcorp signed a
management agreement with Hilton Worldwide for
the management of Transcorp’s proposed Lagos
Hotel, the Transcorp Hilton Lagos. The Transcorp
Hilton Lagos will be a full-service, 350-room, fivestar hotel on Glover Road, Ikoyi, Lagos. During the
year, we commenced the renovation and upgrade
of the Transcorp Hilton, Abuja, Nigeria’s premier
five-star hotel. As well as a dramatic transformation
of its existing facilities, this project will also see the
addition of a 5 000 seat capacity conference centre
and 200 serviced luxury apartments to the hotel.
As part of efforts to expand our hospitality footprint,
we also completed the acquisition of a site in Port
Harcourt for the development of another five-star hotel.
In 2014, we intend to intensify our efforts in advancing
the different construction projects to achieve our
30-month completion target. When these projects are
completed, Transcorp will have the largest number of
hotel rooms owned by any investor in Nigeria.
Agriculture
During the year, Teragro, our juice concentrate
producing subsidiary, fulfilled purchase orders for a
wide variety of small and medium scale customers.
In October 2013, the plant received the ISO 9001: 2008
(Quality Management System) and FSSC 22000: 2005
(Food Safety Management System) certifications,
illustrating that our products and processes meet
the highest global standards. We plan to increase
significantly the size and scope of this business
in 2014.
Valentine Ozigbo, MD/CEO, Transnational Corporation of Nigeria Plc receives the Sales Team of the
Year Hilton Award
13
TRANSCORP
I
ANNuAL REPORT 2013
Conclusion
The past year for Transcorp has been outstanding,
we have launched new businesses and projects
and have expanded existing ones. The fruits of our
efforts have become visible and are rightly being
acknowledged by different stakeholders, including
the investing public. In 2014, we are determined
to surpass the achievements of the past year and
deliver on our vision to create value for you our key
stakeholder by building a conglomerate of successful
businesses.
I would like to express our appreciation to you
our shareholders for being steadfast and loyal
over the years. I would also like to thank the Board,
Management and Staff of the Company for their
untiring efforts in re-positioning the Company.
We look forward to 2014 with a high degree of
confidence, in both our Company and the Nigerian
economy. As Nigeria’s only vehicle for mass
participation in key growth sectors, we feel a special
responsibility in what we do and how we do it; and
we look forward to continuing to reward our stake
holders. Thank you.
Left to right: Oscar Onyema, CEO, Nigerian Stock Exchange, Tony O. Elumelu, CON, Chairman
Transcorp, Obinna Ufudo, President/CEO, Transcorp and Adeoye Fadeyibi, MD/CEO, Transcorp
Ughelli Power Limited during the ‘fact-behind-the-figures’ presentation at the NSE
Chairman, Board of Directors
Left to right: Obinna Ufudo, President CEO, Transcorp, Jeff Immelt, Chairman, General Electric, Philip
Oduzua, MD/CEO, UBA Plc, Tony O. Elumelu, CON, Chairman, Transcorp and Adeoye Fadeyibi, MD/
CEO, TUPL during the agreement signing ceremony between Transcorp and General Electric
14
CHIEF EXECuTIVE OFFICER’S REPORT
Distinguished Shareholders,
In 2011, we set out a comprehensive agenda to
restructure Transcorp for accelerated growth and
maximum profitability. This included an aggressive
strategy aimed at diversifying our businesses and
expanding our income streams. Today, I am pleased
to announce that we have made good progress and
our 2013 full year audited results underscore our
overall performance.
Operating Results and Financial
Performance Review
Our Annual Report and Accounts prepared in
conformity with International Financial Reporting
Standards present the operating results of the group
and subsidiaries for the year ended 31 December
2013. In line with our foundation of sound corporate
governance and our adherence to regulatory standards,
IFRS has provided a uniform and consistent basis of
preparing our financial information for comparison and
greater transparency group-wide.
Transcorp achieved very strong financial and operating results in FY
2013 as evidenced by growth in various key performance indicators for
the Company as well as consolidated results of its subsidiaries (“the Group”).
Revenue
Profit
FY 2013 gross earnings of N25.23 billion for the Group represents
a growth of 60% over prior year gross earnings of N15.81 billion.
The Company’s gross earnings increased in 2013 by 41% from
N4.80 billion in 2012 to N6.78 billion. Strong revenue growth in
2013 was achieved on the back of improved occupancy levels
at Transcorp Hilton Abuja, energy sales from newly acquired
Ughelli Power Plant and fair value gains from listed equities
investments.
The impressive revenue growth combined with tight expense
management translated into significant profits. The Group
2013 PBT of N9.03 billion was 129% higher than 2012 PBT of
N3.95 billion. The Company’s 2013 PBT of N3.19 billion increased
by 11% from N2.88 billion in 2012.
N’bn
N’bn
30
10
25
8
20
6
15
4
10
2
5
0
2012
Group
15
TRANSCORP
I
2013
2012
Company
ANNuAL REPORT 2013
2013
0
2012
Group
2013
Company
2012
2013
Assets
In 2013, the Group’s total assets grew by 50% from N99.5 billion
to N149.4 billion. The total assets of the company increased to
N49.0 billion in 2013 from N38.65 billion in the prior year. The
major drivers of this growth included the funds raised through
the rights issue undertaken during the year and the significant
investments in Transcorp Ughelli.
N’bn
150
120
90
60
30
0
2012
Group
2013
2012
2013
Company
Capital Restructuring and Rights Issue
On 30 January 2013, we held a court-ordered meeting where
you voted unanimously for the adoption of a Scheme of
Arrangement to ratify the Company’s share premium account
of N27.07 billion. You will recall that part of this arrangement
included offsetting the negative balance on the Company’s
revenue reserve accounts as at 31 December 2011 of
N25.77 billion.
Further, in June 2013, we recorded a successful Rights Issue
of 12 906 999 142 ordinary shares oF 50 kobo each. The Rights
recorded a gross proceed of N12.91 billion and an
oversubscription level by 32%.
These two events represent significant milestones in our
corporate history. While the Rights Issue provided us with
financial muscle to undertake new investments and improve
profitability, the Scheme of Arrangements enabled us to rest the
legacy issues that impaired our ability to pay dividends. We are
quite excited as a company to have arrived at this point.
Key Business Achievements
Energy
Our key investment in the Nigerian power profit sector has
provided the right platform needed to stimulate growth.
We successfully acquired Ughelli Power Plc, the operator of the
972MW Ughelli Power Plant. Remarkably, within two months,
the plant’s generating capacity of 160MW increased from to
360MW. Our long term plan is to increase the plant’s output to
3 000MW within the next three to five years.
Our intent to play a leading role in the Nigerian power sector
goes beyond power generation. We envision an energy city –
with the Ughelli plant as a hub – that will catalyse industrial
development in the country. The planned energy city will
comprise fertiliser and petrochemical plants among other
heavy industries. We also plan to positively impact our host
communities through effective community relations initiatives
such as providing educational, health and sporting facilities of
global standards.
We have stepped up our engagement with the Ministry
of Petroleum and regulatory bodies to complete the
documentation and pre-drilling activities for our oil block OPL
281. We are further exploring opportunities for the acquisition
of oil and gas assets available from ongoing divestiture of
onshore assets by IOC’s and sale of marginal fields by the federal
government.
Hospitality
Our hospitality business continues to make excellent progress
as we focus on developing more hotels as well as expanding
and renovating existing ones.
Transcorp Hilton Hotel Abuja received the “Nigeria’s Leading
Hotel” in 2013 award by World Travel Awards. The award-winning
hotel also secured hosting rights for the World Economic Forum
on Africa in 2014.
In line with our hospitality expansion plans, we executed
a Management Agreement with Hilton Worldwide for the
development of a 350-room five-star Transcorp Hilton in
Ikoyi, Lagos. We plan to break ground shortly while targeting
completion within the next two to three years. Furthermore,
we recently acquired a prime location in Port Harcourt, Rivers
State for the development of another 350-room five-star Hotel.
We are now negotiating with Hilton Worldwide for the predevelopment works and expect to commence construction by
third quarter of 2014.
In line with our commitment to continuously improving our
customer service delivery, we have commenced the renovation
and upgrade of Transcorp Hilton Hotel Abuja. Part of this project
includes the construction of a 5 000 seat capacity conference
facility and 200 luxury apartments within the hotel premises.
16
CHIEF EXECuTIVE OFFICER’S REPORT continued
In addition, the hotel is developing operational excellence with
increased focus on high-impact projects that will translate to
superior guest experience. It has also embarked on trainings
as well as service strategy and visioning sessions to equip staff
with the right skills and attitude for world class customer service
delivery.
During the year, we successfully resolved the dispute over
the ownership of the 51% stake in THTSL (formerly NIRMSCO
Properties Limited), owners of the Transcorp Hilton, Abuja.
Transcorp Hotels Calabar has continued to provide world class
hospitality to all our discerning guests. We have continued the
extensive renovation and upgrade of the hotel we re-launched
two years ago. The hotel caters to the needs of leisure travellers
and is the preferred centre of choice for several high profile
events in Calabar.
Agriculture
Our agribusiness subsidiary, Teragro Commodities Limited,
was successfully accredited by the Global Food Safety Initiative
(GFSI) and was awarded two food safety certifications: ISO 9001:
2008 and FSSC 22000: 2005. These certificates underscore our
commitment to global safety standards and clearly position
Teragro as the leading fruit juice concentrate producer in
Nigeria.
We launched an informative and interactive Teragro website
– www.teragro-ng.com – a platform that provides pertinent
information on Teragro’s essence and guides our prospective
and current customers on our methodology, and product
specifications in line with international standards.
In the medium term, we are backward integrating with a
planned development of our own mango and orange farms to
significantly enhance the scope of our business. We believe that
we will build capacity to respond to the increasing demand for
our fruit juice concentrates and purees.
Outlook
2014 promises to be very bright as we are well on track to again
deliver on all our set objectives. Our key target is to grow Group
profits to over N25 billion during the year. We intend to achieve
this by the continued diversification and deepening of our
existing businesses.
17
TRANSCORP
I
ANNuAL REPORT 2013
In our power business, we will focus on concluding the
rehabilitation of a number of identified turbines in order to
improve generating output at the Ughelli plant to 700MW. Our
oil and gas business will witness a speedy take-off as we expect
to finalise negotiations of the production sharing contract
of OPL281 with the Department of Petroleum Resources. We
will embark on aggressive drilling campaign for commercial
production before the end of 2014.
The focal point of our hospitality business will be to commence
construction of our proposed Transcorp Hilton Ikoyi, Lagos. We
will also target the completion of the project development
activities for the planned Transcorp Hilton Port Harcourt. We
expect to conclude the renovation works at Transcorp Hilton,
Abuja by the end of the 2015 financial year.
In our agriculture space, we plan to close a number of commercial
negotiations for our fruit juice concentrates. Subsequently,
we will exploit backward integration opportunities through
cultivation of a 5 000 hectares farm to improve supply of raw
materials to the factory.
Closing
In closing, I would like to thank the Board of Directors, the
management and staff for their commitment and support.
We believe that Transcorp is well positioned to become the
foremost conglomerate in Nigeria, driving positive change and
growth in its defined business sectors.
Thank you.
Obinna Ufudo
Chief Executive Officer
CORPORATE GOVERNANCE REPORT
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 31 December 2013, Transcorp complied with the provisions of the Code
of Corporate Governance issued by Securities and 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 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 and Governance Committee (NGC) and Finance and 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 framework 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 organisation structure.
2. Board of Directors
2.1 General
The Board of Directors consists of eight members made up of one executive and seven 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 inclusive of emergency board meetings. The details of Directors’
attendance of Board meetings are disclosed on page 21 of the Annual Report. The Board establishes formal delegation 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. Dr. Julius Kpaduwa (representing Nashville Capital
Partners Limited) retired at the last Annual General Meeting held on 21 June 2013 while Ms. Angela Aneke resigned from the Board on
11 December 2013. Mr. Emmanuel N. Nnorom was appointed to the Board on 16 December 2013.
Consequent upon the foregoing, the Board of Directors of the Company comprised the following as at the end of the year.
18
CORPORATE GOVERNANCE REPORT continued
Mr. Tony 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 organisation 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.
Mr. Obinna Ufudo
President/CEO
Appointed: 2011
Mr. Obinna Ufudo holds an M.Sc. degree in International Securities, Investment and Banking from the University of Reading, United
Kingdom as a British Chevening Scholar. He also holds an Executive Master of Business Administration (EMBA) from the IESE Business
School, University of Navarra, Barcelona, Spain, and a B.Sc in Finance from Enugu State University of Technology, Enugu, Nigeria.
Mr. Ufudo has held senior level positions in securities trading, investment management and financial advisory firms. Prior to his
appointment as President/CEO of Transcorp, he was the Chief Operating Officer of the Heirs Holdings Group, where he optimised dayto-day operations of the Group and supervised its various subsidiaries.
Mr. Ufudo is an Associate Member of the Chartered Institute of Bankers of Nigeria and is an International Fixed Income and Derivatives
Certified Professional.
Non-executive Director
Appointed: 2007
Olorogun O’tega Emerhor holds a First Class Honours Degree 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 currently the Group CEO of Standard Alliance Group; Chairman, THTSL, 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, GTBank. He was the Managing Director of erstwhile Crystal Bank,
now part of UBA.
He is on the board of several companies and has received numerous prestigious awards.
19
TRANSCORP
I
ANNuAL REPORT 2013
Alhaji Mohammed Nasir Umar
Appointed: 2008
A member of the Finance and Investment Committee of the Board, Alhaji Mohammed Nasir Umar is a graduate of Ahmadu Bello
University, Zaria. He holds an MSc. in Land Surveys and is a registered surveyor with the Surveyors Council of Nigeria. He is also a fellow
of the Nigerian Institute of Surveyors.
Alhaji Umar started his career with Sokoto Rima River Basin Development Authority in 1977. He has vast and varied experience in
lands and survey matters spanning over a period of 32 years. He has held many important position and responsibilities which include
Director of Planning and Survey of the Federal Capital Development Authority (FCDA), Chairman, Resettlement Task Force of the FCDA
and many others.
Alhaji Umar is presently, the Chairman/CEO of Em-N Surveys and Engineering.
