ANNUAL REPORT AND CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2010
RC. 61123 8
Ideas Opportunit ies Wealth 1 Content Pages Corporate Information 2 Notice of Annual General Meeting 3 Chairman's Statement 4-7 Board of Directors Pictures 8-9 Corporate Governance Report 10-20 Directors' Report 21-24 Statement of Directors' Responsibilities 25 Report of the Audit Committee 26 Report of the Independent Auditors 27-28 Statement of Significant Accounting Policies 29-33 Profit and Loss Account 34 Balance Sheet 35 Cash Flow Statement 36 Notes to the Financial Statements 37 - 46 Statement of Value Added 47 Five year Financial Summary 48 Proxy Form 49 Mandate Form 50 Notes 51-52
Annual Report & Consolidated Financial Statements For the Year Ended 31 December 2010 2
Corporate Information
Company Registration No. RC 611238
Registered Office: 11, Alfred Rewane Road, Ikoyi, Lagos, Nigeria.
Board of Directors: Prof. Mrs. Ndi Okereke-Onyiuke, OON Chairman Mr. Nicholas Okoro, GMD/CEO Otunba Funso Lawal, OON Mr. Adegboyega Olulade Dr. Olusegun Salako (representing Nashville Capital Partners) resigned March 2011 Dr. Julius Kpaduwa (representing Nashville Capital Partners) appointed March 2011 Olorogun O’tega Emerhor, OON Mr. Kayode Fasola Mr. Femi Otedola (resigned February 2011) Mr. Emmanuel Nnorom (resigned April 2011) Mr. Tony Elumelu, MFR (appointed April, 2011) Chief O.B. Lulu-Briggs (alternate Chief Mrs. Seinye O.B. Lulu-Briggs) Alhaji Mohammed Nasir Umar
Auditors: PricewaterhouseCoopers Chartered Accountants Plot 252E Muri Okunola Street Victoria Island, Lagos.
Bankers: UBA Plc Zenith Bank Plc First Bank of Nigeria Plc Union Bank of Nigeria Plc Intercontinental Bank Plc Wema Bank Plc Skye Bank Plc Unity Bank Plc
Company Secretary: Mrs. Helen Iwuchukwu 11, Alfred Rewane Road, Ikoyi, Lagos
Registrars: Afribank Registrars 2A, Gbagada Expressway Anthony Village, Lagos
Annual Report & Consolidated Financial Statements For the Year Ended 31 December 2010 3
NOTICE IS HEREBY GIVEN that the 5th Annual General Meeting of Transnational Corporation of Nigeria (Transcorp) PLC will be held on Thursday the 15th day of September 2011. at the Transcorp Hilton Hotel, No 1, Aguiyi Ironsi Street, Maitama, Abuja, FCT at 11.00am for the transaction of the following business:
Ordinary Business To receive and consider the audited accounts for the year ended 31 December, 2010 and the report of the Directors, Auditors and Audit committee thereon.
To re-elect the retiring directors.
To confirm the appointment of Mr. Tony Elumelu, MFR and Dr. Julius Kpaduwa to the Board of Directors.
To fix the remuneration of the directors.
To re-appoint the Auditors
To authorize the Directors to fix the remuneration of the Auditors.
To elect members of the Audit committee
Dated this 28th day of July, 2011
By order of the Board
HELEN IWUCHUKWU (MRS) Company Secretary 11, Alfred Rewane Road Ikoyi,Lagos.
Proxies A member of the company entitled to attend and vote at the meeting is entitled to appoint a proxy to attend and vote instead of him/her. A proxy need not to be member of the Company. A proxy for an organisation may vote on a show of hand and on a poll. To be valid, executed forms of proxy should be deposited at the registered office of the Company or with the Registrars not less than 48hours before the time of holding the meeting.
Notes: Audit Committee In accordance with section359(6) of the Companies and Allied Matters Act, CAP C20 LFN 2004, a shareholder may nominate another shareholder for appointment as member of the audit committee by giving notice to the company secretary at least 21days before the Annual General Meeting.
Closure of Register and Transfer Books Notice is hereby given that, the Register of Members and Transfer Books will be closed from the 31st of August, 2011 to the 15th September, 2011 both days inclusive.
Annual Report & Consolidated Financial Statements For the Year Ended 31 December 2010 4
Dear Shareholders,
In 2010, Transnational Corporation had its second consecutive year of growth. Our revenues were stable and we have taken concrete steps to improve profitability in the coming years. Importantly, for the first time since the company became listed on the Nigerian Stock Exchange, the Board and management were able to focus more on our business without the distractions of previous years. This is a testimony to the internal cohesion and dedication of the Board and management, as well as the effectiveness of strategies adopted to address the key concerns of all the stakeholders. We will build on this to deliver on your (Shareholders’) expectations towards gaining your confidence and support. Financial Performance Review Fellow shareholders, despite the difficult operating environment and many challenges faced by the company in Year 2010, we managed to improve upon the performance of the previous years and your company is gradually moving towards realising the values in its brand proposition with a view towards delivering superior financial returns to its stakeholders. The company recorded gross revenues of N2.38 billion as against N2.79 billion in 2009, a marginal decline of 15% attributed to provisions for expansion of the Transcorp Hilton Hotel Abuja and accrued tax liabilities for prior years. While the company managed to keep its operating expenses at about the same level (1.44 billion) over the two years.
The group total revenue increased by 7% from N12.99billion in the preceeding financial year to N13.93 billion during the review period. While, the group operating expenses increased by 20% from N4.53 billion to N5.47 billion for the financial year due to refocusing of our businesses strategy within the group.
During the year under review, the company recorded a significant increase of 3298% or N3.36 billion in its profit before tax over the previous year; increasing from N101million to N3.46 billion. Similarly, group profit before tax increased from N3.23 billion in 2009 financial year to N6.91 billion in the reporting period, representing a growth of 114% or N3.68 billion. This growth was a result of deliberate refocussing of the company's business as well as a write back of N2.85billion provision made in prior year for investment in OPL281 which was considered lost, but now reallocated to the company in February 2011. This marked an important turning point in the history of the company. Hence, Year 2010 operating results and performance is remarkable and commendable, given the enormity of the challenges in the operating environment.
Balance Sheet The company's total assets grew by 31% from N16.40 billion to N21.52 billion, while its networth decrease slightly from N15.75 billion to N15.24billion during the period under review. The decrease in the net worth is the result of the recognition of N3.83 billion excess owner returns received from Hilton Hotel between 2007-2009 which has been provided for in the company books. While, the group's total assets increased by 23% from N34.75 billion to N42.96 billion, its networth increased by N3.69 billion, representing a growth of 16% over the previous year. Total liabilities increased by 38% from N11.81 billion to N16.33 billion in the financial year.
The company's shareholders funds stood at N15.24 billion in comparison with N15.75 billion in 2009, the reserves position remains at the same level for both years inspite of N3.32 billion profit made during the year 2010, the reason was that the N3.38 billion excess owner returns received from Hilton Hotel between 2007 -2009 was written off against the profit made during the year.
Annual Report & Consolidated Financial Statements For the Year Ended 31 December 2010 5
Business Update In my last letter, I had assured shareholders that our business model was solid, just as Transcorp was poised for its next phase of growth. Our model, which is built on identifying undervalued assets in high potential sectors with owners looking for a partner that has the capital resources and managerial reserve to upgrade and boost operations, is very healthy. After five years of making major investments in sub-optimised assets we have learnt a great deal about the financing, operating and governance structures that work best for our shareholders.
It gives me great pleasure to inform you that we have indeed entered the next phase of Transcorp’s growth. I will share with you the progress we have made on three of our recent projects.
As you will recall, we concluded the acquisition of Metropolitan Hotel Calabar in June 2010 and rebranded it ”The Transcorp Metropolitan Hotel and Conferencing Limited”. Since then, we have established an interim management pending the identification and selection of a suitable hotel management brand for the hotel. In the meantime, the interim management launched a marketing campaign in major cities of Nigeria to raise the hotel’s visibility and create awareness among event planners, conference organizers, holiday makers, corporations and government agencies. The response has been encouraging. Our projection is that the hotel will be accretive to earnings after a year of full operations by a suitable hotel managment chain. Our vision is to make the Transcorp Metropolitan the exemplar of first rate hospitality and destination point in Calabar as part of the company's larger/global aspiration of becoming the prime provider of accommodation, entertainment, leisure and hosting properties in Nigeria.
In pursuit of this vision, Transcorp has commissioned a leading architectural firm to prepare designs for the proposed Transcorp Ikoyi Hilton on Rumens Road, Ikoyi Lagos. The property, conceived for mixed development; will have multi-category guest accommodation, condominiums, ballroom, meeting halls, convention venues, casino, high-end retail shopping, luxurious fitness facilities and unrivalled gastronomic delights in the renowed tradition of the Hilton group. In addition, the property on completion, will house the corporate group office of Transnational Corporation of Nigeria Plc. Our schedule is to break ground on the project in 2012 to be ready for grand commissioning in 2015. On completion, the hotel will redefine the generally accepted standards for luxury in Nigeria.
Together with the Transcorp Hilton Abuja, these hotels will complete the first phase of Transcorp’s masterplan for the hospitality sector. In the second phase, Transcorp will closely examine opportunities in other high density Nigerian cities with strong business visitor traffic and events calendars including Port Harcourt, Ibadan, Enugu, and Kano.
Transcorp’s partnership and history with Hilton Hotels is proof of a winning team that discerning visitors and event organizers have come to trust. Therefore, it did not come to us as a surprise when your hotel, Transcorp Hilton Abuja won the award as the best Hilton Hotel in Africa and Asia in Year 2010. We hope to leverage on this success in the proposed Transcorp Ikoyi Hilton in the near future.
In the agricultural sector, Teragro Commodities Limited, Transcorp’s wholly owned agro-allied business subsidiary, has signed a long term lease agreement with the Benue state government for Benfruit, a new fruit concentrate processing plant. Over several months Transcorp held extensive negotiations with Benue state officials and central stakeholders to fine-tune the terms of an agreement that would be wealth generative for our shareholders and its citizens. The state, which already has a good reputation for private-public partnerships in the agro-allied segment, has offered Transcorp terms that are flexible and attractive. The lease will be for an all-cash consideration paid in phases over the lease period.
Annual Report & Consolidated Financial Statements For the Year Ended 31 December 2010 6
Naturally, as Transcorp’s first investment in the sector, our Board and management team have spent considerable time studying the opportunity, fine-tuning our business plan and identifying the managers to execute on it. We also devoted a fair amount of time to analyzing the risks and challenges of participation in this vital sector. Due to strategic importance of agriculture to national development and the number of Nigerians dependent on it for their livelihoods, government interventions through import bans, tariff hikes and exclusive import licenses can significantly affect the economics of large scale capital ventures in the sector. In developing our models, we have maintained a very disciplined conservatism on projected demand, price elasticity, energy costs and other key variables. According to these different measures, the investment retains its appeal.
In selecting the existing plant owned by Benue state rather than building a new plant Transcorp had a number of considerations in mind. Foremost of these was the need for speed to market. The Benfruit plant is new and will be commissioned before the end of 2011. Building a new plant would take no less than eighteen months from the site design, approvals phase, and equipment order placement to installation. The next factor that influenced our decision was that the opportunity was there. The Benue state government had expressed its intention to lease the plant. The third factor was that by engaging with the Benue state government as partner, Teragro and Transcorp have a higher confidence level of success. Earlier, I had alluded to our experience working with legacy stakeholders and governments as partners. This informed our proposals during negotiations on the best terms for the transaction. Now that Teragro has concluded the deal, we are reasonably sure that we would have an understanding that gives our shareholders both the security and return they should expect. The last point that convinced us of the merit of the transaction was the willingness of the Benue state government to lease rather than insist on an outright purchase. This draws a line on the risk Transcorp will bear and greatly reduces the costs all round.