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, Ogbomoso. 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 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 of Wema Bank. Mr. Fasola was until recently the Regional Executive
in charge of South West Business Group in Wema Bank Plc.
Dr. 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 and 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.
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 and 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.
20
Mr. Edozie is the Group Deputy Managing Director of BGL Plc overseeing strategic business platforms 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 authorised 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.
Emmanuel N. Nnorom
Non executive Director
Appointed: 2013
Emmanuel N. Nnorom is the President/COO of Heirs Holdings. Prior to joining the Heirs Holdings Group, Emmanuel served as CEO
of UBA Africa, overseeing United Bank of 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 qualified as a 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.
2.3 Board Meeting Attendance
Total number
of meetings
obliged
to attend
Total number
of meetings
attended
Number of
meetings not
attended
Dates of
meetings not
attended
(dd/mm/yy)
5
5
21/2/13, 14/5/13,
20/6/13, 26/6/13,
16/12/13
N/A
N/A
Mr. Obinna Ufudo
5
5
21/2/13, 14/5/13,
20/6/13, 26/6/13,
16/12/13
N/A
N/A
5
3
21/2/13, 20/6/13,
16/12/13
2
14/5/13, 26/6/13
Ms. Angela Aneke (Resigned on
11 December 2013)
4
4
21/2/13, 14/5/13,
20/6/13, 26/6/13,
N/A
N/A
Dr. Julius Kpaduwa (representing
Nashville Capital Partners Ltd)
(Retired on 21 June 2013)
3
2
21/2/13, 20/6/13
1
14/5/13
5
4
21/2/13, 14/5/13,
20/6/13, 26/6/13
1
16/12/13
Mr. Kayode Fasola
5
5
21/2/13, 14/5/13,
20/6/13, 26/6/13,
16/12/13
N/A
N/A
Mr. Stanley Inye Lawson
5
4
21/2/13, 14/5/13,
26/6/13,
16/12/13/
1
20/06/13
Mr. Chibundu Edozie
5
5
21/2/13, 14/5/13,
20/6/13, 26/6/13,
16/12/13
N/A
N/A
Mr. Emmanuel N. Nnorom
(Appointed 16 December 2013)
0
0
N/A
N/A
N/A
Directors
N/A means “Not Applicable”
21
TRANSCORP
I
ANNuAL REPORT 2013
Dates of
meetings
attended
(dd/mm/yy)
2.4 Board Committees and Executive Management Committee
(a) Nominations and Governance Committee (formerly Establishment Committee)
The functions of the Nomination and 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.
•
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:
The Committee comprises:
1. Mr. Emmanuel N. Nnorom
–
Chairman
2. Mr. Kayode Fasola –
Member
3. Mr. Chibundu Edozie
–
Member
The table below shows the frequency of meetings of NGC and members’ attendance:
Total number
of meetings
obliged
to attend
Total number
of meetings
attended
Dates of
meetings
attended
(dd/mm/yy)
Number of
meetings
not attended
Dates of
meetings not
attended
(dd/mm/yy)
Ms. Angela Aneke
(Resigned on 11 Dec 2013)
1
1
25/03/13
N/A
N/A
Mr. Kayode Fasola
1
1
25/03/13
N/A
N/A
Mr. Chibundu Edozie
1
1
25/03/13
N/A
N/A
(Appointed 16 Dec 2013)
0
0
N/A
N/A
N/A
Directors
1
Mr. Emmanuel N. Nnorom was appointed to the Board and its Committees on 16 December 2013 and with effect therefrom, chairs the Committee. He replaced Ms. Angela Aneke as the Chairman.
(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.
•
Provide oversight on financial matters an0d 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.
22
•
Monitor and assess the overall integrity of the financial statements and disclosures of the financial condition and results of the Group.
•
Monitor and evaluate on a regular basis, the qualifications, independence and performance of external and internal auditors and the
financial control departments.
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, 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:
–
Chairman
2. Mr. Obinna Ufudo
–
Member
3. Mr. Kayode Fasola
–
Member
4. Mr. Emmanuel N. Nnorom2
–
Member
5. Alhaji Mohammed Nasir Umar
–
Member
The table below shows the frequency of meetings of FIC and members’ attendance:
Total number
of meetings
obliged
to attend
Total number
of meetings
attended
Dates of
meetings
attended
(dd/mm/yy)
number of
meetings
not attended
Dates of
meetings not
attended
(dd/mm/yy)
Mr. Chibundu Edozie
4
4
11/3/13, 25/3/13,
14/5/13, 30/10/13
N/A
N/A
Mr. Obinna Ufudo
4
4
11/3/13, 25/3/13,
14/5/13, 30/10/13
N/A
N/A
Mr. Kayode Fasola
4
4
11/3/13, 25/3/13,
14/5/13, 30/10/13
N/A
N/A
Mrs. Angela Aneke
(Resigned 11 December 2013)
4
4
11/3/13, 25/3/13,
14/5/13, 30/10/13
N/A
N/A
4
3
11/3/13, 25/3/13,
14/5/13
1
30/10/13
Emmanuel N. Nnorom
0
0
N/A
N/A
N/A
Directors
2
Mr. Emmanuel N. Nnorom was appointed to the Board on 16 December 2013 and replaced Ms. Angela Aneke on the Committee.
(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 3
–
Chairman
2. Alhaji Abu Jimah
–
Member
3. Mr. John Isesele
–
Member
–
Member
–
Member
6. Mr. Emmanuel N. Nnorom 4
–
Member
3
Mr. Matthew Esonanjor was elected to the Committee on 21 June 2013 at the Annual General Meeting. He replaced Chief Sylvanus Ezendu as the substantive Chairman of the Committee
on 30 October 2013, taking over from Alhaji Abu Jimah who was the Acting Chairman.
4
23
TRANSCORP
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ANNuAL REPORT 2013
The table below shows the frequency of meetings of SAC and members’ attendance:
Total number
of meetings
obliged
to attend
Total number
of meetings
attended
Dates of
meetings
attended
(dd/mm/yy)
Number of
meetings
not attended
Dates of
meetings not
attended
(dd/mm/yy)
Chief Sylvanus C. Ezendu 5
0
0
N/A
N/A
N/A
Mr. Matthew Esonanjor
1
1
30/10/13
N/A
N/A
Alhaji Abu Jimah
2
2
14/5/13, 30/10/13
N/A
N/A
Mr. John Umobuarie Isesele
2
2
14/5/13, 30/10/13
N/A
N/A
Mr. Kayode Fasola
2
2
14/5/13, 30/10/13
N/A
N/A
Mr. Chibundu Edozie
2
2
14/5/13, 30/10/13
N/A
N/A
Ms. Angela Aneke
(Resigned 11 December 2013)
2
2
14/5/13, 30/10/13
N/A
N/A
Mr. Emmanuel Nnorom 6
(Appointed 16 December 2013)
0
0
N/A
N/A
N/A
Committee members
5
Chief Ezendu passed away on 17 March 2013.
6
Executive Management Committee (formerly Executive Management Team)
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.
•
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 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.
•
Recommending to the Board structures and systems through which activities are arranged, defined and coordinated in terms of
specific objectives.
•
Preparation of annual financial plans for the approval of the Board and ensuring the achievement of set objectives.
•
Reviewing and approval of the structure and framework for performance reporting of subsidiary companies.
The Executive Management Committee comprises:
1.President/CEO
2. Chief Financial Officer
3. Director of Resources
4. Head, Strategy and Business Transformation
5. Legal Adviser
6. Commercial Director
7. Chief Internal Auditor
8. Company Secretary
24
DIRECTORS’ 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 2013, to the members of the Company. This report discloses the state of
the Company and the Group.
Incorporation and address
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
•
Transnational Hotels and Tourism Services Limited
•
Transcorp Metropolitan Hotels and Conferencing Limited
•
Ughelli Power Plc
•
Transcorp Ughelli Power Limited
•
Transcorp Staff Share Ownership Trust Company Limited
•
•
Transcorp Properties Limited
•
•
Telecommunication Backbone Development Company Limited (TDBC) (inactive)
•
Transcorp Telecomms Limited (inactive)
•
Transcorp Trading and Logistic Limited (inactive)
•
Transcorp Refining Company Limited (in liquidation)
•
Transcorp Hotels and Leisure Limited (in liquidation)
•
Transcorp Infrastructure Limited (in liquidation)
•
Transcorp Commodities Limited (in liquidation)
•
Transcorp Hilton Limited (in liquidation)
•
Allied Commodities Limited (in liquidation)
All the companies above indicated as being in liquidation are currently undergoing the process of voluntary winding up under the
supervision of the court.
Principal activities
The Company’s business is the investment in and operation of portfolio companies in hospitality, energy and agriculture.
The Company has retained subsidiaries and affiliates providing services and sale of goods in these sectors.
25
TRANSCORP
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ANNuAL REPORT 2013
Results
The Company and Group’s detailed results for the year ended 31 December 2013, are set out on page 33 of this report. The summarised
results are presented below:
Group
2013
N’000
Company
2013
N’000
2012
N’000
2012
N’000
Revenue
18 825 278
13 244 845
2 142 000
2 325 697
Gross profit
14 373 743
9 768 281
2 142 000
2 325 697
Profit before tax
9 032 151
3 948 215
3 186 963
2 874 600
Taxation
(2 074 249)
(1 420 467)
(365 951)
(355 423)
Profit from continuing operations
6 957 902
2 527 748
2 821 012
2 539 177
Other comprehensive income
–
182 953
–
–
Total comprehensive income
6 957 902
2 710 701
2 821 012
2 539 177
Owners of the parent
4 029 758
1 224 029
2 821 012
2 539 177
Non controlling interest
2 928 144
1 486 672
–
–
6 957 902
2 710 701
2 821 012
2 539 177
Total comprehensive income attributable to
Dividend
The Directors are recommending the payment of dividend of 5 kobo per share to the Shareholders.
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 presently the Chairman of Heirs Holdings Limited.
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,
were as follows:
Name of Director
Director
Mr. Tony O. Elumelu, CON
Mr. Obinna Ufudo
Percentage
holding %
Number of shares held at 31 December 2013
Direct
1 973 051 468
2 901 973
Indirect
Total
15 085 865 631 17 058 917 099
48 187 370
44.056
51 089 343
0.132
–
221 430 773
221 430 773
0.572
4 106 720
1 012 622 537
1 016 729 257
2.626
Dr. Julius Kpaduwa 7
–
33 333 334
33 333 334
0.086
–
3 735 500
3 735 500
0.010
1 500 000
–
1 500 000
0.004
29 250 000
–
29 250 000
0.076
Mr. Chibundu Edozie
–
10 228 066
10 228 066
0.026
–
–
–
–
16 415 403 211 18 426 213 372
47.588
Ms. Angela Aneke 6
Mr. Kayode Fasola
Total
2 010 810 161
6
Ms. Angela Aneke resigned from the Board on 11 December 2013.
7
Dr. Julius Kpaduwa (representing Nashville Capital Partners Ltd) retired from the Board at the last Annual General Meeting, being 21 June 2013.
26
DIRECTORS’ REPORT continued
Alternate directorship
There was no alternate directorship during the year under review.
Shareholding Analysis
The shareholding structure of the Company as at 31 December 2013 was as follows:
Share Range
Number of
Shareholders
% of
Total
Number of
Holdings
% of
Total
2 425
215 064
60 506
11 120
1 604
137
34
4
0.834
73.932
20.800
3.823
0.551
0.047
0.012
0.001
1 111 928
528 374 951
1 392 678 503
2 675 542 686
3 586 023 174
3 447 491 196
9 658 871 834
17 430 903 153
0.002
1.365
3.597
6.910
9.261
8.903
24.945
45.017
290 894
100.00
38 720 997 425
100.00
1 – 999
1 000 – 9 999
10 000 – 99 999
100 000 – 999 999
1 000 000 – 9 999 999
10 000 000 – 99 999 999
100 000 000 – 999 999 999
1 000 000 000 – 9 999 999 999
Substantial Interest in Shares
As at 31 December 2013, 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.
Fixed Assets
Information relating to changes in the fixed assets of the Company is given in Note 6 to the financial statements.
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.
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 organisations and hospitals.
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 trainings 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.
Donations and Gifts
During the year under review, the Group made donations of N400 million (2012: N100 million) to the National Committee on flood relief
and rehabilitation.
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
7 February 2014
27
TRANSCORP
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ANNuAL REPORT 2013
STATEMENT OF DIRECTORs’ RESPONSIBILITIES
In accordance with the provisions of sections 334 and 335 of the Companies and Allied Matters Act, Cap C20, Laws of the Federation
of Nigeria, 2004 (“CAMA”), the Directors are responsible for the preparation of the financial statements, which give a true and fair view
of the state of affairs of the Group and of the profit or loss for the period ended 31 December 2013, and in so doing they ensure that:
• Proper accounting records are maintained;
•
Applicable accounting policies are adopted and consistently applied;
•
Judgments and estimates made are reasonable and prudent;
•
The going concern basis is used, unless it is inappropriate to presume that the Company will continue in business; and
•
Internal control procedures are instituted which as far as reasonably possible, safeguard the assets of the Group and prevent and
detect fraud and other irregularities.
The Directors accept responsibility for the annual consolidated financial statements, which have been prepared using appropriate
accounting policies supported by reasonable and prudent judgments and estimates in conformity with International Financial Reporting
Standards (IFRS) and the requirements of CAMA.
The Directors are of the opinion that the 2013 consolidated Financial Statements give a true and fair view of the state of the financial
affairs of the Company and Group.
The Directors accept responsibility for the maintenance of accounting records that may be relied upon in the preparation of the financial
statements as well as adequate systems of internal control.
Nothing has come to the attention of the Directors to indicate that the Company and its subsidiaries will not remain going concerns for
at least twelve months from the date of this statement.
Signed on behalf of the directors
Obinna Ufudo
President/CEO Tony O. Elumelu, CON
Chairman
7 February 2014
28
REPORT OF THE AuDIT COMMITTEE
To the Members of Transnational Corporation of Nigeria Plc
In compliance with section 359(6) of the Companies and Allied Matters Act Cap C20 LFN 2004 (“CAMA”), members of the Audit Committee
of Transnational Corporation of Nigeria Plc (“the Company”) hereby report as follows:
• The Audit Committee met in exercise of its statutory responsibilities in accordance with section 359(6) of CAMA;
•
We have examined the auditors’ report including the financial statements for the year ended 31 December 2013;
•
We have also deliberated with the external auditors, reviewed their findings and recommendations and confirm that the auditors’
report for this period is consistent with our review; and
•
We are satisfied that the accounting and reporting policies of the Company are in accordance with legal requirements and meet
ethical standards.
Matthew Esonanjor
Chairman, Audit Committee
7 February 2014
Members of the Audit Committee
1. Mr. Matthew Esonanjor 8
–
Chairman
2. Alhaji Abu Jimah
–
Member
3. Mr. John Isesele
–
Member
–
Member
–
Member
6. Mr. Emmanuel N. Nnorom 9
–
Member
8
Mr. Matthew Esonanjor was elected to the Committee on 21 June 2013 at the Annual General Meeting. He replaced Chief Sylvanus Ezendu as the substantive Chairman of the Committee on
30 October 2013, taking over from Alhaji Abu Jimah who was the protem Chairman.
9
29
Upon the resignation of Ms. Angela Aneke from the Board, Mr. Nnorom replaced her on the Audit Committee.
TRANSCORP
I
ANNuAL REPORT 2013
Report of the independent auditors
30
REPORT OF THE INDEPENDENT AuDITORS continued
31
TRANSCORP
I
ANNuAL REPORT 2013
STATEMENT OF FINANCIAL POSITION
as at 31 December 2013
Group
31 December
2012
31 December
as restated
2013
– note 31
Note
N’000
N’000
Company
1 January
2012
as restated 31 December 31 December
– note 31
2013
2012
N’000
N’000
N’000
Assets
Non-current assets
Intangible assets
Investment property
Investment in subsidiaries
Prepaid lease rental
6
7
8
9
11
88 586 001
31 985 609
1 575 000
–
65 000
122 211 610
48 656 004
24 691 298
1 500 000
–
95 000
74 942 302
49 161 996
24 676 741
1 467 000
–
120 000
75 425 737
77 960
5 078 782
1 575 000
29 535 120
–
36 266 862
48 485
5 080 258
1 500 000
21 288 723
–
27 917 466
Current assets
Inventories
Prepaid lease rental
12
13
11
14
15
1 431 175
8 445 628
30 000
8 150 771
9 195 229
27 252 803
149 464 413
706 834
2 633 425
30 000
15 695 241
5 549 863
24 615 363
99 557 665
784 966
2 170 858
30 000
110 826
6 903 161
9 999 811
85 425 548
–
4 644 178
–
8 150 771
17 680
12 812 629
49 079 491
–
3 139 255
–
7 472 139
117 860
10 729 254
38 646 720
Liabilities
Current liabilities
Current income tax liabilities
Borrowings
Advance deposits
16
17
18
20
6 283 466
3 921 635
3 656 983
1 875 000
15 737 084
6 597 984
4 107 977
3 764 127
2 126 258
16 596 346
3 629 596
4 572 027
259 111
1 935 551
10 396 285
4 107 816
216 123
762 665
1 875 000
6 961 604
5 539 376
228 931
3 264 170
1 876 799
10 909 276
Non-current liabilities
Borrowings
Deferred tax
Retirement benefit obligation
18
10
21
39 452 293
7 598 529
–
47 050 822
62 787 906
10 003 427
7 279 642
1 581 606
18 864 675
35 461 021
2 104 965
7 647 269
1 656 588
11 408 822
21 805 107
9 198 952
–
–
9 198 952
16 160 556
10 003 427
–
–
10 003 427
20 912 703
29
29
29
19 360 499
7 213 368
(25 784)
31 678 187
58 226 270
28 450 237
86 676 507
149 464 413
12 906 999
27 071 664
–
1 879 727
41 858 390
22 238 254
64 096 644
99 557 665
12 906 999
27 071 664
–
338 497
40 317 160
23 303 281
63 620 441
85 425 548
19 360 499
7 213 368
–
6 345 068
32 918 935
–
32 918 935
49 079 491
12 906 999
27 071 664
–
(22 244 646)
17 734 017
–
17 734 017
38 646 720
Total assets
Total liabilities
Equity
Ordinary share capital
Share premium
Treasury shares
Retained earnings
Equity attributable to owners of the parent
Total equity
Net equity and liabilities
30
The notes on pages 36 to 73 are an integral part of these financial statements.
The financial statements on pages 32 to 35 were approved and authorised for issue by the Board of Directors on 7 February 2014
and were signed on its behalf by
Tony O. Elumelu CON
Chairman, Board of Directors
FRC/2013/CIBN/00000002590
Ibikunle Orlola
Obinna Ufudo
Chief Finance Officer
President, Chief Executive Officer
FRC/2013/ICAN/00000004372FRC/2013/CIBN/00000002585
32
STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2013
Note
Revenue
22
Cost of sales
23
Gross profit
25
24
Operating profit
Group
31 December
31 December
2013
2012
N’000
N’000
18 825 278
13 244 845
Company
31 December
31 December
2013
2012
N’000
N’000
2 142 000
2 325 697
(4 451 535)
(3 476 564)
–
–
14 373 743
9 768 281
2 142 000
2 325 697
(9 213 184)
(7 522 739)
(2 274 757)
(1 081 343)
5 089 950
1 519 002
4 032 287
2 028 286
10 250 509
3 764 544
3 899 530
3 272 640
Finance income
27
1 313 513
1 043 917
603 905
449 951
Finance cost
27
(2 531 871)
(860 246)
(1 316 472)
(847 991)
Net finance (cost)/income
(1 218 358)
183 671
(712 567)
(398 040)
Profit before taxation
9 032 151
3 948 215
3 186 963
2 874 600
(2 074 249)
(1 420 467)
(365 951)
(335 423)
6 957 902
2 527 748
2 821 012
2 539 177
Taxation
17
Profit for the year
Profit attributable to:
4 029 758
1 130 724
2 821 012
2 539 177
2 928 144
1 397 024
–
–
6 957 902
2 527 748
2 821 012
2 539 177
Other comprehensive income:
Items that will not be reclassified to profit
or loss
Actuarial gains
21
–
261 363
–
–
Tax charge on actuarial gains
10
–
(78 410)
–
–
Other comprehensive income for the year,
net of tax
–
182 953
–
–
Total comprehensive income for the year
6 957 902
2 710 701
2 821 012
2 539 177
4 029 758
1 224 029
2 821 012
2 539 177
Attributable to:
2 928 144
1 486 672
–
–
Total comprehensive income for the year
6 957 902
2 710 701
2 821 012
2 539 177
Basic EPS (kobo)
28
12.17
4.04
8.52
9.08
Diluted EPS (kobo)
28
12.17
4.04
8.52
9.08
The results shown above relate to continuing operations.
33
TRANSCORP
I
ANNuAL REPORT 2013
statement of changes in equity
Group
Balance at January 2012
Prior period adjustments (Note 31)
1 January 2012 as restated
Attributable to owners of the parent
Share
capital
N’000
Share
premium
N’000
12 906 999
–
Total
controlling
interest
N’000
Noncontrolling
interest
N’000
Treasury
shares
N’000
Retained
earnings
N’000
27 071 664
–
(11 218 968)
28 759 695
12 199 049
40 958 744
–
–
11 557 465
11 557 465
11 104 232
22 661 697
Total
equity
N’000
12 906 999
27 071 664
–
338 497
40 317 160
23 303 281
63 620 441
Profit for the year
–
–
–
1 130 724
1 130 724
1 397 024
2 527 748
for the year
–
–
–
93 305
93 305
89 648
182 953
Dividend paid
–
–
–
–
–
(2 234 498)
(2 234 498)
Sale of interest to non-controlling
interest
–
–
–
317 201
317 201
(317 201)
–
Balance at 31 December 2012
12 906 999
27 071 664
–
1 879 727
41 858 390
22 238 254
64 096 644
Balance at 1 January 2013
12 906 999
27 071 664
–
1 879 727
41 858 390
22 238 254
64 096 644
– (25 768 702)
–
25 768 702
–
–
–
12 363 906
Share capital reconstruction
6 453 500
5 910 406
–
–
12 363 906
–
Profit for the year
–
–
–
4 029 758
4 029 758
2 928 144
6 957 902
Dividend paid
–
–
–
–
–
(2 058 000)
(2 058 000)
Rights issue
Acquisition of treasury shares
–
–
(25 784)
–
(25 784)
–
(25 784)
Increase in subsidiary investment
–
–
–
–
–
5 341 839
5 341 839
19 360 499
7 213 368
(25 784) 31 678 187
58 226 270
28 450 237
86 676 507
Share
capital
N’000
Share
premium
N’000
Retained
earnings
N’000
Total
N’000
12 906 999
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
Company
Balance at 1 January 2013
Share capital reconstruction
Rights issue
Profit for the year
34
STATEMENTS OF CASH FLOWS
Note
Group
2013
N’000
2012
N’000
Company
2013
N’000
2012
N’000
Cash flows from operating activities
Cash (used in)/generated from operations
32
VAT paid
Tax paid
17
Net cash (used in)/generated from
operating activities
(324 796)
6 628 043
(2 097 626)
1 080 379
(483 229)
(517 728)
–
–
(1 727 504)
(2 097 983)
(164 559)
(109)
(2 535 529)
4 012 332
(2 262 185)
1 080 270
1 313 513
1 043 917
603 905
449 951
–
(1 500)
–
(34 535)
3 104
23 721
24
17 401
Cash flows from investing activities
Interest received
27
Oil Prospecting License
Proceeds from sale of property plant
and equipment
32
–
(1 102 532)
–
(1 102 532)
10 781 529
(3 238 963)
2 558 428
(3 038 363)
Investment in treasury bills
–
(3 444 738)
–
–
Purchase of government backed
asset notes
–
(6 318 716)
–
(1 740 952)
Advance payment received for OPL
–
190 707
–
179
Purchase of equity securities
Fixed income investment
Proceeds from sale of subsidiary
Investment in subsidiary
–
–
–
1 661 320
5 341 839
–
(8 246 397)
(7 312 000)
(525 934)
(787 175)
(54 666)
(47 885)
(48 850 000)
–
–
–
–
(35 758)
–
(2 723)
(31 935 949)
(13 671 037)
(5 138 706)
(11 150 139)
Proceeds from borrowings
46 927 292
17 032 789
13 828 397
16 532 831
Repayments of borrowings
(17 584 853)
(5 629 311)
(17 584 853)
(5 629 310)
(2 058 000)
(2 234 498)
–
–
12 363 906
–
12 363 906
–
(2 531 871)
(860 246)
(1 316 472)
(847 991)
Net cash flow from financing activities
37 116 474
8 308 734
7 290 978
10 055 530
Net increase/(decrease) in cash,
cash equivalents and bank overdrafts
2 644 996
(1 349 971)
(109 913)
(14 339)
5 549 863
6 903 161
117 860
135 526
Foreign exchange gain/(loss) on cash and
cash equivalents
1 000 370
(3 327)
9 733
(3 327)
Cash, cash equivalents and bank
overdrafts at the end of the year
9 195 229
5 549 863
17 680
117 860
Purchase of property, plant and equipment
Acquisition of subsidiary
Purchase of computer software
Net cash used in investing activities
Cash flows from financing activities
Dividend paid to non-controlling interest
Proceeds from rights issue
Interest payment
27
Cash, cash equivalents and bank
overdrafts at the beginning of the year
15
35
TRANSCORP
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ANNuAL REPORT 2013
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 Staff Share Ownership Trust Company Limited
•
•
Telecommunication Backbone Development Company Limited (TDBC) (inactive)
•
Transcorp Telecomms Limited (inactive)
•
Transcorp Trading and Logistic Limited (inactive)
•
Transcorp Refining Company Limited (in liquidation)
•
Transcorp Hotels and Leisure Limited (in liquidation)
•
Transcorp Infrastructure Limited (in liquidation)
•
Transcorp Commodities Limited (in liquidation)
•
Transcorp Hilton Limited (in liquidation)
•
Allied Commodities Limited (in liquidation)
•
Ughelli Power Plc
The Company’s business is the investment in and operation of portfolio companies in the hospitality, energy and agro-allied 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
2.1 Basis of preparation
The consolidated financial statements have been prepared in compliance 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 judgement in the process of applying the Group’s accounting policies. The areas
involving a higher degree of judgement 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
36
NOTES TO THE FINANCIAL STATEMENTS continued
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 amount, event or actions, actual results ultimately may differ
from those estimates.
The financial statements have been prepared on a historical cost basis except for the fair value basis applied to certain
property plant and equipment, intangible assets, investment property and equity investments. The financial statements are
presented in Naira being the functional currency of the primary economic environment in which the Company operates.
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
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 2013 and have a material impact on the Group.
The IAS 1, ‘Financial statement presentation’:
Amendment to IAS 19, ‘Employee benefits’ Published June 2011.
IFRS 10, ‘Consolidated financial statements’. Published May 2011.
IFRS 12, ‘Disclosure of interest in other entities’. Published May 2011.
Amendments to IFRS 10, 11 and 12 on transition guidance. Published July 2012.
IFRS 13, ‘Fair value measurement.’ Published May 2011.
IAS 27 (revised 2011) ‘Separate financial statements’. Published May 2011.
Amendment to IAS 32, ‘Financial instruments: Presentation’, on offsetting financial assets and financial liabilities.
Published December 2011.
2.2
Consolidation
(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.
37
TRANSCORP
I
ANNuAL REPORT 2013
If the business combination is achieved in stages, the acquisition date carrying value of the acquiree’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
acquisition-date 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.
(d)Associates
Associates are all entities over which the Group has significant influence but not control, generally accompanying
a shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for at cost in
the separate financial statements of Transcorp. In the consolidated financial statements, associates are accounted
for using the equity method of accounting. Under the equity method, the investment is initially recognised
at cost, and the carrying amount is increased or decreased to recognise the investor’s share of the profit or loss
of the investee after the date of acquisition. The Group’s investment in associates includes goodwill identified
on acquisition. If the ownership interest in an associate is reduced but significant influence is retained, only a
proportionate share of the amounts previously recognised in other comprehensive income is reclassified to profit
or loss where appropriate. The Group’s share of post-acquisition profit or loss is recognised in the income statement,
and its share of post-acquisition movements in other comprehensive income is recognised in other comprehensive
income with a corresponding adjustment to the carrying amount of the investment.