Our effort to activate our energy portfolio is yielding results. Transcorp recorded considerable progress with the Department of Petroleum Resources for the recovery of OPL 281. The Oil block, hitherto revoked, was reallocated to Transcorp in February 2011 after the payment of the balance of signature bonus on the Oil block. In order to operationalise the oil block, Transcorp has identified technnical and financial partners respectively in EER and SacOil, a pan-African energy company listed on the Johannesburg Stock Exchange, to take up equity in the block and provide the resources for its development.
Similarly, Transcorp has initiated discussions with the Bureau of Public Enterprises and the Presidency for the refund of debt owed Transcorp by NITEL. In 2006, Transcorp had paid $500million (amounting to about N63 billion) as part of the global purchase price for 51% equity stake in the company. As part of the terms of a transfer deal reached with the federal government, loans and interest totaling N85billion have been repaid to the banks that financed the acquisition of NITEL by Transcorp. However, consequent upon the reversal of the sale by government in Year 2009, the sum of N5.5billion representing loans granted NITEL by Transcorp is due for payment.
From the foregoing, it is clear that Transcorp is a company moving in the right direction. The challenge for us now is to move faster with greater determination. At this point, I would like to single out for special commendation Mr. Nicholas Okoro, the Group Managing Director, and his management team. They have toiled extremely hard, under the guidance of the Board, to bring Transcorp this far. On the part of the Board, we are committed to supporting them build capacity at the corporate headquarters in terms of training, hiring and other administrative resources to support the current structure as well as match the direction that is evolving.
Annual Report & Consolidated Financial Statements For the Year Ended 31 December 2010 7
The ground we covered in 2010 sends a strong signal that Transcorp is back on track. Long gone are the days when Transcorp came close to becoming a byword for unrealized dreams. None of these could have been achieved without the unflinching support we received from you, our shareholders. On behalf of the Board and management I would like to thank you immensely for your support, patience and understanding over the years. I will also like to reassure you that we will continue to steer the ship of Transcorp in a way that guarantees value to you at all times.
Thank you.
Prof. Mrs. Ndi Okereke - Onyiuke, OON CHAIRMAN, BOARD OF DIRECTORS
Annual Report & Consolidated Financial Statements For the Year Ended 31 December 2010 8
Board of Directors
Prof. Mrs. Ndi Okereke-Onyiuke, OON Nicholas Okoro Chairman, Board of Directors Group Managing Director/CEO
Otunba Funso Lawal, OON Olorogun O’tega Emerhor, OON Director Director
Mr Kayode Fashola Mr Tony Elumelu, MFR Director Director (Appointed Apr 2011)
Annual Report & Consolidated Financial Statements For the Year Ended 31 December 2010 9
Board of Directors
High Chief O. B. Lulu Briggs Mr Adegboyega Olulade Director Director
Dr. Julius Kpaduwa Alh. Nasir Umar Appointed March 2011 Director
Mr Emmanuel Nnorom Dr. Olusegun Salako Director (Resigned Apr 2011) Director(Resigned Mar 2011)
Mr Femi Otedola Director (Resigned Feb 2011)
Annual Report & Consolidated Financial Statements For the Year Ended 31 December 2010 10
Background Transcorp Plc is committed to best practices & principles enshrined in the code of Corporate Governance in Nigeria as well as international best practices and procedures in Corporate Governance. The corporate governance practices of the company are constantly reviewed in the day to day running of the company and Transcorp strives to be compliant with the code and best practices. The Board of Directors adopts corporate governance policies which ensure that the businesses of Transcorp are conducted in an honest, transparent manner and with high ethical standards.
Board of Directors and Composition The day to day running of the company is managed by the GMD/CEO supported by the Group Management Team. The Board is made up of 11 members: 1 Executive Director, 1 Chairman and 9 Non–Executive Directors. The non – executive Directors serve on the various Board Committees depending on their areas of expertise or specialties where their respective knowledge and experience is most valuable. The following Directors served on the Board in the year 2010 following their re-election by the shareholders at the last Annual General Meeting.
1 Prof. Mrs. Ndi Okereke - Onyiuke OON - Chairman 2 Otunba Funso Lawal, OON 3 Mr. Nicholas Okoro - Group Managing Director/Chief Executive Officer 4 Mr. Femi Otedola (Resigned Feb 2011) 5 Mr. Adegboyega Olulade 6 Olorogun O’tega Emerhor, OON 7 Chief O. B. Lulu-Briggs ( alternate Chief Mrs. Seinye O. B. Lulu-Briggs) 8 Dr. Olusegun Salako (representing Nashville Capital Partners Limited) 9 Alhaji Mohammed Nasir Umar 10 Mr. Kayode Fasola 11 Mr. Emmanuel Nnorom (Resigned Apr 2011)
Profile of the Directors:
Prof. Mrs. Ndi Okereke - Onyiuke- OON Professor Ndi Okereke-Onyiuke, OON has served as the Chairman of the Board since the company’s inception in 2004. She graduated Magna cum laude and holds an MBA from New York State University. Prof Okereke-Onyiuke is the former Director General of the Nigerian Stock Exchange.She is the world’s first woman to head a stock exchange and unarguably the most influential woman in Nigeria's corporate world today. She was an integral part of the team that created the “All Nigeria Share Index (ANSI), an invaluable guide to investors and economy monitors. She pioneered the automation of the country’s stock exchange processes, which has reduced the risk profile of the Nigerian stock market among other benefits.
Mr. Nicholas Okoro Nicholas Okoro is an investment banker and turn-around manager with over 28 years experience in Consulting, Privatization among others. He has held top management positions in several Nigerian companies and banks. Nicholas was a key member of the team that pioneered the privatisation program of the Federal Government in 1989. He frequently consults for governments and corporations on economic and management issues. He holds a B.Sc degree (1981) of the University of Nigeria Nsukka; an MBA degree (1984) of the University of Lagos. A Chartered Stockbroker, he is a member of the Nigerian Institute of Management and in 1985 won the Young Manager of the Year competition (Lagos Zone) organized by the Institute.
Annual Report & Consolidated Financial Statements For the Year Ended 31 December 2010 11
Mr. Femi Otedola Mr Femi Otedola is the President and Chief Executive Officer of Zenon Petroleum & Gas Limited, an indigenous company engaged in the procurement, storage, marketing and distribution of petroleum products. Zenon is today rated among the top five companies in the country. 1n 2001, he established Seaforce Shipping Company Limited, a modern tanker fleet of four vessels that transport petroleum products. He is the owner of Atlas Shipping Agency, Swift Insurance, FO Properties Limited and FO Transport and currently the President of the Nigerian Chamber of Shipping. He is also a member of the governing council of the Nigerian Investment Promotion Council. Mr Femi Otedola resigned in Feburary, 2011.
Otunba Funso Lawal, OON Otunba Funso Lawal, OON, holds a B.Sc and M.Sc from the University of Wisconsin-Madison USA. He joined CitiBank Nigeria in 1985, where he rose to the position of Assistant Vice President before joining Oceanic International Bank as a pioneer staff. He is the executive chairman of Sogenal Oil & Gas Company, an indigenous oil exploration and production company which has been successful in pioneering indigenous technology in the offshore terrain of the oil & gas industry. Otunba Funso Lawal is also a prominent member of the Nigerian Economic Summit Group (NESG) and sits on the boards of Prime Trust Insurance, Rosenthal Trust Limited and Brian Information Technology Company.
Mr. Adegboyega Olulade Mr Adegboyega Olulade is a graduate of the University of Ife (now Obafemi Awolowo University) Ile- Ife. An investment banker, stockbroker and financial consultant, he was at various times the head of capital and money market of Farida Investment and Securities Limited, a member of the Nigerian Stock Exchange.He was group head (assistant general manager), corporate finance in Ivory Merchant Bank Limited and MD/CEO of Frederickson Finance and Securities Limited. He joined Adonai-Tekts Investment Limited as the Executive Vice Chairman. He is the chairman of many companies including Adonai-Net Nigeria Limited – a telecommunications company, and Marde Properties and Investment in South Africa.
Olorogun O'tega Emerhor, OON Olorogun O’tega Emerhor, OON, holds a First Class degree in Accountancy from University of Nigeria, Nsukka (1983). He holds fellowships from 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. He trained as a chartered accountant at the renowned PriceWaterhouseCoopers and has worked in several Banks. Olorogun Emerhor is currently the Vice Chairman/Group CEO of Standard Alliance Insurance Plc; former Vice Chairman, First Inland Bank Plc; Chairman, Synetics Technologies Ltd and Heroes Group. He holds directorships in a number of companies and he has received various prestigious awards.
Chief O.B Lulu Briggs Chief O.B. Lulu-Briggs is the Chairman/Managing Director of Moni Pulo Limited, one of Nigeria’s leading oil services companies. He is an industrial magnate and renowned statesman. His alternate representative on the board is Mrs Seinye O.B. Lulu-Briggs, a seasoned administrator and astute businesswoman, and the current Executive Vice Chairman of Moni Pulo Limited. She is also the Chief Executive of Rachael Hotels Limited. Mrs Lulu-Briggs is a graduate of the Institute of Data Processing Management, London. She has attended specialized training programmes in and outside Nigeria and she also serves as a Non-Executive Director on the board of Intercontinental Bank plc.
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Mr. Kayode Fasola Mr. Kayode Fashola is a professional banker with over 20 years of cognate experience. He holds a B.Sc Degree from University of Ibadan, an MBA (Finance) Obafemi Awolowo University, Ile-Ife, and an MBA (Banking) Ladoke Akintola University, Ogbomoso. He is an alumnus of the prestigious Lagos Business School and the London Business School (University of London). Kayode started his career in Nigeria Agricultural Co-operative and Rural Development Bank, Kaduna. He has cognate experience in the banking industry that covers Corporate Banking, Commercial Banking, Public Sector, Relationship Management, Risk and Performance Management. He has held various Management positions in the banking industry and currently in charge of South West Business Group of Wema Bank Plc. He is an Associate Member of the Chartered Institute of Management, Member National Institute of Marketing of Nigeria and an Honorary Senior Member, Chartered Institute of Bankers of Nigeria.
Mr. Emmanuel Nnorom Mr. Emmanuel Nnorom is a seasoned auditor and banker with over 2 decades of experience working with several companies quoted on the Nigerian Stock Exchange. He is an Alumnus of the Oxford University Templeton College and a Fellow of the Institute of Chartered Accountants of Nigeria (ICAN) and the Chartered Institute of Bankers of Nigeria (CIBN). He trained as an accountant with Peat Marwick Castleton Elliot & Co., winning the First Prize in the finals of the May 1982 diet of ICAN examinations. Mr. Nnorom has held several key positions in the Banking and Manufacturing industry. He was appointed an Executive Director with UBA Plc since 2008 and is currently the Executive Director responsible for the Group finance directorate. Mr. Nnorom resigned in April 2011 and was replaced by Mr. Tony Elumelu, MFR
Dr. Olusegun Salako (Nashville Capital Partners) Dr. Olusegun Salako is a graduate of biology and medical technology from the Roosevelt and Rush University in Chicago. He studied Medicine in the University Of Illinois College Of Medicine and graduated with an MD degree in 1981. His postgraduate education was at Henry Ford Hospital, Detroit Michigan where he completed a Residency specializing in Obstetrics and Gynaecology and is Board certified.He is a founding member and past President of the Association of Nigerian Physicians in the Americas. He has held several top ranking medical positions and has received numerous awards in teaching. Salako has participated in free medical missions to various parts of Nigeria since 1997. He is a fellow of the American College of Obstetricians and Gynaecologists and the International College of Surgeons. Dr. Salako resigned in March 2011 and was replaced by Dr. Julius Kpaduwa.