When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other
unsecured receivables, the Group does not recognise further losses, unless it has incurred legal or constructive
obligations or made payments on behalf of the associate.
38
The Group determines at each reporting date whether there is any objective evidence that the investment in the
associate is impaired. If this is the case, the Group calculates the amount of impairment as the difference between
the recoverable amount of the associate and its carrying value and recognises the amount adjacent to ‘share
of profit/(loss) of associates in the income statement.
(e)
Common control transactions
The Group applies predecessor values method in accounting for business combination under common control.
The financial statements are prepared using predecessor book values, i.e. the book values of the net assets of the
acquiree Company in the consolidated accounts of the Group before the transaction, without any step up to fair
value. The difference between any consideration given and the aggregate book value of the assets and liabilities
(as of the date of the transaction) of the acquired entity is recorded as an adjustment to equity. This is recorded in
retained earnings. No additional goodwill is created by the transaction.
2.3
Segment 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.
2.4
Foreign 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)
2.5
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.
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:
39
TRANSCORP
•
Leasehold buildings
5%
•
Plant and machinery – Turbines
2%
•
Plant and machinery – Others
10%
•
Furniture and fittings
20%
•
Office equipment
10%
•
Motor vehicles
25%
I
ANNuAL REPORT 2013
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 recognised 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 derecognised when replaced.
Residual values, method of amortisation 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 its 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.
2.6 Intangible 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 an expense 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
employee costs and an appropriate portion of relevant overheads.
Other development expenditures that do not meet these criteria are recognised as an expense 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.
40
(c)
Oil Prospecting License
The Group accounts for expenditures on the Oil Prospecting License having regard to the requirements of
IFRS 6 – Exploration for and Evaluation of Mineral Resources. Expenditures related to the oil prospecting license are
capitalised at cost. Such expenditures include costs of acquisition of License, geological and geophysical surveys
and directly attributable overheads and administrative expenses. General prospecting or evaluation costs incurred
prior to having obtained the legal rights to explore an area are expensed directly to the income statements as they
are incurred, if they do not meet the capitalisation criteria as specified in the IFRS framework.
The capitalised costs are not depleted but are carried forward until technical feasibility and commercial viability
of extracting oil is considered to be determined. This is when proven and/or probable reserves are determined to
exist. A review of the exploration license or field is carried out, at least annually, to determine whether proven and/
or probable reserves have been discovered. Upon determination of proven and/or probable reserves, exploration
and evaluation assets attributable to those reserves are tested for impairment and then are transferred to property
plant and equipment as oil and gas assets.
2.7
Investment 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.
41
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
Financial assets and liabilities are recognised when the Group becomes a party to the contractual provisions of the
instrument. Financial assets are derecognised when the rights to receive cash flows from the assets have expired or have
been transferred and the Group has transferred substantially all risks and rewards of ownership. Financial liabilities are
derecognised when the obligation specified in the contract is discharged, cancelled or expires.
TRANSCORP
I
ANNuAL REPORT 2013
2.9.1Classification
The directors 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.
(c)
Available-for-sale investments
Available-for-sale financial assets are non-derivatives that are either designated in this category or not
classified in any of the other categories. They are included in non-current assets unless the investment
matures or directors intends to dispose of it within 12 months of the end of the reporting period.
(d) Held-to-maturity investments
Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and
fixed maturities that the directors have the positive intention and ability to hold to maturity, other than:
(i) those that the Group upon initial recognition designates as at fair value through profit or loss;
(ii) those that the Group designates as available-for-sale; and
(iii) those that meet the definition of loans and receivables.
(e)
Financial liabilities at amortised cost
Financial liabilities at amortised 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 recognised 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 realised 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 initially recognised at the amount expected to be received, less, when material,
a discount to reduce the loans and receivables to fair value. Subsequently, loans and receivables are
measured at amortised cost using the effective interest method less a provision for impairment.
(c) Available-for-sale investments
Available-for-sale investments are recognised initially at fair value plus transaction costs and are subsequently
carried at fair value. Gains or losses arising from remeasurement are recognised in other comprehensive
income except for exchange gains and losses on the translation of debt securities, which are recognised
in the consolidated statement of income. When an available-for-sale investment is sold or impaired,
the accumulated gains or losses are moved from accumulated other comprehensive income to the income
statement. Available-for-sale investments are classified as non-current, unless an investment matures within
twelve months, or the directors expects to dispose of it within twelve months.
42
(d)
Held-to-maturity investments
Held-to-maturity investments are initially recognised at fair value including direct and incremental
transaction costs and measured subsequently at amortised cost, using the effective interest method.
(e)
Financial liabilities at amortised cost
Trade payables are initially recognised at the amount required to be paid, less, when material, a discount
to reduce the payables to fair value. Subsequently, trade payables are measured at amortised cost using
the effective interest method. Bank debt and long-term debt are recognised initially at fair value, net of
any transaction costs incurred, and subsequently at amortised cost using the effective interest method.
These are classified as current liabilities if payment is due within twelve months. Otherwise, they are
presented as non-current liabilities.
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.
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.
The Group first assesses whether objective evidence of impairment exists.
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-tomaturity 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.
(b)
43
TRANSCORP
I
Assets classified as available for sale
The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset
or a Group of financial assets is impaired. For debt securities, the Group uses the criteria referred to in (a) above.
In the case of equity investments classified as available for sale, a significant or prolonged decline in the fair value of
the security below its cost is also evidence that the assets are impaired. If any such evidence exists for available-forsale financial assets, the cumulative loss – measured as the difference between the acquisition cost and the current
fair value, less any impairment loss on that financial asset previously recognised in profit or loss – is removed from
equity and recognised in profit or loss. Impairment losses recognised in the consolidated income statement on
ANNuAL REPORT 2013
equity instruments are not reversed through the consolidated income statement. If, in a subsequent period, the fair
value of a debt instrument classified as available for sale increases and the increase can be objectively related to an
event occurring after the impairment loss was recognised in profit or loss, the impairment loss is reversed through
the consolidated income statement.
2.12Inventories
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 direct 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 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
Cash and cash equivalents include 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.
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.
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 tax
The tax 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.
44
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.
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)
Gratuity scheme
Some subsidiaries operate an unfunded defined benefit gratuity scheme. The level of benefit provided is based on
the length of service and earnings of the person entitled.
The cost of defined benefit plans is determined using the projected unit credit method. The related pension liability
recognised in the statement of financial position is the present value of the defined benefit obligation at the end
of the reporting period less the fair value of plan assets.
Actuarial valuations for defined benefit plans are carried out annually. The discount rate applied in arriving at
the present value of the pension liability represents the yield on high quality corporate bonds denominated in
the currency in which the benefits will be paid, and that have terms to maturity approximating the terms of the
related pension liability.
Actuarial gains and losses are recognised in full in the period in which they occur, in other comprehensive income.
Current service cost, the recognised element of any past service cost and the interest expense arising on the
pension liability are included in the same line items in the income statement as the related compensation cost.
45
TRANSCORP
(b)
Defined contribution scheme
The Group operates a defined contributory 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.
(c)
Profit-sharing and bonus plans
The Group recognises a liability and an expense for bonuses and profit-sharing, based on a formula that takes
into consideration the profit attributable to the shareholders after certain adjustments. The Group recognises
a provision where contractually obliged or where there is a past practice that has created a constructive obligation.
I
ANNuAL REPORT 2013
2.20 Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable 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. Income from investments is recognised when it is earned. Income is earned as follows:
(i)
(ii) Dividends are earned in the profit and loss account on the date the Company’s right to receive payment is
established; and
Interest earned on cash investments in money market instruments is recognised in the profit and loss account as
it accrues evenly over the period of the investment.
Recognition of revenue for goods and services 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.
•
The Group does not retain effective control over goods sold.
•
The amount of revenue can be reliably measured.
•
It is possible that the economic benefits associated with the transaction will flow to the Company.
•
The costs incurred in respect of the sale can be measured reliably.
For goods and services, this implies when the goods have been delivered to the customer and when the service has been
performed.
The 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 long-term 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.
46
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.
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
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 programme seeks to minimise 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. 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 directors’ approach to managing foreign exchange risk is to hold foreign currency bank accounts which
act as a natural hedge for these transactions.
At 31 December 2013, if the Naira had weakened/strengthened by 10% against the US dollar with all
other variables held constant, post-tax profit for the year of the Group would have decreased or increased
by N89.3 million (Company N0.75 million) mainly as a result of foreign exchange gains/losses on translation
of US dollar-denominated bank balances.
(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.
If the market price of investments in equity securities had increased by 5% at the reporting date profit of the
Group and the Company would have increased by N201.14 million (2012: N94.25 million) after taxes.
(iii)
47
TRANSCORP
I
Interest rate risk
The Group’s interest rate risk arises from short-term and long-term borrowings. Borrowings are issued at
fixed rates and 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.
ANNuAL REPORT 2013
(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 obliger before making investments in debt securities.
Investments are only made when such analysis are deemed satisfactory.
The credit rating for debt securities held are highlighted below:
Credit rating by counter party
Group
Company
N’000
N’000
BB+
BB+
3 630 763
3 630 763
3 630 763
3 630 763
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 31 December 2012, trade receivables of
N4.5 billion (2012: N230 million) were fully performing, N1.9 billion (2012: N825 million) were past due but not
impaired and N140 million (2012: N531 million) were impaired. The aging analysis of the latter two categories
of receivables is as follows:
Group
Past due but not impaired
Up to 3 months
3 to 6 months
Over 6 months
Impaired
2013
N’000
2012
N’000
1 964 903
824 689
570 104
564 104
192 474
80 144
1 202 325
180 441
139 567
530 947
Up to 3 months
38 600
28 394
3 to 6 months
42 646
273 057
Over 6 months
58 321
229 496
48
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
2013
N’000
Receivable from related party
New customers
(less than 6 months)
Existing customers
(more than 6 months)
Customers with no history
of default
Existing customers with some
past defaults which were fully
recovered
Total unimpaired trade
receivables
Company
2013
N’000
2012
N’000
2012
N’000
–
–
2 574 895
2 292 092
3 460 614
6 249
–
–
1 038 284
24 420
–
–
4 498 898
30 669
2 574 895
2 292 092
13 275
199 329
–
–
4 512 173
229 998
2 574 895
2 292 092
Concentration of credit risk is determined by the percentage of trade receivable due form 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 years ended 31 December 2013 and 2012, the Group has
no significant concentration of credit risk.
(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 abovementioned 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. There is concentration risk in this regard as United Bank for Africa Plc is the major lender
to the Group.
Group
At 31 December 2013
TRANSCORP
I
Between
6 months
and 1 year
N’000
Between 1
and 2 years
N’000
Between 2
and 5 years
N’000
Over 5 years
N’000
Accruals and other
creditors
Borrowings
750 807
–
–
–
–
5 182 659
2 073 570
–
1 583 413
–
9 107 145
–
16 881 303
–
13 463 845
At 31 December 2012
Less than
6 months
N’000
Between
6 months
and 1 year
N’000
Between 1
and 2 years
N’000
Between 2
and 5 years
N’000
Over 5 years
N’000
3 875 851
–
–
–
–
2 722 133
2 284 848
–
1 890 724
–
1 272 875
–
1 475 951
–
6 843 156
Accruals and other
creditors
Borrowings
49
Less than
6 months
N’000
ANNuAL REPORT 2013
3.2
Company
At 31 December 2013
Less than
6 months
N’000
Between
6 months
and 1 year
N’000
Between 1
and 2 years
N’000
Between 2
and 5 years
N’000
Over 5 years
N’000
Accruals and other
creditors
Due to related parties
Borrowings
144 139
3 963 677
904 295
–
–
1 817 600
–
–
530 242
–
–
197 303
–
–
6 512 177
At 31 December 2012
Less than
6 months
N’000
Between
6 months
and 1 year
N’000
Between 1
and 2 years
N’000
Between 2
and 5 years
N’000
Over 5 years
N’000
Accruals and other
creditors
Due to related parties
Borrowings
575 331
4 964 045
1 784 891
–
–
1 890 724
–
–
1 272 875
–
–
1 475 951
–
–
6 843 156
Capital 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 2013, the Group’s strategy, which was unchanged from 2012, 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 December 2013 and 2012 are as follows:
Group
2013
N’000
Total debt
Less: cash and cash equivalents
Net debt
Total equity
Gearing ratio
2012
N’000
Company
2013
N’000
2012
N’000
43 109 276
(9 195 229)
33 914 047
86 676 507
13 767 554
(5 549 863)
8 217 691
64 096 644
9 961 617
17 680
9 979 297
32 918 935
13 267 597
(117 860)
13 149 737
17 734 017
39%
13%
30%
74%
The increase in the gearing ratio for the Group during 2013 resulted from an increase of over $215 million in loans for the
acquisition of Ughelli Power Plc. Details have been presented in note 18.
3.3 Fair value estimation
The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been
defined as follows:
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).
50
The following table presents the Group’s financial assets and liabilities that are measured at fair value at 31 December 2013:
Assets
Financial assets at fair value through profit or loss
Equity securities at fair value through profit or loss
Level 1
Level 2
Level 3
Total
4 520 008
–
–
4 520 008
There were no transfers between Levels 1 and 2 during the year.
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.
4. Critical accounting estimates and judgements
Critical accounting policies and key sources of estimation uncertainty
The preparation of financial statements requires the directors to use judgement in applying its accounting policies and
estimates and assumptions about the future. Estimates and other judgements 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 judgements 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.
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 4 operating segments.
(i)
Hospitality
The hospitality business is made up of its direct subsidiary Transnational Hotels and Tourism Services Limited (THTSL) and an
indirect subsidiary, Transcorp Metropolitan Hotel and Conferencing Limited (TMHCL) which is fully owned by THTSL.
(ii)
Agriculture
This relates to a subsidiary Teragro Commodities Limited.
(iii) Energy
Two subsidiaries make up the Energy segment namely Transcorp Energy Limited, Transcorp Ughelli Power Limited and an
indirect subsidiary, Ughelli Power Plc which is fully owned by Transcorp Ughelli Power Limited.
(iv) 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.
Total segment assets exclude tax related assets. These are included in the reconciliation to the total statement of financial
position assets.
51
TRANSCORP
I
ANNuAL REPORT 2013
Hospitality
N’000
Agriculture
N’000
Energy
N’000
Corporate
Centre
N’000
Total
N’000
As at 31 December 2013
External revenues
Inter-segment revenue
15 349 794
–
14 871
–
3 460 613
–
–
2 142 000
18 825 278
2 142 000
Reportable segment revenue
15 349 794
14 871
3 460 613
2 142 000
20 967 278
Finance income
Finance cost
Depreciation and amortisation
402 879
–
(1 314 589)
–
(34 998)
(19 570)
291 311
(1 146 231)
(168 960)
619 323
(1 350 642)
(16 536)
1 313 513
(2 531 871)
(1 519 655)
Profit/(loss) before taxation
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
Segmental liabilities
Additions to non-current assets
68 316 832
24 629 357
454 819
400 507
847 494
22 633
92 427 636
33 977 469
40 924 148
49 079 491
16 160 561
54 667
210 224 466
75 614 881
41 456 267
External revenues
Inter-segment revenue
13 243 501
–
1 344
–
–
–
–
2 325 697
13 244 845
2 325 697
Reportable segment revenue
13 243 501
1 344
–
2 325 697
15 570 542
Finance income
Finance cost
Depreciation and amortisation
Taxation
468 965
–
(1 239 194)
4 522 661
(1 085 044)
–
(12 255)
(17 125)
(181 340)
–
125 002
–
–
(393 591)
–
449 950
(847 991)
(36 574)
2 874 600
(335 423)
1 043 917
(860 246)
(1 292 893)
6 822 330
(1 420 467)
Segmental assets
Segmental liabilities
39 217 858
17 446 447
93 141
614 889
8 656 479
7 040 069
38 894 277
21 619 094
86 861 755
46 720 499
652 494
86 797
–
85 142
824 433
Additions to non-current assets
Revenues from transactions with other operating segments relates to dividend income from subsidiary Transnational Hotels
and Tourism Services Limited to the Company, Transnational Corporation of Nigeria Plc.
52
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
2013
2012
N’000
N’000
Revenues
Total revenue for reportable segments
20 967 278
15 570 542
Elimination of inter-segment revenue
(2 142 000)
(2 325 697)
Consolidated revenue
18 825 278
13 244 845
Total profit or loss for reportable segments
11 178 386
6 822 330
Elimination of inter-segment profits
(2 146 235)
(2 874 115)
Consolidated profit before taxation
9 032 151
3 948 215
Profit or loss
Assets
Total assets of reportable segments
210 224 466
86 861 755
Consolidation eliminations
(60 760 053)
12 695 910
Consolidated total assets
149 464 413
99 557 665
Liabilities
Total liabilities of reportable segments
75 614 881
46 720 499
Consolidation eliminations
(12 826 975)
(11 259 478)
Consolidated total liabilities
62 787 906
35 461 021
Entity-wide information
The following is an analysis of the Group’s revenue from continuing operations from its major products and services.
31 December
2013
N’000
31 December
2012
N’000
Rooms
9 741 880
8 354 846
Food and beverage
Analysis of revenue by category:
4 406 057
3 792 116
Shop rental
460 088
439 756
Service charge
356 546
281 618
10 554
8 169
374 669
366 996
14 871
1 344
Capacity charge
1 792 727
–
Energy sent out
1 667 886
–
18 825 278
13 244 845
Laundry
Other operating revenue
Juice concentrate
Total
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% of revenue for all the years
presented.
53
TRANSCORP
I
ANNuAL REPORT 2013
6. Property, plant and equipment
Group
Building
Plant
and
and
Land improvements machinery
N’000
N’000
N’000
Furniture Computer
and and office
fittings equipments
N’000
N’000
Motor
vehicles
N’000
1 664 805
261 752
Capital
Work in
Progress
N’000
Total
N’000
Cost
Balance as at 1 January 2012
11 067 185
11 359 899
Prior period adjustments
(Note 31)
20 291 328
3 665 887
–
–
–
–
–
141 839
373 358
145 125
25 002
101 851
Additions
Disposals
Balance as at 31 December 2012
2 008 360
57 336
– 26 419 337
– 23 957 215
–
787 175
(88 042)
–
–
(5 464)
(30 766)
(36 596)
(15 216)
–
31 358 513
15 167 625
2 376 254
1 779 164
45 742
348 387
– 51 075 685
–
263 346
327 087
512 677
41 002
66 692
–
Depreciation and impairment
losses
1 210 804
Prior period adjustments
(Note 31)
–
3 752
–
–
–
–
–
3 752
Depreciation for the year
–
264 732
351 105
550 646
14 524
89 185
–
1 270 192
Disposals
–
–
(3 310)
(25 821)
(34 084)
(1 852)
–
(65 067)
–
531 830
674 882
1 037 502
21 442
154 025
–
2 419 681
31 358 513
15 167 625
2 376 254
1 779 164
45 742
348 387
6 876
29 532
159 357
194 724
8 906
83 085
43 454
1 354 096 39 020 679
–
9 238
97 706
65 529 40 923 745
Additions
Acquisition of subsidiary
Disposals/reclassifications
376 497
–
Balance as at 31 December 2013 31 741 886
–
– 51 075 685
525 934
48 462
–
(2 722)
(15 936)
(48 462)
16 551 253 41 604 752
1 973 888
61 164
513 242
60 521 92 506 706
(18 658)
losses
–
531 830
674 882
1 037 502
21 442
154 025
–
2 419 681
–
409 804
518 414
472 837
6 752
99 010
–
1 506 817
Disposals
–
–
–
–
(592)
(5 201)
–
(5 793)
–
941 634
1 193 296
1 510 339
27 602
247 834
–
3 920 705
31 358 513
14 758 688
1 681 273
1 152 128
16 334
195 060
– 49 161 996
31 358 513
14 635 795
1 701 372
741 662
24 300
194 362
– 48 656 004
31 741 886
15 609 619 40 411 456
463 549
33 562
265 408
60 521 88 586 001
Carrying amounts
At 1 January 2012
At 31 December 2012
At 31 December 2013
Company
3 173
1 632
11 446
21 927
44 947
–
Additions
23 403
3 248
10 729
7 369
4 375
5 542
54 666
Disposals
–
–
–
(2 722)
(13 202)
–
(15 924)
26 576
4 880
22 175
26 574
36 120
5 542
121 867
83 125
losses
Disposals
162
1 121
9 415
14 272
9 670
–
34 640
2 485
65
826
2 669
9 015
–
15 060
–
–
–
(592)
(5 201)
–
(5 793)
2 647
1 186
10 241
16 349
13 484
–
43 907
Carrying amounts
At 31 December 2012
3 011
511
2 031
7 655
35 277
–
48 485
At 31 December 2013
23 929
3 694
11 934
10 225
22 636
5 542
77 960
54
7. Intangible assets
Group
Goodwill
N’000
At 1 January 2013
Addition
Disposal
Total
N’000
Company
Oil
Computer Prospecting
software
Licence
N’000
N’000
Total
N’000
19 482 953
7 361 411
–
26 844 364
177 754
2 780
(57 042)
123 492
5 075 818
–
–
5 075 818
24 736 525
7 364 191
(57 042)
32 043 674
12 966
–
–
12 966
5 075 818
–
–
5 075 818
5 088 784
–
–
5 088 784
–
45 227
–
45 227
8 526
–
8 526
–
–
12 838
58 065
–
–
12 838
58 065
1 476
10 002
–
–
1 476
10 002
26 844 364
123 492
5 075 818
32 043 674
12 966
5 075 818
5 088 784
–
26 844 364
58 065
65 427
–
5 075 818
58 065
31 985 609
10 002
2 964
–
5 075 818
10 002
5 078 782
19 482 953
177 754
5 075 818
24 736 525
12 966
5 075 818
5 088 784
–
19 482 953
45 227
132 527
–
5 075 818
45 227
24 691 298
8 526
4 440
–
5 075 818
8 526
5 080 258
Accumulated amortisation
and impairment
At 1 January 2013
Amortisation charge
(Note 25)
Net book value
Cost
and impairment
At 31 December 2013
Oil
Computer Prospecting
software
Licence
N’000
N’000
Net book value
Cost
and impairment
At 31 December 2012
Goodwill is not amortised but tested for impairment annually. The remaining amortisation period for computer software cost is
between 3 to 6 years.
Goodwill has been allocated to the following CGUs:
31 December 31 December
2013
2012
N’000
N’000
863 163
20 369 790
5 611 411
26 844 364
Transcorp Metropolitan Hotels and Conferencing Limited (TMHCL)
Transnational Hotels and Tourism Services Limited (THTSL)
Transcorp Ughelli Power Limited (TUPL)
863 163
18 619 790
–
19 482 953
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 2013 and 2012 , 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. Key assumptions included the following:
Budgeted gross margin %
Weighted average growth rate
Pre-tax discount rate
31 December 2013
TMHCL
THTSL
31 December 2012
TMHCL
THTSL
74%
6%
14.19%
67%
6%
14.95%
66%
6%
17.67%
66%
6%
17.67%
Reasonably possible changes in key assumptions would not cause the recoverable amount of goodwill to fall below the carrying
value.
55
TRANSCORP
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ANNuAL REPORT 2013
8. Investment property
Investment property relates to a piece of land at Rumens Road Ikoyi measuring approximately 4 876 151 square metres.
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 2013 and 31 December 2012. 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
31 December 31 December 31 December
2013
2012
2013
N’000
N’000
N’000
At 1 January 2013
Opening net book amount
At 31 December 2013
1 500 000
75 000
1 575 000
1 467 000
33 000
1 500 000
1 500 000
75 000
1 575 000
2012
N’000
1 467 000
33 000
1 500 000
– 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 2013 using
Quoted prices
in active
Significant
markets for
other
Significant
identical
observable unobservable
assets
inputs
inputs
(Level 1)
(Level 2)
(Level 3)
Recurring fair value measurements
Land
–
1 575 000
–
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.
9. Investment in subsidiaries
Other subsidiaries companies
Movement in investment in subsidiaries is analysed as follows:
January 2013
Additions – cost
Reduction in equity holding in subsidiary (9b)
At 31 December 2013
Company
2013
2012
N’000
N’000
19 618 523
9 808 397
108 200
29 535 120
13 868 523
7 312 000
108 200
21 288 723
21 288 723
8 246 397
–
29 535 120
15 638 043
7 312 000
(1 661 320)
21 288 723
56
(a)
On 1 November 2013, Transcorp Ughelli Power Limited completed the acquisition of 100% shareholding in Ughelli Power Plc.
The fair values of the assets and liabilities of Ughelli Power Plc as at 1 November 2013 is shown below:
N’000
Non-current assets
Inventory
40 299 376
819 606
369 607
Total assets
Total liabilities
Net assets
41 488 589
–
41 488 589
Purchase consideration
Excess of purchase consideration over equity acquired/Goodwill
47 100 000
5 611 411
The revenue and profit of Ughelli Power Plc since acquisition as included in the consolidated statement are N3.46 billion and
N2.086 billion respectively.
Company
2013
2012
N’000
N’000
(b)
Investments in subsidiary companies eliminated on consolidation is shown below:
Transnational Corporation investment in subsidiary:
Transnational Hotels and Tourism Services Limited (THTSL)
Transcorp Refining Company Limited
19 618 523
13 868 523
1 000
1 000
10 000
10 000
Telecommunications Backbone Development Company Limited
9 900
9 900
9 500
9 500
Transcorp Hotels and Leisure Limited
9 500
9 500
Transcorp Infrastructure Limited
9 500
9 500
Transcorp Telecomms Limited
10 000
10 000
Transcorp Commodities Limited
9 500
9 500
Transcorp Hilton Limited
9 900
9 900
Allied Commodities Limited
9 500
9 500
Transcorp Trading and Logistics Limited
Transcorp Ughelli Power Limited (TUPL)
THTSL investment in subsidiary:
TUPL investment in subsidiary
Ughelli Power Plc
9 900
9 900
10 000
10 000
9 808 397
7 312 000
29 535 120
21 288 723
1 661 320
1 661 320
47 100 000
–
All the subsidiary companies except Transnational Hotels and Tourism Services Limited, Transcorp Metropolitan Hotels and
Conferencing Limited, Transcorp Energy Limited, Transcorp Properties Limited, Teragro Commodities Limited, Transcorp
Employee Share Scheme 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.
57
TRANSCORP
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ANNuAL REPORT 2013
(c) Other relevant details of the investments are as follows:
Issued
share
capital (in
thousands)
Parent’s
interest
NonGroup’s controlling
interest
interest
Subsidiaries
Nature of business
Transnational Hotels and Tourism
Services Limited (THTSL)
Rendering of hospitality services
5 000
51%
51%
49%
Transcorp Refining Company
Limited
Oil and gas consultancy
exploration, refining and
marketing
1 000
100%
100%
0%
Transcorp Telecomms Limited
Distribution of global systems for
mobile
10 000
100%
100%
0%
Telecommunications Backbone
Development Company Limited
Internet service providers
browsing and e-mail services
10 000
99%
100%
0%
(TRG)
Cultivate the soil and grow food,
cash and fodder crops
10 000
95%
100%
0%
Transcorp Hotels and Leisure
Limited
Car rental, hiring and protocol
services
10 000
95%
100%
0%
Transcorp Infrastructure Limited
Power generation, distribution
and sale
10 000
95%
100%
0%
Transcorp Trading and Logistics
Limited
General maritime operations
including
10 000
100%
100%
0%
Transcorp Commodities Limited
Dealers in agricultural and mineral
products
10 000
95%
100%
0%
Transcorp Employee Share
Scheme
Manages shares ownership
scheme set up for the employees
10
1%
1%
99%
Transcorp Hilton Limited
Manage hotels, cafeterias, eateries,
dinners, canteens cafes, pizzerias,
snack bars, etc
10 000
99%
100%
0%
Allied Commodities Limited
Sale and purchase of wholesale
and retail commodities which the
Company may lawfully deal in
10 000
95%
100%
0%
Mining, refining and supply
merchants of mining produce
10 000
99%
100%
0%
Building, contractors, decorators,
merchants and dealers in stone,
sand, lime, iron, etc.