Alhaji Mohammed Nasir Umar Alhaji Mohammed Nasir Umar is a graduate of Ahmadu Bello University, Zaria. He started his career with Sokoto Rima River Basin Development Authority in 1977 and obtained his M.Sc in Land Surveys in 1985. He was a Director of Planning & Survey of the Federal Capital Development Authority (FCDA) 1988-1994. He has vast and varied experience in Lands and Survey matters spanning over a period of 32 years post qualification. He has held many important position and responsibilities and is currently the Chairman/CEO of Em-N Surveys & Engineering. Alhaji Umar has attended several National and International Conferences, Seminars and workshops on Lands and Survey matters. He is a Registered Surveyor by Surveyors Council of Nigeria and a fellow of the Nigeria Institution of Surveyors (FNIS).
Frequency of Meetings The Board met six (6) times in the year 2010 to consider the following key matters. Corporate strategy, annual corporate plan, internal control systems, review of financial performance, formulation of growth strategies, new business opportunities and to direct the operations and affairs of the Company and its subsidiaries. All directors except one attended meetings regularly in the year 2010. The record of attendance at Board meetings is available for viewing at the head office, 11 Alfred Rewane Road, Ikoyi, Lagos and available for inspection at the Annual General Meeting in line with the provisions of section 258(2) of the Companies and Allied Matters Act, Cap C20 Laws of the federation of Nigeria 2004.
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Roles and Responsibilities of the Board of Directors. The powers and duties of the Board of Directors are as contained in the Articles of Association of the Company and as statutorily provided for under the Companies and Allied Matters Act Cap C20 Laws of the Federation of Nigeria, 2004.
The Articles provide the following key matters:- Composition, membership and size of the Board, balance of powers, role of the Board, duties of Directors, role of the Chairman, the Chief Executive Officer and the Company Secretary, division of responsibilities between the Board and Management, matters reserved for the Board, relationship with key stakeholders, governance and duties of Directors.
Appointment and Resignation To ensure a rigorous and transparent procedure, any appointment, resignation or removal of a director is considered by the board as a whole. Non – executive directors are required to devote sufficient time to the Company’s affairs. There is no formal limitation on the number of board appointments that non – executive directors can hold but all directors are required to carefully consider the number of appointments they take so as to ensure that they have the time and capacity to properly and comprehensively carry out their duties as directors. Non-executive directors are required to advise the board of any subsequent changes to or additional commitment from time to time. All board appointments meet the requirements of the Companies and Allied Matters Act and comply with the Articles of Association. The Board maintains a policy that a Board composition consisting of 9-11 members is sufficient. The current Directors are well resourced and experienced.
Retirement of Directors by rotation The Company’s Articles of Association provide that the directors who have been longest in office since the last election are required to retire at each annual general meeting (AGM) and may offer themselves for re- election. At the last Annual General Meeting, all directors retired and were re-elected by shareholders. At the AGM all other directors except Dr. Julius Kpaduwa and Mr. Tony Elumelu, MFR will retire by rotation in accordance with the Articles of Association. Being eligible for re-election, all retiring Directors have offered themselves for re-election.
Board Remuneration and other information Details of remuneration paid to directors are set out below. Non-executive directors receive fees for their membership and attendance at meetings of the Board and committees on which they serve. Proposals on non-executive directors’ remuneration are reviewed by the board, following recommendations by the Establishment Committee.
Directors Sitting Annual Fee Other Total Allowances Emoluments
Non-executives Prof. Mrs. Ndi Okereke - Onyiuke, OON 1,000,000 600,000 6,455,996 8,055,996 Otunba Funso Lawal, OON 750,000 500,000 5,925,996 7,175,996 Mr. Femi Otedola - - - - Mr. Adegboyega Olulade 750,000 500,000 5,925,996 7,175,996 High Chief O.B Lulu Briggs (Alternate Mrs Seinye O. B. Lulu Briggs) 450,000 - - 450,000 Mr. Kayode Fasola 900,000 500,000 5,925,996 7,325,996 Mr. Emmanuel Nnorom 600,000 500,000 5,925,996 7,025,996 Dr. Olusegun Salako (representing Nashville Capital Partners) 900,000 500,000 5,925,996 7,325,996 Olorogun Otega Emerhor, OON 900,000 500,000 5,925,996 7,325,996 Alhaji Mohammed Nasir Umar 600,000 500,000 5,925,996 7,025,996 Dr. Ogunkoya (Nashville Capital Partners) 100,000 - - 100,000 Executive Mr. Nicholas Okoro - - 5,925,996 5,925,996
Annual Report & Consolidated Financial Statements For the Year Ended 31 December 2010 14
Particulars of Directors
Directors Age Director Scheduled Special Board Since Board Meetings Meetings Attended Attended Non-Executives Prof. Mrs. Ndi Okereke - Onyiuke, OON 61 years 2004 3 2 Otunba Funso Lawal, OON 56 years 2004 4 1 Mr. Femi Otedola 2006 - - Mr. Adegboyega Olulade 50 years 2005 1 - Chief O.B. Lulu Briggs (alternate Mrs. Seinye O. B. Lulu Briggs) 81 years 2007 3 - Mr. Kayode Fasola 47 years 2009 4 2 Mr. Emmanuel Nnorom 53 years 2009 3 1 Dr. Olusegun Salako (representing Nashville Capital Partners) 61 years 2009 4 2 Olorogun O’tega Emerhor, OON 54 years 2007 4 2 Alhaji Mohammed Nasir Umar 59 years 2008 3 1 Executive Mr. Nicholas Okoro 58 years 2009 4 2
Schedule of attendance of meetings held during the year
Board Meetings
The Board of Directors met 6 times in the year 2010. The attendance register and minutes are available for viewing by members of the company at 11, Alfred Rewane road, Ikoyi, Lagos and at the Annual General Meeting.
Directors Ordinary Ordinary Ordinary Emergency Pre-AGM Ordinary Board Board Board Board Board Board 25/02/2010 01/06/2010 29/07/2010 20/08/2010 13/10/2010 14/12/2010 Non Executives Prof. Mrs. Ndi Okereke - Onyiuke, OON x x - x x x Otunba Funso Lawal, OON x x x - x x Mr. Femi Otedola ------Mr. Adegboyega Olulade - - x - - - Chief O.B. Lulu Briggs (alternate Mrs Seinye O.B. Lulu Briggs) - - x - - x Mr. Kayode Fasola x x x x x x Mr. Emmanuel Nnorom x x - x - x Dr. Olusegun Salako x x x x x x (representing Nashville Capital Partners) Olorogun Otega Emerhor, OON x x x x x x Alhaji Mohammed Nasir Umar x x x x - x Executives Mr. Nicholas Okoro x x x x x x
Annual Report & Consolidated Financial Statements For the Year Ended 31 December 2010 15
Group Company Secretary Mrs. Helen Iwuchukwu is the Company Secretary. The company secretariat is a central source of information and advice to the Board and committees within the company and the subsidiaries on matters of ethics and good governance. Through its investor relations arm liaises with the company’s registrars on all issues affecting shareholders. The company secretary assists the parent board, committees, subsidiaries board and committees in their deliberations, drawing the attention of members to their legal duties and ensuring, together with the Group Managing Director and senior management, that decisions of the board are properly implemented. Appointment and removal of the company secretary are matters for the Board as a whole. The company secretary ensures that in accordance with pertinent legislations, the proceedings and affairs of the Board and its members, the company itself and, where appropriate, the owners of securities in the company are properly administered. The company secretary ensures compliance with Regulatory and Listing Requirements of SEC and NSE. The company secretary also assists in developing the annual board plan and ensures compliance with the statutory requirements of the Company and its subsidiaries. Independence of Directors The Board comprises a majority of non–executive directors. A rigorous policy of disclosure of interests is followed to mitigate conflicts of interest of non – executive directors. Delegation of Authority and Risk Management The ultimate responsibility for the Group’s operations rests with the board. The board retains effective control through a well developed governance structure of board committees that specialise in specific areas of the business. Necessary authorities have been delegated to the Group Managing Director (GMD) to manage the day-to-day business affairs of the Company. The establishment, finance and new business committees assist the GMD in discharging his duties and the duties of the board when it is not in session. However, in terms of statute and the Company’s Articles of Association, certain matters are reserved for the board and/or shareholders approval. The delegation of authority is reviewed periodically to ensure it remains aligned and relevant in relation to the rapid growth of the Company. Future amendments will also include the integration of a risk appetite framework, which has recently been adopted by the Group, with a view to identifying, classifying, escalating and mitigating risks.
Dealings by Directors in Company Securities The Company has a policy that regulates dealings by directors.
Governance Structure and Changes in 2010 This section provides an overview of the Company’s formal governance structure and related mechanisms. This structure is largely replicated in significant Transcorp subsidiaries. In all subsidiary operations, the statutory audit committee assumes the additional responsibilities of risk management and compliance. The board has a diversity of talent, expertise and experience. This is put to good use through various carefully structured board committees and is partly reflected by the number of board and committee meetings held during the year under review. These are presented below:
The Governance structure of the company did not change in 2010 and consists a) The Board of Directors. b) The Global Management Team: Fully executive and apart from the Group Managing Director/Chief Executive Officer, other members are Heads of departments. c) The Statutory Audit Committee: comprises of equal representation from Board of Directors and Shareholders.
Responsibility for good Corporate Governance in the day to day running of the Company is placed on both the Board of Directors and the Global Management Team. The Group Managing Director is the Chief Executive Officer of the Company. Annual Report & Consolidated Financial Statements For the Year Ended 31 December 2010 16
GROUP BOARD OF DIRECTORS
ESTABLISHMENT COMMITTEE
GLOBAL NEW BUSINESS COMMITTEE MANAGEMENT TEAM
FINANCE COMMITTEE
INTERNAL AUDIT COMMITTEE AUDIT
Transnational Corporation of Nigeria Plc is a holding company with shareholding interests and oversight responsibility for subsidiaries within the group. The Boards of the subsidiaries report to the Board of Transnational Corporation of Nigeria Plc (the parent board) who are accountable to the shareholders. a) Changes in the Board of Directors: There was one change in the composition of the Board in the year 2010. Following the company's exit from NITEL in 2009 the lender Banks who were Directors of the company in view of Nitel loan left the Board. Consequently, Mr Maurice Phido (representing Union Bank of Nigeria Plc resigned in February, 2010) b) Changes in the Group Management Team Two (2) members of the Group management team resigned in the year 2010.
Enhancing good Corporate Governance The following have been undertaken as part of normal compliance with policies enhancing good Corporate Governance.
Annual Report & Consolidated Financial Statements For the Year Ended 31 December 2010 17
Board Committees: Composition and Attendance to Meetings Board Committees: Composition and Attendance to Meetings a) The establishment Committee, met two times and reviewed the employee policy manual, the a) The establishment Committee, met two times and reviewed the employee policy manual, the organisation struture and other related matters. Membership of the Committee is as follows: organisation struture and other related matters. Membership of the Committee is as follows: Names Attendance 28-05-2010 11-12-2010 Names Attendance 28-05- 10 11-12- 10 1) Mr. Emmanuel Nnorom ………Chairman x x 1) Mr. Emmanuel Nnorom ………Chairman x x 2) Mr. Kayode Fasola...... Member x x 2) Mr. Kayode Fasola...... Member x x 3) Mr. Nicholas Okoro...... Member x x 3) Mr. Nicholas Okoro...... Member x x 4) Dr. Olusegun Salako...... Member x x 4) Dr. Olusegun Salako...... Member x x b) New Business Committee was reconstituted as a result of new businesses being pursued or b) New Business Committee was reconstituted as a result of new businesses being pursued or invested in, especially in the oil & gas, agriculture and hospitality sectors. The committee met invested in, especially in the oil & gas, agriculture and hospitality sectors.The committee met two times in the year 2010. Membership of the Committee is as follows; two times in the year 2010. Membership of the Committee is as follows; Names Attendance 18-02-2010 15-12-2010 Names Attendance 18-02- 10 15-12- 10 1) Otunba Funso Lawal, OON ……....… Chairman x x 1) Otunba Funso Lawal, OON ……....… Chairman x x 2) Mr. Nicholas Okoro...... Member x x 2) Mr. Nicholas Okoro...... Member x x 3) Alhaji Mohammed Nasir Umar...... Member - - 3) Alhaji Mohammed Nasir Umar...... Member - - 4) Mr. Kayode Fasola...... Member - x 4) Mr. Kayode Fasola...... Member - x 5) Chief (Mrs) Seinye O.B. Lulu Briggs..Member - x 5) Chief (Mrs) Seinye O.B. Lulu Briggs..Member - x c) The Finance Committee met four (4) times in the year 2010 and regularly reviewed the c) The Finance Committee met four (4) times in the year 2010 and regularly reviewed the management accounts, the monthly income statements, cash position, expenditure items, management accounts, the monthly income statements, cash position, expenditure items, subsidiaries financial performance and quarterly financial reports for regulatory agencies and subsidiaries financial performance and quarterly financial reports for regulatory agencies and publication. Members of the Committee include; publication. Membership of the Committee is as follows: Names Attendance 22-2-10 21-5-10 13-8-10 10-12-10 Names Attendance 22-2-10 21-5-10 13-8-10 10-12-10 1) Olorogun O’tega Emerhor, OON …….Chairman x x x x 1) Olorogun O’tega Emerhor, OON …….Chairman x x x x 2) Mr. Nicholas Okoro...... Member x x x x 2) Mr. Nicholas Okoro...... Member x x x x 3) Mr. Kayode Fasola...... Member - - - - 3) Mr. Kayode Fasola...... Member - - - - d) Audit Committee d) Audit Committee The Statutory Audit Committee met three (3) times in the year 2010. The members of the The Statutory Audit Committee met three (3) times in the year 2010. The membership of the committee include; committee include; 1) Chief Sylvanus Ezendu …………….....Chairman, representing the shareholders Names 2) Mr. John Umobuarie Isesele ...... Member, representing the shareholders 1) Chief Sylvanus Ezendu …………….....Chairman, representing the shareholders 3) Alhaji Abu O. Jimah ...... Member, representing the shareholders 2) Mr. John Umobuarie Isesele ...... Member, representing the shareholders 4) Olorogun O’tega Emerhor, OON ....Member, non-executive director 3) Alhaji Abu O. Jimah ...... Member, representing the shareholders 5) Mr. Emanuel Nnorom...... Member, non-executive director 4) Olorogun O’tega Emerhor, OON ....Member, non-executive director - - 6) Mr. Kayode Fasola ...... Member, non-executive director 5) Mr. Emanuel Nnorom...... Member, non-executive director 6) Mr. Kayode Fasola ...... Member, non-executive director - The Statutory Audit Committee (the committee) has adopted terms of reference in accordance with Companies and Allied Matters Act (CAMA) and Securities and Exchange Commission (SEC) The Statutory Audit Committee (the committee) has adopted terms of reference in accordance with requirements. The committee is pleased to present below its report in line with the Companies and Companies and Allied Matters Act (CAMA) and Securities and Exchange Commission (SEC) Allied Matters Act. requirements. The committee is pleased to present below its report in line with the Companies and Allied Matters Act.
Names Attendance 16-9-10 7-10-10 29-11-10 1) Chief Ezendu x x x 2) Mr Isesele x x x 3) Alh. Jimah x x x 4) Olorogun O. Emerhor x Nil x 5) Mr Nnorom x x x 6) Mr Fasola N/A x Nil
Annual Report & Consolidated Financial Statements For the Year Ended 31 December 2010
Attendance 16-9-10 7-10-10 29-11-10 x x x x x x x x x Nil x - x x x x = x 18
Composition of the Committee The Statutory Audit Committee (as highlighted above) comprises six persons, made up of three representatives of the Shareholders and three representatives of the Board.
Activities of the committee
The committee performed the following activities during the year under review:
• Examined the auditor's report and made recommendations thereon to annual general meeting;
• Ascertained whether the accounting and reporting policies of the company are in accordance with legal requirements and agreed ethical practices.
• Reviewed the scope and planning of audit requirements.
• Reviewed the findings on internal control report in conjunction with the external auditors and management responses thereon.
• Reviewed the effectiveness of the company’s system of accounting and internal control;
• Made recommendations to the Board with regard to the appointment, removal and remuneration of the external auditors of the company.
• Authorised the internal auditor to carry out investigations into activities of the company and its subsidiaries that are of interest or concern to the committee.
• Authorised that a forensic audit be carried out to determine the extent of financial impropriety that occurred between May 2007 and May 2009.
Internal audit The Internal Audit Department provides an objective and independent assurance on the effectiveness of the company's internal controls by bringing a systematic and disciplined approach to evaluate and improve the effectiveness of the risk management, control and governance processes of the organisation. Transcorp has a robust internal audit department that is appropriately resourced.
Risk management and internal control Risk management is the identification, assessment, and prioritisation of risks followed by co- ordinated and economical application of resources to minimise, monitor, and control the probability of and/or impact of unfortunate events. Transcorp's objective is to embed risk management and appropriate internal controls into the day-to-day running of the business as far as it is practicable and at a reasonable cost. Plans are underway to deploy a robust enterprise risk management system across the group that will be designed to identify potential events that can affect the company and its subsidiaries and manage such risks within tolerable level thereby providing reasonable assurances regarding the achievement of the company's objectives.
Internal Control Current and potential investors, as well as other stakeholders of the Company, require assurance on an engaging basis that the company has sound internal control systems and procedures which by design are adequate to mitigate the risk of loss of shareholders wealth as well as the risk of inaccurate or misleading reporting. The business involves acquisitions and transformation of Nigerian owned businesses to world class standards, as such the business environment is dynamic, and for the
Annual Report & Consolidated Financial Statements For the Year Ended 31 December 2010 19
company to be successful in this ever changing environment, Transcorp Plc has continually adapted itself both in terms of structure and operating processes to ensure that it remains relevant to the needs of its investors, shareholders and other stakeholders.
In the design of its internal control structure, Transcorp Plc places greater emphasis on preventive controls as opposed to detective controls. This ensures that the Financial Statements are reliable. Periodically, Transcorp Plc carries out an Internal Control Assessment of each department on a continuous basis and effects changes that ensure that new control measures are implemented to mitigate any newly identified risks. The following key risks have been identified and mitigating controls have been put in place or are being developed.
Fraud risk and Fraud Risk Management The audit committee is responsible for assessing fraud risk across the Group and driving the implementation of fraud prevention activities, which include whistle blowing processes. Fraud risk management is also responsible for detecting and investigating fraud. The implementation of fraud prevention mechanisms in the Group remains a priority. There was no recorded case of fraud in Year 2010 due to the processes adopted around payment and pre-disbursement audit.
Political Risk Political risk with respect to Transcorp relates to the erroneous impression in some quarters that the company is still a government company, and that any major unforeseen political change or upheaval will affect the company. Transcorp is of the opinion that the current political dispensation will be sustained and there will be political stability. The widely acclaimed success of the April 2011 general elections gave credence to this belief. In addition, this risk is well mitigated by the fact that the company is a publicly quoted company whose shares are listed on the Nigerian Stock exchange.
Conglomerate Risk Transcorp is at risk of losing focus because of diversified activities. Transcorp Group has a well defined value proposition in terms of value it brings to the table. Capital management skills and local knowledge that addresses the core weakness of developing economies. These create a consistent platform for decision making and therefore bring about the synergies which the conglomerate structure can bring in a developing economy like Nigeria.
Inadequate Manpower Risk Transcorp will require a large number of skilled and honest personnel to achieve its objectives. There is a dearth of adequately skilled personnel in the country. Hence, there is a conscious drive to bring highly skilled Nigerians in the Diaspora back to Nigeria, while also embarking on training and retraining of the existing workforce.
Revenue Risk The company's sole source of revenue is from the Transcorp Hilton Hotel. To mitigate this, Transcorp expanded its portfolio in the hospitality sector with the acquisition of the Transcorp Metropolitan Hotel, Calabar. In addition, the Oil block OPL 281 has been reallocated to Transcorp and the company through its subsidiary, Transcorp Energy Limited has entered into a Technical Partnership and a Joint Operating Agreement with Equity Energy Resources (EER) and SacOil of South Africa to operationalise the company's investment in the energy sector. There is a plan to build a Hilton managed Hotel in Ikoyi, Lagos on the company's land at Rumens road. Also, as indicated in other parts of this report, Transcorp’s wholly owned agro-allied business subsidiary has signed a long term lease agreement with Benue State Government for Benfruit, a new fruit concentrate processing Plant. It is hoped that the company will commence production before the end of this year. These strategic moves are geared towards creating new revenue sources for the company.
Annual Report & Consolidated Financial Statements For the Year Ended 31 December 2010 20
Financial Reporting and Accountability The chairman of the finance committee accounts to the board for its activities and makes recommendations to the board regarding the adoption of the annual financial statements and any other matters arising from the above responsibilities. The chairman of the committee is required to attend the annual general meeting to answer questions concerning matters falling within the ambit of the committee.
Stakeholder Communication Transcorp strives to have transparent, open and clear communication with all of its relevant stakeholders. The company therefore ensures that financial and non – financial information is timely and accurately disseminated to relevant stakeholders. Towards this end, external consultants were retained to work with the company's Corporate Communications and Company Secretariat for effective investor relations management.
CSR and Donations The Group contributes to its environment by donations, good governance and healthy competition. Donations during the year include:
COMPANY AMOUNT (N) 1 Rehime Peace Ministry 500,000 2 Sponsorship of ANPA Convention 764,200 3 Association Of Nigeria Physician in the US 600,000 4 Caresunend 50,000 1,914,200
Annual Report & Consolidated Financial Statements For the Year Ended 31 December 2010 21
The Directors are presenting the annual report together with the audited financial statements for the year ended 31 December, 2010 to the members of the Company. This report discloses the state of the Company and the Group. The results, statement of financial position, cash flows and accompanying notes are presented first for the consolidated Group and subsequently for the Company.