10 000
100%
100%
0%
Transcorp Metropolitan Hotels
and Conferencing Limited
(TMHCL)
Rendering of hospitality services
5 000
0%
51%
49%
(TUPL)
Investment in power generation
66 152
65%
65%
35%
Ughelli Power Plc
Power generation
10 000
0%
65%
35%
All these subsidiaries are incorporated in Nigeria.
58
(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.
Transnational Hotels and
Transcorp ughelli
Tourism Services Limited
Power Limited
(THTSL)
(TuPL)
2013
2012
2013
2012
N’000
N’000
N’000
N’000
Summarised balance sheet
Current
Asset
16 956 923
11 264 471
4 550 570
8 684 288
Liabilities
(15 351 040)
(9 701 919)
(3 803 680)
(7 056 435)
1 605 883
1 562 552
746 890
1 627 853
Total current net assets
Non-current
Assets
48 997 539
49 858 888
46 366 279
–
Liabilities
(7 612 457)
(8 236 961)
(30 253 341)
–
Total non-current net assets
41 385 082
41 621 927
16 112 938
–
Net assets
42 990 965
43 184 479
16 859 828
1 627 853
Summarised statement of comprehensive income
15 349 794
13 258 127
3 460 613
–
Profit/(loss) before income tax
6 144 978
4 503 648
2 154 774
(372 147)
Income tax expense
(1 708 298)
(1 162 177)
–
–
Post-tax profit/(loss) from continuing operations
4 436 680
3 341 471
2 154 774
(372 147)
Revenue
–
261 365
–
–
4 436 680
3 602 836
2 154 774
(372 147)
Total comprehensive income allocated to
non-controlling interests
2 173 973
1 765 390
754 171
(130 251)
Dividends paid to non-controlling interests
2 058 000
2 234 498
–
–
8 835 697
7 000 668
(540 884)
(322 961)
–
–
–
–
Income tax paid
(1 202 174)
(1 729 561)
–
–
Net cash generated from operating activities
7 633 523
5 271 107
(540 884)
(322 961)
Summarised cash flows
Cash flows from operating activities
Cash generated from operations
Interest paid
Net cash used in investing activities
28 034
(2 319 470)
(46 535 157)
112 139
Net cash used in financing activities
(4 200 000)
(4 560 190)
39 099 558
8 696 000
Net increase/(decrease) in cash and cash equivalents
3 461 557
(1 608 553)
(7 976 483)
8 485 178
Cash, cash equivalents and bank overdrafts at
beginning of year
5 128 648
6 738 512
8 485 178
–
Cash and cash equivalents at end of year
8 590 205
5 129 959
508 695
8 485 178
The information above is the amount before inter-Company eliminations.
59
TRANSCORP
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ANNuAL REPORT 2013
10. Deferred tax
Group
2013
N’000
2012
N’000
The movement in deferred tax is as follows:
Deferred tax liability
At 1 January 2013
7 279 642
6 355 503
318 887
(446 036)
–
1 291 765
Tax charge relating to components of other comprehensive income
–
78 410
7 598 529
7 279 642
Others
N’000
Total
N’000
Income statement charge (Note 17)
At 31 December 2013
Retirement Accelerated
benefit
tax
obligation depreciation
N’000
N’000
At 1 January 2012
Fair Value
Gains
N’000
Provisions
N’000
(38 140)
901 052
5 492 591
–
–
6 355 503
–
–
1 291 765
–
–
1 291 765
Charged/(credited) to the income
statement
(164 759)
(200 565)
–
(84 571)
3 859
(446 036)
78 410
–
–
–
–
78 410
At 31 December 2012
Charged to other comprehensive income
(124 489)
700 487
6 784 356
(84 571)
3 859
7 279 642
At 1 January 2013
(124 489)
700 487
6 784 356
(84 571)
3 859
7 279 642
–
–
–
318 887
–
318 887
Charged to the income statement
Charged to other comprehensive income
At 31 December 2013
–
–
–
–
–
–
(124 489)
700 487
6 784 356
234 316
3 859
7 598 529
Deferred tax assets are recognised for tax losses carried forward to the extent that the realisation of the related tax benefit
through future taxable profits is probable. The Company and Group did not recognise deferred income tax assets of N4.7 billion
(31 December 2012: N4.2 billion) in respect of losses amounting to N14.9 billion (31 December 2012: N13.1 billion) that can be
carried forward against future taxable income.
11. Pre-paid lease rental
Group
2013
2012
N’000
N’000
At 1 January
125 000
150 000
Utilisation
(30 000)
(22 500)
Additions
At 31 December
–
95 000
127 500
–
(2 500)
Less minimum lease payments for the next 12 months
(30 000)
(30 000)
Non current lease payments
65 000
95 000
65 000
95 000
–
–
Fees
Non current lease payments has been analysed as follows:
Due between 1 to 5 years
Due after 5 years
Pre-paid 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.
60
12. Inventories
Group
2013
2012
N’000
N’000
242 380
102 420
12 186
6 222
Engineering spares
409 431
408 652
Guest supplies
171 858
152 593
Other raw materials
595 320
36 947
1 431 175
706 834
Food and beverage
Fuel
All inventory are stated at cost. The cost of inventories recognised as an expense and included in ‘cost of sales’ amounted to
N1.78 billion (2012: N1.047 billion).
An impairment charge of N30.6 million (2012: N323 million) was recorded on the Group’s inventory in the income statement.
13. Trade and other receivables
Group
Company
31 December 31 December 31 December 31 December
2013
2012
2013
2012
N’000
N’000
N’000
N’000
Trade receivables
Less: Provision for impairment of trade receivables
Trade receivables – net
Other receivables and prepayments
Due from related companies (Note 35)
Dividend receivable
4 754 479
(139 567)
4 614 912
3 830 716
–
–
8 445 628
1 585 634
(215 520)
1 370 114
1 263 311
–
–
2 633 425
–
–
–
2 069 283
647 095
1 927 800
4 644 178
–
–
–
847 163
198 965
2 093 127
3 139 255
2013
2012
N’000
N’000
215 520
(75 953)
139 567
Balance
(Recovery)/impairment losses recognised on receivables
14. Debt and equity securities
Group
118 827
96 693
215 520
Company
2013
2012
2013
2012
N’000
N’000
N’000
N’000
Equity securities at fair value through profit or loss
Investment in AkwaIbom State Government asset backed note
Investment in Treasury Bills
4 520 008
2 692 824
4 520 008
2 692 824
–
6 318 716
–
1 740 952
–
3 444 738
–
–
3 630 763
3 238 963
3 630 763
3 038 363
8 150 771
15 695 241
8 150 771
7 472 139
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 (2012: 1.24 billion). These investments
have recorded a fair value gain of N2.78 billion (2012: N 1.45 billion) as at the end of the year.
61
TRANSCORP
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ANNuAL REPORT 2013
15. Cash and cash equivalents
Cash and bank balance
16. Trade and other payables
Trade creditors
Accruals and other liabilities
Due to related companies (Note 35)
Total
17.Taxation
Group
Company
2013
2012
2013
2012
N’000
N’000
N’000
N’000
9 195 229
5 549 863
17 680
117 860
Group
Company
2013
2012
2013
2012
N’000
N’000
N’000
N’000
750 807
3 875 851
–
–
5 182 659
2 722 133
144 139
575 331
350 000
–
3 963 677
4 964 045
6 283 466
6 597 984
4 107 816
5 539 376
Group
Company
2013
2012
2013
2012
N’000
N’000
N’000
N’000
1 441 870
1 526 368
151 757
102 853
99 292
107 565
–
–
1 541 162
214 200
1 633 933
232 570
151 751
214 200
102 853
232 570
318 887
(446 036)
–
–
2 074 249
1 420 467
365 951
335 423
Payment during the year
4 107 977
1 541 162
(1 727 504)
4 572 027
1 633 933
(2 097 983)
228 931
151 751
(164 559)
126 187
102 853
(109)
At 31 December
3 921 635
4 107 977
216 123
228 931
9 032 151
2 709 645
99 292
214 200
3 948 215
1 184 465
107 565
232 570
3 186 963
956 089
–
214 200
2 874 600
862 380
–
232 570
–
151 751
(1 100 639)
2 074 249
11 804
105 412
(221 349)
1 420 467
–
151 751
(956 089)
365 951
–
102 853
(862 380)
335 423
Income tax
Education tax
Tax on franked investment income
Deferred tax (Note 10)
The movement in tax payable is as follows:
At 1 January
Provision for the year
A reconciliation between tax expense and the product of
accounting profit multiplied by Nigeria’s domestic tax rate
for the years ended 31 December 2011 and 2012 is as follows:
Profit before tax
Tax at Nigeria Corporation tax rate of 30% (2012: 30%)
Education tax
Tax losses for which no deferred income tax asset
was recognised
Minimum tax adjustments
Effect of timing differences
Tax charge for the year
62
18. Borrowings
Group
Company
2013
2012
2013
2012
N’000
N’000
N’000
N’000
(a)
Borrowings falling due within a year
3 656 983
3 764 127
762 665
3 264 170
(b)
Borrowings falling due after one year
39 452 293
10 003 427
9 198 952
10 003 427
43 109 276
13 767 554
9 961 617
13 267 597
(c)
The Group’s borrowings are analysed below:
Purpose
To restructure the existing
credit obligation of the
Company which were
provided to support its
investments in Oil and
Gas and Hospitality
businesses
To finance the
Company's investment
in target sectors
Principal
(N’000) Loan type
4 400 000 Term loan
8 years and
2 months
(repayment
from March
2013)
Other terms/
Security
2 153 898
4 358 305
17% per
annum
4 000 000
6 012 000
Pledge of investment
17% per
in treasury bill held
annum
amounting to not less
than N1.2b Pledge of the
Company's direct/indirect
shareholding in THTSL
Tripartite legal mortgage
over Metro Hotels property
11 600 000 Term loan
7 years
Negative charge on fixed
(Restructured) inclusive of and floating assets of the
12 months Company
moratorium
To augment the
Company's working
capital requirements
1 000 000 Revolving
term loan
365 days
Negative charge on fixed
repayable
and floating assets of the
on demand; Company
available for
5 years
17% per
annum
204 624
1 000 000
To provide working
capital support to the
Company business
3 000 000 Revolving
overdraft
5 years with Irrevocable domiciliation
180 days
of specific contract to
review cycle repay drawdown
17% per
annum
3 000 000
1 501 700
250 000 Mediumterm loan
5 years
Charge on Transcorp
investment in Akwa ibom
State note worth N300m
providing 120% cover
17% per
annum
194 561
232 911
33 383 050 Mediumterm loan
7 years
Share charge, the
Libor
Deed of Corporate
plus
Guarantee, the assignment 8.5%
of contracts agreement
and Trust Deed
33 383 050
–
42 936 133
13 104 916
To finance the staff
share scheme
To buy Ughelli Power Plc
from Vendor (BPE and
Ministry of Finance) –
$215 million
53 633 050
63
Tenor
Outstanding Outstanding
Principal/
Principal/
drawdown
drawdown
as at
as at
Interest 31 December 31 December
rate
2013
2012
TRANSCORP
I
ANNuAL REPORT 2013
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 31 December 2013
and 2012.
31 December 2013
31 December 2012
Loans and
Held for
Loans and
Held for
receivables
trading
receivables
trading
Group
N’000
N’000
N’000
N’000
Financial assets
3 630 763
4 520 008
13 002 417
2 692 824
9 195 229
–
5 549 863
–
12 825 992
4 520 008
18 552 280
2 692 824
2013
2012
Other
Other
financial
financial
liabilities at
liabilities at
amortised
amortised
cost
cost
N’000
N’000
Financial liabilities
Trade payables and other liabilities
Borrowings
Company
31 December 2013
Loans and
Held for
receivables
trading
N’000
N’000
6 283 466
6 597 984
43 109 276
13 767 554
49 392 742
20 365 538
31 December 2012
Loans and
Held for
receivables
trading
N’000
N’000
Financial assets
4 644 178
–
3 139 255
–
3 630 763
4 520 008
4 779 315
2 692 824
17 680
–
117 860
–
8 292 621
4 520 008
8 036 430
2 692 824
2013
2012
Other
Other
financial
financial
liabilities at
liabilities at
amortised
amortised
cost
cost
N’000
N’000
Financial liabilities
Trade payables
Borrowings
4 107 816
5 539 376
9 961 617
13 267 597
14 069 433
18 806 973
64
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
2013
2012
N’000
N’000
Group
Equity investments held-for-trading
Level 1
4 520 008
2 692 824
Level 1
4 520 008
2 692 824
Company
Equity investments held-for-trading
The carrying values of financial assets and liabilities on the statement of financial position approximate their fair values.
The methods and assumptions used in estimating fair value are as follows:
Cash and cash equivalents, debt securities, trade and other receivables and trade and other payables are highly liquid investments
which are due on demand or within one year. Equity investments are carried at fair value based on market prices as at the reporting
date.
20. Advance deposits
Group
Company
2013
2012
2013
2012
N’000
N’000
N’000
N’000
–
249 459
–
–
EER
1 875 000
1 876 799
1 875 000
1 876 799
Total advance deposits
1 875 000
2 126 258
1 875 000
1 876 799
Customers
Advance deposits from EER relates to an advance payment of $12.5 million received from EER/Sacoil as farm-in fees for
Oil Prospecting License (OPL 281). The approval of the Production Sharing Contract (PSC) of OPL is being awaited from the
Department of Petroleum Resources.
65
TRANSCORP
I
ANNuAL REPORT 2013
21. Retirement benefit obligations
The Company’s subsidiaries, Transnational Hotel and Tourism Services Limited and Transcorp Metropolitan Hotels and Conferencing
Limited operated a gratuity scheme for employees . An agreement was entered with employees of both subsidiaries to discontinue
the schemes. The outstanding liabilities has been settled to the employees.