INCORPORATION AND ADDRESS The Company was incorporated on 16th November, 2004 as a private limited liability company domiciled in Nigeria in accordance with the requirements of the Companies and Allied Matters Act. In December 2006, the company was listed on the Nigerian Stock Exchange after a successful initial public offer (IPO). 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 - Transcorp Energy Limited - Transcorp Properties Limited - Teragro Commodities Limited - Telecommunication Backbone Development Company Limited (TBDC) (Inactive) - Transcorp Refining Company Limited Ltd (Inactive) - Transcorp Telecomms Ltd (Inactive) - Transcorp Hotels and Leisure Ltd (Inactive) - Transcorp Infrastructure Ltd (Inactive) - Transcorp Trading and Logistics Ltd (Inactive) - Transcorp Commodities Ltd (Inactive) - Transcorp Hilton Ltd (Inactive) - Allied Commodities Ltd (Inactive)
Telecommunications Backbone Development Company (TBDC) has a pending ligitation and has otherwise remained dormant. All other companies except Transnational Hotels and Tourism Services Limited, Transcorp Metropolitan Hotels and Conferencing Limited, Transcorp Energy Limited, Transcorp Properties Limited and Teragro Commodities Limited are dormant and undergoing voluntary winding up proceedings.
PRINCIPAL ACTIVITIES The Company's business is the investment in and operation of portfolio companies in the telecommunications, energy, real estate and hospitality sectors. The Company has retanied 7 subsidiaries and affiliates, all providing services and sale of goods in these sectors.
Annual Report & Consolidated Financial Statements For the Year Ended 31 December 2010 22
RESULTS AND DIVIDEND The Company and Group’s results for the year ended 31 December 2010 are set out on page 34. The profit for the year of N3.32 billion (Group N5.39 billion) has been transferred to general reserves. The summarised results are presented below. The directors did not recommend payment of dividend for the year.
Group Company 2010 2009 2010 2009
N’000 N’000 N’000 N’000 Revenue 13,927,551 12,995,152 2,382,396 2,785,717 Gross profit 9,233,386 8,250,542 2,382,396 2,785,717 Net profit 6,908,216 3,233,160 3,456,849 100,966 Earnings per share 0.21 0.05 0.13 0.00
Our results have been driven by the strategic investments made by the company. Some of the key events which occurred prior to, during and after the presented period and years are discussed below. These have had a significant impact on the results of the operations and financial condition of the Group.
Annual Report & Consolidated Financial Statements For the Year Ended 31 December 2010 23
DIRECTORS' INTERESTS IN CONTRACTS No director indicated interests in contracts with the Company during the period under review.
DIRECTORS’ SHAREHOLDING The direct and indirect interests of directors in the issued share capital of the Company as recorded in the register of directors' shareholdings and register of members and as notified by the directors for the purposes of Sections 275 and 276 of the Companies and Allied Matters Act are as follows:
Director Number of shares held at 31 December 2010
Prof. Mrs. Ndi Okereke - Onyiuke Direct 7,241,964 Indirect Nil
Otunba Funso Lawal Direct 207,200,000 Indirect 200,000,000
Mr. Adegboyega Olulade Direct Nil Indirect 393,505,650
Dr Olusegun Salako Direct 8,725,500 Indirect Nil
Mr. Kayode Fasola Direct 1,000,000 Indirect Nil
Mr. Femi Otedola Direct 891,331,260 Indirect Nil
Chief O.B Lulu-Briggs Direct 67,500,000 Indirect Nil
Mr. Nick Onuoha Okoro Direct 600,000 Indirect Nil
Olorogun O'tega Emerhor Direct Nil Indirect 189,344,966
Mr. Emmanuel N. Nnorom Direct Nil Indirect Nil
Alh. Mohammed Nasir Umar Direct Nil Indirect 3,735,500
Annual Report & Consolidated Financial Statements For the Year Ended 31 December 2010 24
SHAREHOLDING
The shareholding structure of the Company for the year is as follows:
Shareholder No. of Holders Percent Units Percent
1 - 1,000 80,611 27.26 79,886,251 0.31 1,001 - 10,000 161,103 54.48 669,581,169 2.59 10,001 - 100,000 44,704 15.12 1,550,483,502 6.01 100,001 - 1,000,000 8,253 2.79 2,727,553,450 10.57 1,000,001 - 10,000,000 873 0.30 2,442,630,661 9.46 10,000,001 - 100,000,000 112 0.04 3,290,883,687 12.75 100,000,001 - 1,000,000,000 46 0.02 15,052,979,563 58.31
295,702 100 25,813,998,283 100
EMPLOYMENT OF DISABLED PERSONS The Group has a policy of fair consideration of job applications by disabled persons having regard to their abilities and aptitude. The Group’s policy prohibits discrimination of disabled persons in the recruitment, training and career development of its employees. In the event a members of staff becoming disabled, every effort is made to ensure that their employment with the Group continues and that appropriate training is arranged.
EMPLOYEE HEALTH, SAFETY AND WELFARE The Group enforces strict health and safety rules and practices at the work environment, which are reviewed and tested regularly. The group provides free medical insurance for its employees and their families through Company maintained hospitals. Fire prevention and fire-fighting equipment are installed in strategic locations within the Group’s premises.
EMPLOYEE TRAINING AND INVOLVEMENT The Directors maintain regular communication and consultation with the employees on matters affecting employees and the Company. Employees are kept fully informed regarding the company's performance and the company continues with its open door policy whereby views of employees are sought and given due consideration on matters which particularly affect them. Training is carried out at various levels through in-house and external courses. The company's skill base has been extended by a range of training provided to the employees whose opportunity for career development within the company has been enhanced.
DONATIONS AND GIFTS During the year 2010,the Company made donations as detailed in the CSR/donations on page 20.
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.
By order of the Board
Helen Iwuchukwu (Mrs) Company Secretary
28th July, 2011
Annual Report & Consolidated Financial Statements For the Year Ended 31 December 2010 25
The Companies and Allied Matters Act (CAMA) requires the Directors to prepare financial statements for each financial year that give a true and fair view of the state of financial affairs of the Company at the end of the year and of its profit or loss. The responsibilities include ensuring that the Company:
(a) keeps proper accounting records that disclose, with reasonable accuracy, the financial position of the Company and comply with the requirements of the Companies and Allied Matters Act;
(b) establishes adequate internal controls to safeguard its assets and to prevent and detect fraud and other irregularities;
(c) prepares its financial statements using suitable accounting policies supported by reasonable and prudent judgements and estimates, and are consistently applied.
The Directors accept responsibility for the annual financial statements, which have been prepared using appropriate accounting policies supported by reasonable and prudent judgements and estimates, in conformity with Nigerian Accounting Standards and the requirements of the Companies and Allied Matters Act.
The Directors are of the opinion that the financial statements give a true and fair view of the state of the financial affairs of the Company and of its profit or loss. The Directors further accept responsibility for the maintenance of accounting records that may be relied upon in the preparation of financial statements, as well as adequate system of internal financial controls.
Nothing has come to the attention of the Directors to indicate that the Company will not remain a going concern for at least twelve months from the date of this statement.
...... Director Director
July 28th 2011
Annual Report & Consolidated Financial Statements For the Year Ended 31 December 2010 26
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), Laws of the Federation of Nigeria 2004, members of the Audit Committee of Transnational Corporation of Nigeria Plc hereby report as follows:
1 The Audit Committee met in exercise of its statutory responsibilities in accordance with section 359 (6) of the Companies and Allied Matters Act, (Cap C20), Laws of the Federation of Nigeria 2004.
2 We have examined the Auditors’ report including the financial statements for the year ended 31 December, 2010
3 We have deliberated with the external Auditors, reviewed their findings and recommendations and confirm that the Auditors’ report for this period is consistent with our review.
4 We are satisfied that the accounting and reporting policies of the company are in accordance with legal requirements and meet ethical standards.
------Chief Sylvanus C. Ezendu Chairman, Audit Committee
Dated this 28th Day of July 2011
Members of the Audit Committee 1 Chief Sylvanus C. Ezendu (Chairman) - Shareholder 2 Mr. John Umobuarie Isesele (Member) - Shareholder 3 Alhaji Abu O. Jimah (Member) - Shareholder 4 Olorogun O' tega Emerhor, OON (Member) - Director 5 Mr. Kayode Fasola (Member) - Director 6 Mr. Emmanuel Nnorom (Member) - Director (resigned Apr. 2011) 7 Mr. Tony Elumelu, MFR (Member) - Director (appointed Apr. 2011)
Annual Report & Consolidated Financial Statements For the Year Ended 31 December 2010 27 28 29
The principal accounting policies adopted in the preparation of these financial statements are set out below: a) Basis of Preparation The consolidated financial statements are prepared in compliance with Companies and Allied Matters Act (CAMA) and Nigerian Statements of Accounting Standards (SAS). The financial statements are presented in the functional currency, Nigerian Naira (N), rounded to the nearest thousand, and prepared under the historical cost convention.
The preparation of financial statements in conformity with generally accepted accounting principles requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting year. Although these estimates are based on the Directors’ best knowledge of current events and actions, actual results ultimately may differ from those estimates.
The Companies and Allied Matters Act requires that a statement of source and application of funds be included with the financial statements. In its place however, a statement of cash flow has been prepared in accordance with the statement of accounting standards (SAS 18) b) Consolidation Subsidiaries include all entities (including special purpose entities) over which the Company has the power to govern the financial and operating policies generally accompanying a shareholding. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Company controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Company. They are de-consolidated from the date that control ceases.
The financial statements of consolidated companies are prepared as of the same date, December 31. Where statements are prepared for periods different from the Company, adjustments are made for the effect of significant transactions or events that occur between both dates.
The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in profit and loss. All balances and unrealised surpluses and deficits on transactions between group companies have been eliminated. Where necessary, accounting policies for subsidiaries have been changed to ensure consistency with the policies adopted by the Company. c) Valuation of business combination Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any non- controlling interest. d) Intangible Assets i Goodwill Goodwill represents the excess of the cost of an acquisition over the fair value of the Company’s share of the net identifiable assets of the acquired subsidiary at the date of acquisition. Goodwill on acquisitions of subsidiaries is included in intangible assets and is not amortised. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Impairment losses are recognised immediately in the profit and loss account.
Annual Report & Consolidated Financial Statements For the Year Ended 31 December 2010 30
ii Goodwill Impairment Goodwill balances are tested annually by the Group for impairment as stated above, or more frequently if indicators are present or changes in circumstances suggest that impairment may exist. In performing the assessment, the Company performs a comparison of the carrying value of the reporting units, as defined, to the fair value of these units. iii Impairment of long term investments The carrying amounts of the long term investments are reviewed at each balance sheet date by the Group to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset, which is the higher of its fair value less costs to sell and its value in use, is estimated in order to determine the extent of the impairment loss.
Any impairment charge is recognised in the income statement in the year in which it occurs. Impairment losses are recognised in the income statement, unless an asset has previously been revalued, in which case the impairment loss is recognised as a reversal to the extent of that previous revaluation with any excess recognised through the income statement. e) Revenue Recognition Income from investments is recognized as follows: i) Dividends are recognized in the profit and loss account on the date the Company’s right to receive payment is established; and ii) Interest earned on cash investments in money market instruments is recognized in the profit and loss account as it accrued.
Recognition of revenue for goods and services is when: - The significant risks and rewards of ownership have been transferred to the customer or the service has been rendered - The Company 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
Amount received from customers or guests in advance of receiving the goods or services is recognised as liability in the balance sheet described as unearned income.