Group
2013
2012
N’000
N’000
Amounts recognised in income statements are shown below:
Current service cost
Interest cost
558 574
231 206
–
219 002
(189 926)
–
–
(317 142)
368 648
133 066
Actuarial losses – Change in assumption
–
118 081
Actuarial losses – Experience
–
143 282
–
261 363
1 581 606
1 656 588
Write back of provision
Curtailment gain
Total, included in employee benefits expense (Note 26c)
Amounts recognised in other comprehensive income are shown below;
The movement in the defined benefit obligation over the years was as follows:
Defined benefit obligation at the beginning of the year
Current service cost
Interest cost
558 574
231 206
–
219 002
Plan participants’ contribution.
–
–
Actuarial losses – Change in assumption
–
118 801
–
143 282
(189 926)
–
Actuarial losses/(gains) – Experience
Write back of provision
(1 950 254)
(433 096)
Curtailment gain
–
(354 177)
Defined benefit obligation at end of year
–
1 581 606
Benefits paid
22.Revenue
Group
Company
2013
2012
2013
2012
N’000
N’000
N’000
N’000
Rooms
9 741 880
8 354 846
–
–
Food and beverage
4 406 057
3 792 116
–
–
Shop rental
460 088
439 756
–
–
Service charge
356 546
281 618
–
–
10 554
8 169
–
–
374 669
366 996
–
–
Juice concentrate
14 871
1 344
–
–
Dividend income
–
–
2 142 000
2 325 697
1 792 727
–
–
–
Laundry
Other operating revenue
Capacity charge
Energy sent out
1 667 886
–
–
–
18 825 278
13 244 845
2 142 000
2 325 697
All the revenue was generated in Nigeria.
66
23. Cost of sales
598 687
574 906
–
–
Staff costs (Note 26)
1 189 535
1 529 427
–
–
Food and beverage
Rooms
1 581 288
1 326 565
–
–
Natural gas and fuel costs
721 941
–
–
–
Repairs and maintenance
115 100
–
–
–
Depreciation
162 177
–
–
–
82 807
45 666
–
–
4 451 535
3 476 564
–
–
Other operating departments
24. Other operating income
Group
Company
2013
2012
2013
2012
N’000
N’000
N’000
N’000
2 005 345
13 247
962 545
230
Fair value gains
3 069 742
1 479 466
3 069 742
1 479 466
14 517
25 543
–
548 590
Gain on sale of investment
Profit on fixed asset disposal
25. Administrative and general expenses
346
746
–
–
5 089 950
1 519 002
4 032 287
2 028 286
Group
Company
2013
2012
2013
2012
N’000
N’000
N’000
N’000
Staff costs (Note 26)
1 469 882
1 118 780
365 260
189 753
Depreciation
1 344 640
1 270 192
15 060
36 574
Amortisation
12 838
22 701
1 476
2 102
Auditor’s remuneration
Management and incentive fees
95 000
75 000
35 000
30 000
1 724 283
782 836
700 000
–
Professional fees
182 662
805 515
208 711
232 469
Directors’ remuneration (Note 26)
436 879
308 164
212 564
179 516
Rent and rates
70 648
65 720
41 332
40 637
Loss on asset disposal
10 107
–
10 107
–
880 297
946 746
10 312
16 875
Repairs and maintenance
Advertising
15 428
113 284
14 887
69 078
Insurance
18 418
150 525
15 539
9 989
Energy cost
723 669
676 844
14 048
12 744
Travel and accommodation
203 001
155 820
82 115
58 359
15 696
160 888
14 621
47 406
160 532
310 852
80 007
43 041
Bank charges
75 997
87 710
27 468
15 277
Acquisition expenses on investments
31 200
–
31 200
–
Licenses and fees
Business development
Other operating expenses
67
Group
Company
2013
2012
2013
2012
N’000
N’000
N’000
N’000
TRANSCORP
I
ANNuAL REPORT 2013
1 742 007
471 162
395 050
97 523
9 213 184
7 522 739
2 274 757
1 081 343
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:
Group
Company
2013
2012
2013
2012
Number
Number
Number
Number
Managerial
39
26
8
7
Senior staff
333
65
6
4
Others
1,530
1,436
10
10
1 902
1 527
24
21
(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:
Group
Company
2013
2012
2013
2012
Number
Number
Number
Number
N240,001 – N500,000
678
1 035
–
–
N500,001 – N1,000,000
742
427
6
6
N1,000,001 – N2,000,000
212
26
–
–
N2,000,001 – N4,000,000
183
14
4
4
Above N4,000,000
87
25
14
11
1 902
1 527
24
21
(c) Staff costs for the above persons (excluding Directors):
Group
Company
2013
2012
2013
2012
N’000
N’000
N’000
N’000
Salaries and wages
2 168 644
2 402 588
355 620
183 636
Gratuity net charge
368 648
133 066
–
–
Defined contribution cost
122 125
112 553
9 640
6 117
2 659 417
2 648 207
365 260
254 978
(d) Analysis of staff costs
Group
Company
2013
2012
2013
2012
N’000
N’000
N’000
N’000
Cost of revenue
1 189 535
1 529 427
Administrative and general expenses
1 469 882
1 118 780
365 260
254 978
2 659 417
2 648 207
365 260
254 978
–
68
(e)
Emoluments of Directors
The remuneration paid to the Directors of the Company was:
Group
Company
2013
2012
2013
2012
N’000
N’000
N’000
N’000
The remuneration paid to the Directors of the
Company was:
Salaries
138 507
109 331
62 638
63 689
Fees
159 421
7 252
10 975
4 225
Defined contribution
Benefits in kind
Amount paid to the highest paid Director
(excluding pension contributions)
1 427
2 638
1 427
1 536
137 524
188 943
137 524
110 066
436 879
308 164
212 564
179 516
64 065
63 689
64 065
63 689
1 600
1 800
1 600
1 800
Chairman's emoluments
Fees
Benefit in kind
43 879
37 226
43 879
37 226
45 479
39 026
45 479
39 026
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:
Group
Company
2013
2012
2013
2012
Number
Number
Number
Number
Less than N10,000,000
Over N10,000,000
27. Finance income and costs
Interest expense on loans
Interest income
7
9
–
2
10
17
9
8
17
26
9
10
Group
Company
2013
2012
2013
2012
N’000
N’000
N’000
N’000
(2 531 871)
(860 246)
(1 316 472)
1 313 513
1 043 917
603 905
449 951
(1 218 358)
183 671
(712 567)
(398 040)
(847 991)
28. 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.
Group
Company
2013
2012
2013
2012
Profit attributable to shareholders
Weighted average number of ordinary shares in issue
69
4 029 758
1 130 724
2 821 012
2 539 177
33 123 990
25 813 998
33 123 990
25 813 998
Basic earnings per share (Kobo)
12.17
4.04
8.52
9.08
Diluted earnings per share (Kobo)
12.17
4.04
8.52
9.08
TRANSCORP
I
ANNuAL REPORT 2013
29. Share capital
(a)
Authorised
Group
Company
2013
2012
2013
2012
45 000 000 000 (2012: 36 000 000 000) ordinary shares
of 50kobo each
22 500 000
18 000 000
22 500 000
18 000 000
Group and Company
Allotted, called up and fully paid:
Number
of shares
thousands
Ordinary
shares
Total
At 1 January 2012
25 813 998
12 906 999
12 906 999
Shares issued
12 906 999
6 453 500
6 453 500
At 31 December 2013
38 720 997
19 360 499
19 360 499
The Company held an Extraordinary General Meeting on 28 March 2013, where the shareholders approved the creation
of additional 9 billion ordinary shares of the Company to bring the total authorised shares of the Company to 45 billion
Ordinary Shares.
The Company undertook a rights issue of 12 906 999 142 ordinary shares of 50 kobo each at N1.00 per share to existing
shareholders on the basis of 1 new share for every 2 shares held at closure date of 10 April 2013. The new shares issued ranks
pari passu in all respects with existing shares of the Company. The rights issue opened on 3 May 2013 and closed 7 June 2013
with all the shares on offer fully allotted to shareholders.
Net proceeds of N12.36 billion was realised from the rights issue after deducting transaction costs amounting to N543 million.
The proceed was primarily used to refinance bank loan utilised for the acquisition of Ughelli Power Plc.
(b)
Share premium
Group
Company
2013
2012
2013
2012
N’000
N’000
N’000
N’000
At 1 January
27 071 664
27 071 664
27 071 664
27 071 664
Share reconstruction
(25 768 702)
–
(25 768 702)
–
6 453 500
–
6 453 500
–
Transaction cost
(543 094)
–
(543 094)
–
At 31 December
7 213 368
27 071 664
7 213 368
27 071 664
Right issue
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.
(c) Treasury shares
Treasury shares represent the Company’s shares held by the Employee Share Scheme as at 31 December 2013.
70
30. Non-controlling interest
Transnational
Transcorp
Hotels and Metropolitan
Tourism
Hotels and
Transcorp
Services Conferencing Ugheli Power Ugheli Power
Limited
Limited
Limited
Plc
(THTSL)
(TMHCL)
(TUPL)
(UPP)
Opening balance
11 635 555
Prior period adjustments (note 31)
(371 281)
(130 252)
Group
–
11 134 022
11 104 232
–
–
–
11 104 232
THTSL profit for the year
2 176 388
–
–
–
2 176 388
Dividend received
(2 058 000)
–
–
–
(2 058 000)
UPP post-acqusition profit
–
–
–
729 968
729 968
TMHCL profit for the year
–
(2 415)
–
–
(2 415)
TUPL profit for the year
–
–
24 203
–
24 203
Increase in TUPL share capital
–
–
5 341 839
–
5 341 839
22 858 175
(373 696)
5 235 790
729 968
28 450 237
31. Prior period adjustments
In preparing its first set of IFRS financial statements as at 31 December 2012, the Group elected to use the IFRS 1 exemption and
carry all classes of property, plant and equipment (PPE) at their respective fair values at transition date. A qualified external valuer
(Jide Taiwo and Co) was engaged to perform the valuation of PPE as at transition date (1 January 2011).
While preparing the standalone IFRS financial statement of one of its subsidiaries, Transnational Hotels and Tourism Services Limited
(THTSL), the qualified valuer identified an error in valuation of Transcorp Hilton Hotels in Abuja used in preparing the consolidated
IFRS financial statements for Transnational Corporation of Nigeria Plc for the year ended 31 December 2012.
The impact of this understated the deemed cost of land, building and improvements by N23.96 billion at 31 December 2011 and at
31 December 2012. The non-controlling interest reported at 31 December 2011 and at 31 December 2012 was also understated
by N11.10 billion. There was also a corresponding understatement of net deferred tax liabilities of N1.29 billion for those
respective periods.
71
TRANSCORP
I
ANNuAL REPORT 2013
32. Cash generated from operating activities
Profit before tax
Group
Company
2013
2012
2013
2012
N’000
N’000
N’000
N’000
9 032 151
3 948 215
3 186 963
2 874 600
1 506 817
9 761
1 270 192
15 060
36 574
(746)
10 107
Adjustment for non-cash items
Depreciation of fixed assets
Loss/(profit) on disposal of property, plant and equipment
Loss on disposal of intangible asset
57 042
–
–
–
Amortisation of intangible assets
12 838
22 701
1 476
2 102
Fair value gain – investment property
(75 000)
(33 000)
(75 000)
(33 000)
(3 237 059)
(1 479 466)
(3 237 059)
(1 479 466)
30 000
25 000
Fair value gains on trading investment securities
Amortisation of prepaid lease rental
–
(25 784)
–
–
Finance cost
2 531 871
860 246
1 316 472
Finance income
(1 313 513)
(1 043 917)
(603 905)
(449 951)
(214 200)
(232 570)
(214 200)
(232 570)
(1 000 371)
3 327
(9 733)
3 327
(6 378 131)
(462 567)
(1 620 381)
(1 340 681)
Treasury shares
Foreign exchange loss
847 991
Other adjustments to reconcile expenses for the year
to cash from operating activities
Increase in debtors and prepayment
(724 341)
78 132
–
–
Increase/(decrease) in payables and accrued expenses
1 044 729
3 486 115
(867 426)
851 453
(Decrease)/increase in retirement benefit obligation
(1 581 606)
186 381
–
–
(324 796)
6 628 043
(2 097 626)
1 080 379
Net book amount
12 865
22 975
10 131
17 401
(Loss)/profit on disposal of property plant and equipment
(9 761)
746
(10 107)
–
Proceeds from sale of property, plant and equipment
3 104
23 721
24
17 401
(Increase)/decrease in inventory
Net cash generated from/(used in) operations
In the statement of cash flows, proceeds from sale of property
plant and equipment comprise:
33. Capital commitments and contingent liabilities
There were no litigations in the ordinary course of business as at the balance sheet date. The directors are of the opinion that
all known liabilities and commitments which are relevant in assessing the state of affairs of the Company have been taken into
consideration in the preparation of these financial statements.
34. Subsequent events
The shareholders of Transnational Hotels and Tourism Services Limited (THTSL) at an extraordinary general meeting held on
13 January 2014 approved the creation of additional 20 million ordinary shares to bring the authorised share capital of the Company
to 30 million ordinary shares. In addition, at the said meeting the shareholders ratified the allotment of 16 million ordinary shares
of the Company to existing shareholders via a rights issue that was previously approved by the Board of Directors.
35. Related parties
(a) Heirs Holdings Limited
Transcorp entered into a technical services agreement with Heirs Holdings 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”.
72
(b)
Key management personnel
Name
Designation
Name
Designation
Mr. Obinna Ufudo
Olorogun Otega Emerhor, OON
Mr. Kayode Fasola
Chairman
President/CEO
Director
Director
Director
Director
Dr. Julius Kpaduwa
Ms. Angela Aneke
Mr. Chibundu Edozie
Mr. Ibikunle Oriola
Director
Director
Director
Director
CFO
(c)
Subsidiaries
Details of the subsidiaries have been disclosed in note 9c.