Interest income is recognised on a time proportion basis. f) Translation of Foreign Currencies Transactions in foreign currencies during the year are converted into the functional currency, Nigeria Naira, using the exchange rates prevailing at the dates of the transactions. 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 profit and loss account.
Losses on foreign exchange transactions are recognised as an expense in the period in which they are incurred, except when they are directly attributable to the acquisition, construction or production of an asset invoiced in foreign currency, where there is no means of hedging against exchange losses. These are included as part of additions to fixed asset. g) Receivables Debtors are stated after deduction of provision for debts considered to be doubtful of recovery. A provision for impairment of receivables is established when there is objective evidence that the company will not be able to collect all the amounts due according to the original terms of receivables. The amount of the provision is recognised in the profit and loss account.
Annual Report & Consolidated Financial Statements For the Year Ended 31 December 2010 31
h) Property, Plant and Equipment All categories of property, plant and equipment are stated at historical cost less depreciation. 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 Company and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the profit and loss account during the financial period in which they are incurred.
Leasehold land is accounted for as non-current assets and the unexpired term is disclosed.
Property, plant and equipment are reviewed for impairment annually and 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 it recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use.
Gains and losses on disposal of property, plant and equipment are determined by reference to their carrying amounts and are taken into account in determining operating profit.
Depreciation Depreciation on assets is calculated using the straight line method to write down their cost or revalued amounts to their residual values over their estimated useful lives, as follows:
Buildings and leasehold improvement 2-5% Plant and machinery 10-33.33% Furniture and fittings 20% Computer and office equipment 10-33.33% Motor vehicle 20-25%
Capital work in progress is not depreciated until completion of the construction work and is capitalised under the appropriate asset category. Plant and machinery represents plants, machineries, lifts and conveyors and air-conditioning. i) Inventories Inventories are stated at the lower of cost and net realisable value. Cost is 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 j) Investments Long term investments are shown at cost less amounts written off and provisions for diminution in value. Provisions are made for permanent diminution in the value of investments. Provisions for temporary fluctuations in value are made if material. Investment bid costs incurred are written off to the profit and loss account unless it is certain that the Company will be successful in its bid to acquire a specific investment in which case such costs are deferred to the balance sheet.
Income from investments is recognized as follows:
i) Dividends are recognized in the profit and loss account on the date the Company’s right to receive payment is established; and ii) Interest earned on cash investments in money market instruments is recognised in the profit and loss account as it accrued.
Investments where the Company controls the financial and operating policies are consolidated.
Impairment on investments The carrying amounts of the long term investments are reviewed at each balance sheet date by the Group to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset, which is the higher of its fair value less costs to sell and its value in use, is estimated in order to determine the extent of the impairment loss.
Annual Report & Consolidated Financial Statements For the Year Ended 31 December 2010 32
Any impairment charge is recognised in the income statement in the year in which it occurs. Impairment losses are recognized in the income statement, unless an asset has previously been revalued, in which case the impairment loss is recognised as a reversal to the extent of that previous revaluation with any excess recognised through the income statement.
K) Taxation Taxation expense is the aggregate of the charge to the profit and loss account in respect of income tax, education tax and deferred tax.
Income tax is the amount of income tax payable on the taxable profit for the year determined in accordance with the Companies Income Tax Act (CITA). Education tax is assessed at 2% of the chargeable profits.
Deferred tax is provided, using the liability method, for all temporary differences arising between the tax bases of assets and liabilities and their carrying values for financial reporting purposes. The principal temporary differences arise from depreciation on fixed assets and provisions for pensions and other post retirement benefits. Currently enacted tax rates are used to determine deferred tax.
Deferred tax assets are recognised only to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised. l) Employee Benefit
1) Retirement benefit obligations Some subsidiaries operate defined contribution retirement schemes and unfunded defined benefit service gratuity scheme; while the Company operates a defined contribution scheme. The schemes for retirement benefits are as follows:
Staff Gratuity Scheme This is a defined contribution scheme for employees who have served for a continuous period exceeding two years.
Staff Pension Scheme Except as stated below for Transcorp Hilton, the group operated the defined contributory pension scheme in line with the Pensions Reform Act of 2004. The scheme is funded by equal contribution of 7.5% of Basic, Housing and Transport allowances from both the company and the employee. The contributions are deducted and remitted to each employee’s Pension Fund Administrator (PFA) on a monthly basis. The company’s contribution is charged to profit and loss account; while employee’s contributions are deducted from monthly salaries.
Hilton’s Internal Pension Scheme This is an internal pension arrangement between the hotel and its employees payable on retirement. The employer contributes 20% of the employee’s basic salary for all confirmed staff who have spent a minimum of one year as a staff. The scheme is non contributory for employees.
The company’s contributions to the defined contribution scheme is charged to profit and loss account in the year to which they relate.
The liability recognised on the balance sheet in respect of the defined benefit plan is monetary value of the defined benefit obligation at the balance date. The defined benefit obligation is calculated annually based on the entitlements of staff as defined by the scheme handbook.
2) Other entitlements The estimated monetary liability for employee’s accrued annual leave entitlement at the balance sheet date is recognised as an expense accrual.
Annual Report & Consolidated Financial Statements For the Year Ended 31 December 2010 33
m) Borrowings Borrowings are recognised initially net of transaction costs incurred, and interest and fees are charged to the profit and loss account over the life of the loan. Borrowings are classified as current or non-current liabilities as deemed applicable. n) Borrowing costs Borrowing costs are recognised as an expense in the period in which they are incurred, except when they are directly attributable to the acquisition, construction or production of a qualifying asset. These are included as part of additions to fixed asset. A qualifying asset is an asset that takes a substantial period of time to get ready for its intended use or sale. o) Share capital Ordinary shares are classified as equity. Share issue costs net of tax are charged to share premium account. p) Cash and Cash equivalents Cash and cash equivalents represent cash and bank balances as well as any short term investments that are readily convertible to cash. q) Segment reporting A segment is a distinguishable component of the Company that is engaged either in providing products or services (business segment) or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and rewards that are different from those of other segments. Segments with a majority of revenue earned from sales to external customers and whose revenue, result or assets are 10 percent or more of all the segments are reported separately. r) Comparatives Where necessary comparative figures have been adjusted to conform with changes in presentation in the current period.
Annual Report & Consolidated Financial Statements For the Year Ended 31 December 2010 34
N’000
Note Group Company 2010 2009 2010 2009
Revenue 3 13,927,551 12,995,152 2,382,396 2,785,717 Cost of revenue 4 (4,694,165) (4,744,610) - - Gross profit 9,233,386 8,250,542 2,382,396 2,785,717 Administrative and general expenses 5 (5,470,203) (4,532,465) (1,709,409) (1,432,891)
Operating profit 3,763,183 3,718,077 672,987 1,352,826 Other income 6 432,999 1,558,965 71,828 792,022 Interest expense 8 (137,053) (2,043,882) (137,053) (2,043,882)
Exceptional items 9 2,849,087 - 2,849,087 - Profit before taxation 6,908,216 3,233,160 3,456,849 100,966 Taxation 10 (1,518,430) (2,006,583) (132,590) (83,600)
Profit after taxation 24 5,389,786 1,226,577 3,324,259 17,366
Attributable to: Equity holders of the company 3,207,442 (731,673) - - Non controlling interests 2,182,344 1,958,250 - - 5,389,786 1,226,577 - - Basic and diluted earnings per share (Naira) 11 0.21 0.05 0.13 0.00
The statement of significant accounting policies on pages 29 to 33 and the notes on pages 37 to 46 form an integral part of these financial statements.
Annual Report & Consolidated Financial Statements For the Year Ended 31 December 2010 35
N'000
Group Company
Note 2010 2009 2010 2009
Non-current assets Property, plant and equipment 13 7,832,878 6,727,868 604,914 551,318 Long term investments 15 2,852,182 - 18,490,225 13,976,723 Goodwill on acquisition 14 19,482,953 18,619,790 - - Deferred tax asset 22 161,659 - - -
Current assets Inventory 16 680,541 654,946 - - Receivables and prepayments 17 3,616,578 2,966,207 1,381,252 509,232 Cash and cash equivalents 18 8,338,908 5,783,874 1,046,611 1,363,443 12,636,027 9,405,027 2,427,863 1,872,675
Current liabilities Bank overdraft 19 - 291,538 - 291,538 Taxation 10 6,425,029 4,230,758 247,539 114,949 Payables and accrued expenses 20 5,650,557 4,501,745 4,181,187 240,144 Borrowings falling due within a year 21a 528,571 - 528,571 -
12,604,157 9,024,041 4,957,297 646,631
Net current assets/(liabilities) 31,870 380,986 (2,529,434) 1,226,044
Non-current liabilities Borrowings falling due after one year 21b 1,321,429 - 1,321,429 - Deferred tax liability 22 1,435,911 1,950,093 - - Retirement benefit obligation 23 965,282 831,419 - -
Net assets 26,638,920 22,947,132 15,244,276 15,754,085
Equity
Share capital 12a 12,906,999 11,256,836 12,906,999 11,256,836 Share premium 12b 27,071,664 28,721,827 27,071,664 28,721,827 Reserves 24 (18,612,264) (23,128,157) (24,734,387) (24,224,578) Non-controlling interest 25 5,272,521 6,096,626 - -
Shareholders funds 26,638,920 22,947,132 15,244,276 15,754,085
The financial statements and notes on pages 29 to 48 were approved by the Board of Directors on 28th of July, 2011 and signed on its behalf by:
------...... Director Director
Annual Report & Consolidated Financial Statements For the Year Ended 31 December 2010 36
N'000
Note Group Company 2010 2009 2010 2009 Operating activities
Cash generated from operations 26 4,658,195 7,420,940 (19,187) 3,431,765 Gain on sale of fixed assets 6 (9,528) (17,827) - - VAT paid (515,997) (457,409) - - Income taxes paid 10 - (75,000) - -
Net cash generated from /(used in) operations 4,132,670 6,870,704 (19,187) 3,431,765
Investing activities
Purchase of property, plant and equipment 13 (1,604,358) (883,992) (97,582) (11,853) Proceeds from sale of fixed assets 10,347 20,863 - - Disposal of subsidiaries -NITEL - 63,181,907 - 63,181,907 Investment in subsidiaries 15 (1,664,414) - (1,664,414) - Interest received 6 259,380 594,716 42,942 40,148
Net cash (used in)/generated from investing activities (2,999,045) 62,913,494 (1,719,054) 63,210,202
Financing activities Increase/(decrease) in long term borrowings 1,321,429 (63,780,000) 1,321,429 (63,780,000) Increase in short term borrowings 528,571 - 528,571 - (Decrease)/increase in bank overdraft 19 (291,538) 179 (291,538) 179 Dividend paid - (3,648,627) - - Interest payment 8 (137,053) (2,043,882) (137,053) (2,043,882)
Net cash generated from/(used in) financing activities 1,421,409 (69,472,330) 1,421,409 (65,823,703)
Net increase/(decrease) in cash and cash equivalents 2,555,034 311,868 (316,832) 818,264 Cash at beginning of the year 5,783,874 5,472,006 1,363,443 545,179 Cash at end of the year 18 8,338,908 5,783,874 1,046,611 1,363,443
Cash and cash equivalents: This comprises: Cash at bank and in hand 18 8,338,908 5,783,874 1,046,611 1,363,443
The statement of significant accounting policies on pages 29 to 33 and the notes on pages 37 to 46 form an integral part of these financial statements.
Annual Report & Consolidated Financial Statements For the Year Ended 31 December 2010 37
N’000 1 The Company Transnational Corporation of Nigeria Plc was incorporated in Nigeria under the Companies and Allied Matters Act as a public limited liability Company. The principal activity of the Company is the investment in and operation of portfolio companies in various business sectors including the telecommunication, energy, real estate and hospitality sectors.
2 Segment information The Company's primary reporting is by business segment and it currently only operates in one business segment which is the provision of hospitality services. The Company also operates in one geograhical segment. Information relating to both the business and geographical segments have been presented in these financial statements.
Group Company 2010 2009 2010 2009 3 Revenue
Rooms 8,986,083 8,461,965 - - Food & Beverage 3,882,787 3,480,103 - - Shop rental 367,399 293,726 - Service charge 185,235 186,846 - - Laundry 5,171 - Other operating revenue 500,876 572,513 - Dividend income - - 2,382,396 2,785,717
13,927,551 12,995,152 2,382,396 2,785,717 All revenue was generated in Nigeria 4 Cost of revenue Rooms 691,496 1,045,207 - - Staff costs (Note 7) 994,406 905,367 - - Food and beverage 1,415,249 924,564 - - Other operating departments 1,593,014 1,869,472 - - 4,694,165 4,744,610 - - 5 Administrative and general expenses
Administrative and general expenses mainly comprise the following:
Staff costs (Note 7) 1,023,354 838,750 323,326 346,311 Depreciation (Note 13) 1,340,499 1,127,832 43,986 41,172 Auditors' remuneration 55,700 40,750 32,500 25,000 Management and incentive fees (Note 31a) 1,119,193 1,093,745 - - Professional fees 260,227 210,827 260,227 210,827 Director's remuneration 194,112 56,426 124,913 56,426 Acquisition expenses on investments 242,493 - 242,493 - Provision for slow moving inventories 87,121 - - - Other operating expenses 1,147,504 1,164,135 681,964 753,155 5,470,203 4,532,465 1,709,409 1,432,891
6 Other income Other operating income 164,091 196,422 28,886 1,874 Profit on fixed asset disposal 9,528 17,827 - - Interest income 259,380 594,716 42,942 40,148 Loan waiver - 750,000 - 750,000 432,999 1,558,965 71,828 792,022
In 2009, the Federal Government of Nigeria revoked the sale of Nitel to Transcorp. Subsequently, all loans obtained from the bank by Transcorp to finance the purchase of Nitel was paid off by the Federal Government. The amount of N750 million represents additional loans obtained which was waived on the full and final settlement of all loans obtained.
Annual Report & Consolidated Financial Statements For the Year Ended 31 December 2010 38
N’000 7 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 2010 2009 2010 2009
Number Number Number Number Managerial 24 360 13 20 Senior staff 75 905 21 20 Others 1,428 17 12 7
1,527 1,282 46 47 b. The table below shows the number of employees(excluding directors), who earned over N50,000 as emoluments in the year and were within the bands stated. Number Number Number Number N50,001 - N500,000 531 330 - - N500,001 - N1,000,000 26 26 15 16 N1,000,001 - N2,000,000 882 842 7 7 N2000,001 - N4,000,000 61 58 8 8 Above N4000,000 27 26 16 16 1,527 1,282 46 47
c. Staff cost for the above persons (excluding Executive Directors)
Group Company 2010 2009 2010 2009
Salaries and wages 1,829,699 1,363,437 310,612 339,174 Gratuity, termination / severance pay 76,977 291,350 - - Pension cost 111,084 89,330 12,714 7,137
2,017,760 1,744,117 323,326 346,311 d. Analysis of staff costs: Cost of revenue 994,406 905,367 - - Administrative and General expenses 1,023,354 838,750 323,326 346,311
2,017,760 1,744,117 323,326 346,311 e. Emoluments of Directors The remuneration paid to the Directors of the Company was: Emoluments (including fees, pension contributions and benefits in kind) 194,112 169,072 124,913 56,426
Amount paid to the highest paid Director (excluding pension contributions) 65,925 60,000 65,925 60,000
The number of directors of the Company (including the highest paid Director) whose remuneration, excluding pension contributions in respect of services to the Company fell within the following ranges:
Number Number Number Number Less than N10,000,000 16 11 9 8 Over N10,000,000 5 4 2 1 21 15 11 9
8 Interest expense Interest expenses: Interest expense on loan (137,053) (2,043,882) (137,053) (2,043,882)
Annual Report & Consolidated Financial Statements For the Year Ended 31 December 2010 39
N’000 9 Exceptional Items
Group Company 2010 2009 2010 2009
Write back of provision for investment in oil block 2,849,087 - 2,849,087 - 2,849,087 - 2,849,087 -
In May 2006, the company invested in an oil block (OPL 281). In November 2007, this was cancelled by the Federal Government and full provisions was made for the oil block in the company's books. However, in February 2011, the Federal Government revalidated the oil block. An adjustment has been passed in the books to reverse the provisions earlier made for the oil block.
10 Taxation
Income tax 2,018,078 1,507,457 102,924 83,600 Education tax 176,193 140,696 29,666 - 2,194,271 1,648,153 132,590 83,600 Deferred tax (write back)/provision (675,841) 358,430 - -
1,518,430 2,006,583 132,590 83,600
The movement in tax payable is as follows:
At 1 January 4,230,758 2,657,605 114,949 31,349 Provision for the year 2,194,271 1,648,153 132,590 83,600 Payment during the year - (75,000) - -
At 31 December 6,425,029 4,230,758 247,539 114,949
11 Earnings per share
Basic earnings per share (EPS) is calculated by dividing the profit after taxation by the weighted average number of ordinary shares in issue during the year. The adjusted EPS is calculated using the number of shares in issue at balance sheet date.
Group Company 2010 2009 2010 2009
Profit attributable to shareholders of 5,389,786 1,226,577 3,324,259 17,366 the Group /Company
Weighted average number of ordinary shares 25,813,998 22,513,672 25,813,998 22,513,672 in issue
Basic Earnings per share (Naira) 0.21 0.05 0.13 0.00
Adjusted Earnings per share (Naira) - 0.05 - 0.00
Annual Report & Consolidated Financial Statements For the Year Ended 31 December 2010 40
N’000 12a Share capital Group Company 2010 2009 2010 2009 N’000 N’000 N’000 N’000
Authorised: 36,000,000,000 ordinary shares of 50kobo each 18,000,000 18,000,000 18,000,000 18,000,000
Allotted, called up and fully paid: 25,813,998, 283 (2009: 22,513,672,183) ordinary shares of 50kobo each 12,906,999 11,256,836 12,906,999 11,256,836
b. Share premium Share premium 27,071,664 28,721,827 27,071,664 28,721,827
The prior year, financial statement was qualified because of the inability to reconcile the ordinary shares issued by the company. However, during the year, the total number of shares in issue have been reconciled and adjustmets have been passed between the share capital and share premium accounts to reflect the number of ordinary shares in issue by the company. The movement in share capital and share premium is shown below.
Share capital N’000 1 January 2010 - 22,513,672,183 ordinary shares of 50kobo each 11,256,836 Reclassification from share premium - 3,300,326,100 ordinary shares of 50k each 1,650,163
31 December 2010 - 25,813,998,283 ordinary shares of 50kobo each 12,906,999
Share premium 1 January 2010 28,721,827 Reclassification to share capital (1,650,163) 31 December 2010 27,071,664
13 Property, Plant and Euqipment
Leasehold Plant & Furniture & Computer & Motor Capital Total Land & Machinery Fittings Office Vehicles Work in Building Equipment Progress Group Cost: At 1 January 2010 2,575,049 9,575,848 1,500,982 103,154 366,375 - 14,121,408 Transfers in 556,603 297,331 224,959 4,977 6,195 - 1,090,065 Additions 72,114 273,268 1,013,658 4,942 96,246 144,130 1,604,358 Disposals/Write offs - (33,723) (26,532) (280) (13,238) - (73,773)
At 31 December 2010 3,203,766 10,112,724 2,713,067 112,793 455,578 144,130 16,742,058
Depreciation: At 1 January 2010 777,832 5,389,025 899,915 94,131 232,637 - 7,393,540 Transfers in 21,325 118,370 89,598 1,788 2,719 - 233,800 Charge for the year 52,741 894,012 325,793 11,558 56,395 - 1,340,499 Disposals - (19,477) (25,860) (84) (13,238) - (58,659)
At 31 December 2010 851,898 6,381,930 1,289,446 107,393 278,513 - 8,909,180
Net book amount: At 31 December 2010 2,351,868 3,730,794 1,423,621 5,400 177,065 144,130 7,832,878 At 31 December 2009 1,797,217 4,186,823 601,067 9,023 133,738 - 6,727,868
Transfers in relates to property, plant & equipment of the new subsidiary, Transcorp Metropolitan Hotels & Conferencing Limited which was acquired during the year.
The unexpired lease term on land is 94 years.
Annual Report & Consolidated Financial Statements For the Year Ended 31 December 2010 Notes to the Consolidated Financial Statements 41 For the Year Ended 31 December 2010
13 Property, Plant and Equipment (continued) N’000
Leasehold Plant & Furniture Computer & Motor Total Land & Machinery & Fittings Office Vehicles Building Equipment
Company Cost: At 1 January 2010 519,363 14,042 68,538 103,154 34,530 739,627 Additions 72,114 - - 2,668 22,800 97,582
At 31 December 2010 591,477 14,042 68,538 105,822 57,330 837,209
Depreciation: At 1 January 2010 10,838 11,931 51,285 94,131 20,124 188,309 Charge for the year 6,278 1,751 13,708 10,811 11,438 43,986
At 31 December 2010 17,116 13,682 64,993 104,942 31,562 232,295
Net book amount: At 31 December 2010 574,361 360 3,545 880 25,768 604,914 At 31 December 2009 508,525 2,111 17,253 9,023 14,406 551,318
The unexpired lease term on land is 94 years
14 Goodwill
Goodwill is analysed as follows: Group Company 2010 2009 2010 2009
At 1 January 18,619,790 18,619,790 - - Additions during the year 863,163 - - -
At 31 December 19,482,953 18,619,790 - -
Additions to goodwill during the period arose as a result of the 100% acquisition of the shares of Metropolitan Hotel, Calabar (now Transcorp Metropolitan Hotels and Conferencing Limited) by Transnational Corporation of Nigeria Plc. The effective date of acquisition of the investment is 30 June 2010. The purchase consideration of the acquisition is N2.85billion while acquisition related costs of N231.8million in respect of legal, valuation, financial due diligence and financial advisory fees was incurred in the process of the acquisition. The acquisition related costs have been written off to the profit and loss account.
Goodwill has arisen from the excess of the consideration over acquisition-date fair values of identifiable assets and liabilities acquired/assumed respectively. The Company's assessment of the goodwill for impairment has not resulted in any provisions.