(d)
Related party transactions
Name of party
Group
Heirs Holdings Limited
Company
Transnational Hotels and Tourism
Services Limited
Transcorp Staff Share Ownership
Trust Company Limited
Ughelli Power Plc
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)
Transcorp Commodities Limited (Inactive)
Transcorp Hilton Limited (Inactive)
Allied Commodities Limited (Inactive)
Heirs Holding Limited
Nature of
relationship
Nature of
transactions
Controlled by
Technical fee
key management
personnel
Outstanding
balance at
1 January
2013
Outstanding
Net value of
balance at
transactions 31 December
in 2013
2013
–
700 000
350 000
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Receivable
Receivable
Receivable
Receivable
–
112 278
45 356
41 331
55 256
217 289
109 293
(35 704)
55 256
329 567
154 649
5 627
Subsidiary
Sub-subsidiary
Receivable
Receivable
–
–
21 805
80 191
21 805
80 191
647 095
Subsidiary
Subsidiary
Payable
Payable
1 000
10 000
–
–
1 000
10 000
Subsidiary
Subsidiary
Subsidiary
Payable
Payable
Payable
9 900
9 500
9 900
–
–
–
9 900
9 500
9 900
Subsidiary
Subsidiary
Payable
Payable
9 500
9 500
–
–
9 500
9 500
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Controlled by
key management
personnel
Payable
Payable
Payable
Payable
Payable
10 000
9 500
9 900
9 500
10 000
–
–
–
–
–
10 000
9 500
9 900
9 500
10 000
–
700 000
350 000
4 855 845
(1 350 368)
3 505 477
3 963 677
Transnational Hotels and Tourism Services
Limited
Subsidiary
Technical fee
Payable
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
73
TRANSCORP
I
ANNuAL REPORT 2013
value-added statement
2013
N’000
Revenue
Group
%
18 825 278
2012
N’000
%
2013
N’000
Company
%
2012
N’000
13 244 845
2 142 000
2 325 697
6 403 463
2 562 919
4 636 192
2 478 237
25 228 741
15 807 764
6 778 192
4 803 934
– Local
8 420 519
6 115 115
1 894 757
789 791
– Foreign
1 077 966
782 836
–
–
9 498 485
6 897 951
1 894 757
789 791
15 730 256
8 909 813
4 883 435
4 014 143
Other income
%
Bought in services
Value added
Distribution
Employees
Salaries and benefits
2 659 417
17
2 648 207
30
364 940
7
254 978
6
2 531 871
16
860 246
10
1 316 472
27
847 991
21
2 074 249
13
1 420 467
16
365 951
7
335 423
8
1 506 817
10
1 270 192
14
15 060
0
36 574
1
Provider of funds
Interest
Government
Taxation
The future
Depreciation
Retained profit
6 957 902
44
2 710 701
30
2 821 012
58
2 539 177
63
15 730 256
100
8 909 813
100
4 883 435
100
4 014 143
100
74
FIVE-yEAR FINANCIAL SuMMARy
2013
N’000
Group
2012
N’000
2011
N’000
Prepared under local GAAP
2010
2009
N’000
N’000
Balance sheet
122 211 610
74 942 302
75 425 737
30 329 672
25 347 658
Current asset
27 252 803
24 615 363
9 999 811
12 636 027
9 405 026
Current liabilities
(15 737 084)
(16 596 346)
(10 396 285)
(12 604 157)
(9 855 460)
(47 050 822)
(18 864 675)
(11 408 822)
(3 722 622)
(1 950 093)
Net assets
86 676 507
64 096 644
63 620 441
26 638 920
22 947 131
Non-current asset
Capital and reserves
Share capital
Share premium
19 360 499
12 906 999
12 906 999
12 906 999
11 256 836
7 213 368
27 071 664
27 071 664
27 071 664
28 721 827
(25 784)
–
–
–
–
Revenue reserves
31 678 187
1 879 727
338 497
(18 612 264)
(23 128 157)
28 450 237
22 238 254
23 303 281
5 272 521
6 096 625
86 676 507
64 096 644
63 620 441
26 638 920
22 947 131
18 825 278
13 244 845
13 901 453
13 927 551
12 995 152
Treasury shares
Comprehensive income
Revenue
9 032 151
3 948 215
4 605 925
6 908 216
3 233 160
Taxation
(2 074 249)
(1 420 467)
1 255 696
(1 518 430)
(2 006 583)
Profit after taxation
6 957 902
2 527 748
5 861 621
5 389 786
1 226 577
–
182 953
(157 534)
–
–
6 957 902
2 710 701
5 704 087
5 389 786
1 226 577
12.2
4.0
7.1
11.1
2.8
Non-current asset
36 266 862
27 917 466
22 204 720
19 095 139
14 528 041
Current asset
12 812 629
10 729 254
2 044 926
2 427 863
1 872 675
(646 631)
Other comprehensive income for
the year, net of tax
Total comprehensive income for
the year, net of tax
Basic earnings per share (kobo)
Company
Balance sheet
Current liabilities
(6 961 604)
(10 909 276)
(6 949 841)
(4 957 297)
(9 198 952)
(10 003 427)
(2 104 965)
(1 321 429)
–
Net assets
32 918 935
17 734 017
15 194 840
15 244 276
15 754 085
19 360 499
12 906 999
12 906 999
12 906 999
11 256 836
7 213 368
27 071 664
27 071 664
27 071 664
28 721 827
Capital and reserves
Share capital
Share premium
6 345 068
(22 244 646)
(24 783 823)
(24 734 387)
(24 241 944)
32 918 935
17 734 017
15 194 840
15 244 276
15 736 719
Revenue
2 142 000
2 325 697
2 833 333
2 382 396
2 785 717
3 186 963
2 874 600
1 313 375
3 456 849
100 966
(365 951)
(335 423)
(361 516)
(132 590)
(83 600)
2 821 012
2 539 177
951 859
3 324 259
17 366
Revenue reserves
Comprehensive income
Taxation
Profit after taxation
The balances for 2013, 2012 and 2011 have been stated in accordance with International Financial Reporting Standard (IFRS) as issued by
the International Accounting Standard Board (IASB). For all periods up to and including the year ended 31 December 2010 the balances
have been stated in accordance with local General Accepted Accounting Practice (Local GAAP).
75
TRANSCORP
I
ANNuAL REPORT 2013
Notice of annual general meeting
NOTICE IS HEREBY GIVEN that the Eighth Annual General Meeting (“AGM”) of Transnational Corporation of Nigeria Plc (“the Company”)
will hold on Monday, 31 March, 2014 at the Grand Ballroom, Lagos Oriental Hotel, 3 Lekki Road, Victoria Island, Lagos at 10.00 am to
transact the following businesses:
Ordinary business
1. To receive the Audited Financial Statements for the year ended December 31, 2013 and the reports of the Directors, Auditors and
Audit Committee thereon.
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 members of the Audit Committee.
Special business
1. To approve the appointment of a Director.
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 stamped proxy form must be deposited at
the registered office of the Registrar, Africa Prudential Registrars Plc (Formerly UBA Registrars), 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.
Dated this 7th day of February 2014.
By order of the Board
Chinedu N. Eze
Company Secretary
FRC/2013/NBA/00000002586
Company Secretary
Transnational Corporation of Nigeria Plc
38 Glover Road (formerly 22b)
Ikoyi, Lagos
Nigeria
76
NOTES
1. Closure of register
For the purpose of qualifying for the dividend and attendance to the AGM, the Register of Members and transfer books of the
Company will be closed from 10 March, 2014 to 14 March, 2014, both dates inclusive.
2. Dividend warrants
If the dividend recommended by the Directors is approved, dividend warrants will be posted on 1 April, 2014 to all shareholders
whose names appear in the Company’s Register of Members at the close of business on 7 March, 2014.
3. Audit committee
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.
4. Biographical details of directors for re-election 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 2013.
5. Annual report published on the website
The electronic version of the Annual Report 2013 will be hosted on the Company’s website: www.transcorpnigeria.com.
77
TRANSCORP
I
ANNuAL REPORT 2013
PROXy FORM
PROXY FORM
EIGHTH ANNUAL GENERAL MEETING TO BE HELD
AT 10.00 AM ON MONDAY, MARCH 31, 2014 AT THE RESOLUTION
GRAND BALLROOM, LAGOS ORIENTAL HOTEL, 3
LEKKI ROAD, VICTORIA ISLAND, LAGOS
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 Eighth
Annual General Meeting of the Company to be held on Monday,
March 31, 2014 and at any adjournment thereof.
FOR
AGAINST
To receive the Audited Financial Statements for
the year ended December 31 2013, together with
the Report of the Directors, Auditors and Audit
Committee thereon.
To declare a dividend
To re-elect retiring Directors
To authorize Directors to fix the remuneration of
the Auditors.
To elect/re-elect
Committee.
members
of
the
Audit
To approve the appointment of a Director.
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.
Please indicate with an “X” in the appropriate
square how you wish your votes to be cast on
the resolutions set out above. Unless otherwise
instructed, the proxy will vote or abstain from
voting at his discretion.
……………………………………………………………………………………………………………………………………………………...
TRANSNATIONAL CORPORATION OF NIGERIA PLC
Eighth Annual General Meeting
ADMISSION C ARD
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 Monday, March 31, 2014 at the Grand Ballroom, Lagos
Oriental Hotel, 3 Lekki Road, Lagos.
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
TRANSCORP
I
ANNuAL REPORT 2013
shareholders e-service application form
Dear esteemed shareholder,
The E-shareholder data form below has been attached to this report for your use. Kindly fill in your details and
return to the registrar. This will enable us to have your current information in our database.
SHAREHOLDER E-SERVICE APPLICATION FORM
(*= Compulsory fields)
Please tick against the company(ies)
where you have shareholding
1. *SURNAME/COMPANY NAME:
CLIENTELE
2. *FIRST NAME:
3. OTHER NAME:
4. SPOUSE' NAME:
5. *MOTHER'S MAIDEN NAME:
6. *E-MAIL:
7. ALTERNATE E-MAIL:
9. SEX: MALE
8. *MOBILE No.:
FEMALE
10. PHONE No. (HOME):
11. *POSTAL ADDRESS:
12. *CSCS CLEARING HOUSE No.:
13. NAME OF STOCKBROKER:
14. OCCUPATION:
15. NATIONALITY:
16. NEXT OF KIN:
E-SHARE REGISTRATION ACTIVATION MANDATE (Please tick the box below
)
Please take this as authority to activate my account(s) on your 3iOP e-Share Registration Portal where I
will be able to view and manage my investment portfolio online with ease.
BANK DETAILS FOR E-DIVIDEND MANDATE
Please take this as authority to credit my/our under-mentioned account with any dividend payment(s)/
lost/misplaced/stale/unclaimed dividend warrants due on my/our shareholding in the aforementioned
company(ies).
17. *ACCOUNT NAME:
18. *BANK ACCOUNT NUMBER:
Must be NUBAN
19. *BANK:
*BANK'S AUTHORISED SIGNATURE & STAMP
20. *AGE OF ACCOUNT:
Must be confirmed by the bank
DECLARATION
� I hereby declare that the information I have provided is true and correct and that I shall be held personally
liable for any of my personal details.�
Signature: ______________________
Signature : ______________________
for joint/corporate accounts only
1. AFRICA PRUDENTIAL REGISTRARS PLC
2. ABBEY BUILDING SOCIETY PLC
3. AFRILAND PROPERTIES PLC
4. A & G INSURANCE PLC
5. ARM PROPERTIES PLC
6. A.R.M LIFE PLC
7. ADAMAWA STATE GOVERNMENT BOND
8. BECO PETROLEUM PRODUCTS PLC
9. BUA GROUP
10. BENUE STATE GOVERNMENT BOND
11. CAP PLC
12. CAPPA AND D'ALBERTO PLC
13. CEMENT COY OF NORTHERN NIG. PLC
14. CSCS PLC
15. CHAMPION BREWERIES PLC
16. COMPUTER WAREHOUSE GROUP
17. EBONYI STATE GOVERNMENT BOND
18. GOLDEN CAPITAL PLC
19. INFINITY TRUST SAVINGS & LOANS
20. INTERNATIONAL BREWERIES PLC
21. INVESTMENT & ALLIED ASSURANCE PLC
22. JAIZ BANK PLC
23. KEBBI STATE GOVERNMENT BOND
24. NEM INSURANCE PLC
25. NEXANS KABLEMETAL NIG. PLC
26. OMOLUABI SAVINGS AND LOANS PLC
27. PERSONAL TRUST & SAVINGS LTD
28. P.S MANDRIDES PLC
29. PORTLAND PAINTS & PRODUCTS NIG. PLC
30. PREMIER BREWERIES PLC
31. RESORT SAVINGS & LOANS PLC
32. ROADS NIGERIA PLC
33. SCOA NIGERIA PLC
34. TRANSCORP PLC
35. TOWER BOND
36. THE LA CASERA CORPORATE BOND
37. UAC OF NIG. PLC
38. UBA BALANCED FUND
39. UBA BOND FUND
40. UBA CAPITAL PLC
41. UBA EQUITY FUND
42.UBA MONEY MARKET FUND
43. UNITED BANK FOR AFRICA PLC
44. UNIC INSURANCE
45. UPDC
46. UTC NIGERIA PLC
47. WEST AFRICAN GLASS IND PLC
OTHERS: ______________________________
_____________________________________
LAGOS: 220B, Ikorodu Road, Palmgrove, Lagos. Tel: 01-4606460 | ABUJA: 11, Lafia Close, Area 8, Garki, Abuja. Tel: 09-2900873
PORT-HARCOURT: Plot 137, Oluobasanjo Road, (2nd floor), Port Harcourt, Rivers State. Tel: 084-303457
E-MAIL: [email protected] | WEBSITE: www.africaprudentialregistrars.com
Africa Prudential Registrars
TRANSCORP
I
ANNuAL REPORT 2013
Corporate Information
Company registration
number
RC 611238
Registered office
38 Glover Road,
Ikoyi, Lagos, Nigeria
Board of Directors
Mr. Tony O. Elumelu, CON
Mr. Obinna Ufudo
Mr. Kayode Fasola
Dr. Stanley Inye Lawson
Mr. Chibundu Edozie
AuditorsPricewaterhouseCoopers
Chartered Accountants
Plot 252E Muri Okunola Street
Victoria Island, Lagos
Bankers
UBA Plc
First Bank of Nigeria Plc
Wema Bank Plc
Keystone Bank Plc
Fidelity Bank Plc
First City Monument Bank Plc
Africa Finance Corporation
Company Secretary
Mr. Chinedu N. Eze
38 Glover Road
Ikoyi, Lagos
Registrars
220B Ikorodu Road
Palmgrove, Lagos
Chairman
President/CEO
www.transcorpnigeria.com

- Transnational Corporation of Nigeria Plc

Transcription

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