15 Long term investments Group Company 2010 2009 2010 2009
Transnational Hotels and Tourism Services Limited - - 13,868,523 13,868,523 Oil block 2,849,087 2,849,087 2,849,087 2,849,087 Transcorp Metropolitan Hotels & Conferencing Limited - - 1,661,320 - Other subsidiaries companies - - 108,200 108,200 Teragro Commodities Limited 3,095 - 3,095 -
2,852,182 2,849,087 18,490,225 16,825,810 Provision for oil block - (2,849,087) - (2,849,087)
2,852,182 - 18,490,225 13,976,723
Movement in investment in subsidiaries is analysed as follows:
Group Company 2010 2009 2010 2009
At beginning of year - - 13,976,723 13,976,723 Additions - cost 2,852,182 - 4,513,502 - At end of year 2,852,182 - 18,490,225 13,976,723
Annual Report & Consolidated Financial Statements For the Year Ended 31 December 2010 42
N’000 15 Long term investments (continued) a. In June 2010, the company acquired 100% of the ordinary shares of Kingsville Hotels Limited, owner and operator of the Metropolitan Hotel, Calabar now Transcorp Metropolitan Hotels and Conferencing Limited for N2.85billion. The consideration of the hotel was cash financed by a combination of operating cash flows and a N1.85 billion term loan from a bank. The loan is secured by the property acquired in the transaction. b. The investment in the oil block represents payments on account of assets in the course of acquisition of an oil block from the Federal Government in May 2006. In November 2007, this was cancelled by the Federal Government and full provisions was made for the oil block in the company's books. However, in February 2011, the Federal Government revalidated the oil block. An adjustment has been passed in the books to reverse the provisions earlier made for the oil block. c. Investment in subsidiary companies eliminated on consolidation include:
Transnational Hotels and Tourism Services Limited 13,868,523 Transcorp Refining Company Limited 1,000 Transcorp Telecomms Limited 10,000 Telecommunications Backbone Development Company Limited 9,900 Teragro Commodities Limited 9,500 Transcorp Hotels and Leisure Limited 9,500 Transcorp Infrastructure Limited 9,500 Transcorp Trading and Logistics Limited 10,000 Transcorp Commodities Limited 9,500 Transcorp Hilton Limited 9,900 Allied Commodities Limited 9,500 Transcorp Energy Limited 9,900 Transcorp Properties Limited 10,000 Transcorp Metropolitan Hotels & Conferencing Limited 1,661,320 15,638,043 All subsidiary companies except Transnational Hotels and Tourism Services Limited, Transcorp Metropolitan Hotels and Conferencig Limited, Transcorp Energy Limited, Transcorp Properties Limited, Teragro Commodities Limited and Telecommunication Backbone Development Company are dormant and are undergoing voluntary winding up proceedings. d. Other relevant details of the investments are as follows:
Subsidiaries Year of Country of Nature of Issued Groups Incorporation Incorporation Business Share Interest Capital N’000 Transnational Hotels and Tourism 2005 Nigeria Rendering of hospitality 5,000 51% Services Ltd. services.
Transcorp Refining Company Ltd. 2005 Nigeria Oil and gas consultancy 1,000 100% exploration, refining and marketing.
Transcorp Telecomms Ltd 2006 Nigeria Distribution of global 10,000 100% systems for mobile communication.
Telecommunications Backbone 2008 Nigeria Internet service providers 10,000 99% Development Company Ltd. browsing and e-mail services
Teragro Commodities Ltd. 2008 Nigeria Cultivate the soil and grow 10,000 95% Food, cash and fodder crops
Transcorp Hotels and Leisure Ltd. 2008 Nigeria Car rental, hiring and 10,000 95% protocol services
Transcorp Infrastructure Ltd. 2008 Nigeria Power generation, 10,000 95% distribution and sale
Transcorp Trading and Logistics Ltd. 2006 Nigeria General maritime 10,000 100% operations including Transportation.
Transcorp Commodities Limited 2008 Nigeria Dealers in agricultural and 10,000 95% mineral products
Transcorp Hilton Limited 2008 Nigeria Manage hotels, cafeterias, 10,000 99% eateries, dinners, canteens cafes, pizzerias, snack bars, etc
Annual Report & Consolidated Financial Statements For the Year Ended 31 December 2010 43
15 Long term investments (continued) N’000
Allied Commodities Limited 2008 Nigeria Sale and purchase of 10,000 95% wholesale and retail commodities.
Transcorp Energy Limited 2008 Nigeria Mining, refining and 10,000 99% supply merchants of mining produce.
Transcorp Properties Limited 2008 Nigeria Building, contractors, 10,000 100% decorators, merchants and dealers in stone, sand, lime, Iron, etc
Transcorp Metropolitan Hotel and 2010 Nigeria Rendering of hospitality 5,000 100% Conferencing Limited services.
e. Condensed results of operations for subsidiaries as at 31 December 2010
THTSL TMHCL Condensed profit and loss accounts Turnover 13,641,192 286,359 Gross profit 9,150,708 82,678 Operating profit/(loss) 5,784,824 (167,499) Profit /(loss) before taxation 6,001,262 (167,499) Taxation (1,547,499) 161,659 Profit /(loss) after taxation 4,453,763 (5,840)
Condensed financial information Current assets 15,100,293 67,174 Current liabilities 11,484,526 1,298,726 Net assets/(liabilities) 7,655,268 (424,327)
Condensed cash flow Net cash generated from operating activities 8,587,749 376 Net cash used in investing activities (1,267,206) (12,785) Net cash used in financing activities (4,453,763) -
Movement in cash and cash equivalents 2,866,780 (12,409)
Subsidiary financial split Cash and bank balances 7,286,913 5,384
Group Company 2010 2009 2010 2009
16 Inventory
Food and beverage 114,389 144,368 - - Fuel 6,701 4,262 - - Engineering stores 350,517 377,032 - - Guest supplies 208,934 129,284 - -
680,541 654,946 - -
17 Receivables and prepayments Trade receivables 841,757 698,976 - - WHT receivables - 37,187 - - Other receivables and prepayments 2,841,069 2,319,486 181,505 125,078 Related party receivable - - 1,199,747 - Dividend receivable - - - 417,591 Provision for bad and doubtful debts (66,248) (89,442) - (33,437) 3,616,578 2,966,207 1,381,252 509,232
Annual Report & Consolidated Financial Statements For the Year Ended 31 December 2010 44
N’000 Group Company 18 Cash and cash equivalents 2010 2009 2010 2009 Cash and bank balance 8,137,390 5,783,874 845,093 1,363,443 Restricted cash 201,518 - 201,518 -
8,338,908 5,783,874 1,046,611 1,363,443
Restricted cash relates to 3 months principal and interest on the N1.85billion loan obtained from UBA which the company is expected to keep in a debt reserve account at anytime throughout the duration of the loan.
19 Bank overdraft
Bank overdraft - 291,538 - 291,538
20 Payables and accruals
Trade creditors 1,223,160 872,680 - - Other payables and accruals 4,375,582 3,477,502 238,918 131,944 Deposits from guests - 112,950 - - Unearned income 51,815 38,613 - - Due to related companies (Note 31d) - - 3,942,269 108,200
5,650,557 4,501,745 4,181,187 240,144 21 Borrowings Group Company Maturity Date 2010 2009 2010 2009 a. Borrowings falling due within a year UBA Plc June 2014 528,571 - 528,571 - b. Borrowings falling due after one year UBA Plc June 2014 1,321,429 - 1,321,429 - 1,850,000 - 1,850,000 -
The effective interest rate on borrowings for the financial year ended 31 December 2010 was 15% . The tenor of the loan is 4 years. The loan had a morotarium period of 6 months hence repayment of the principal amount will only commence in January 2011. The loan is secured by a legal mortgage over the Metropolitan Hotel property, pledge of shares of Kingsville Nigeria Limited and a negative pledge over the fixed and floating assets of the borrower, Transnational Corporation of Nigeria Plc.
Group Company 2010 2009 2010 2009
22 Deferred tax
The movement in deferred tax is as follows: (i) Deferred Tax liability At start of year 1,950,093 1,591,663 - - Changes during the year: - Charge to P & L (514,182) 358,430 - - At end of year 1,435,911 1,950,093 - -
(ii) Deferred Tax Asset At start of year - - - - Changes during the year: - - Charge to P & L (161,659) - - - At end of year (161,659) - - -
23. Retirement Benefit Obligation Gratuity obligations represent provisions for liabilities in respect of retirement gratuity as stated in the accounting policies. Movement in gratuity liability balance during the year is stated below:
Balance as at 1 January 831,419 766,810 - - Charge to profit and loss account 185,443 291,350 - - Paid in the year (51,580) (226,741) - - Balance as at 31 December 965,282 831,419 - -
Annual Report & Consolidated Financial Statements For the Year Ended 31 December 2010 45
N’000 Group Company 2010 2009 2010 2009 24. Reserves At start of year (23,128,157) (24,816,465) (24,224,578) (24,241,944) Adjustments to prior year reserves (285,509) 461,731 (3,834,068) - Profit for the year 5,389,786 1,226,577 3,324,259 17,366 Pre-acquisition reserves-Transcorp Metropolitan (588,384) - - - At end of year (18,612,264) (23,128,157) (24,734,387) (24,224,578)
Adjustment to prior year reserves Company (N3,834,068) The adjustment to prior year reserves relates to excess dividends paid by one of the subsidiaries, Transnational Hotels and Tourism Services Limited to the company.
Group Pre-acquisition reserves (N588,384)- This relates to the pre-acquisition reserves of the new subsidiary, Transcorp Metropolitan Hotels and Conferencing Services Limited.
Adjustment to prior year reserves (N285,509) - This relates to prior year dividend income which was received in the current year.
25. Non-Controlling interest This comprises amounts due to holders of non-controlling shares in the subsidiary companies.
1 January 2010 6,096,626 10,206,994 - - Movement during the year: Dividend declared during the year (2,071,367) (4,110,368) - - Adjustment relating to prior year 1,247,262 - - -
31 December 2010 5,272,521 6,096,626 - -
Adjustment relating to prior year is in respect of excess dividends paid by one of the subsidiaries, Transnational Hotels and Tourism Services Limited to the NCI in the prior years which was not accounted for in those years. This has been accounted for as a receivable from the NCI in the current year.
26. Cash generated from operating activities
Profit before taxation 6,908,216 3,233,160 3,456,849 100,966 Adjustment for non cash items Depreciation 1,340,499 1,127,832 43,986 41,173 Fixed assets written off 14,295 - - - Write back of Investment (2,849,087) - (2,849,087) - Interest payment 137,053 2,043,882 137,053 2,043,882 Interest received (259,380) (594,716) (42,942) (40,148) Adjustments to reserves (873,893) - (3,834,069) - Non-cash movement in NCI (824,105) - - - Other adjustments to reconcile expenses for the year to Cash from operating activities (Increase)/decrease in debtors and prepayment (650,371) 3,210,475 (872,020) 4,403,250 (Increase)/decrease in inventory (25,595) 59,804 - - (Decrease)/increase in payables and accrued expenses 1,740,563 (1,659,497) 3,941,043 (3,117,358)
Net cash generated from /(used in) operations 4,658,195 7,420,940 (19,187) 3,431,765
27 Contingent liabilities i) Ownership of Capital Leisure and Hospitality Limited In 2005, as part of the Privitisation of the Federal Government of Nigeria, the Company was part of a consortium that bidded and won the acquisition of a 51% stake of NIRMSCO Properties Limited (NPL), which owns the Transcorp Hilton Hotel Abuja. This successful consortium, Capital Leisure and Hospitality Limited (CLHL) acquired the 51% in NPL. Transnational Corporation of Nigeria Plc, owns 70% of CLHL and in line with the Memorandum of Understanding (MoU) with the other consortium members exercises a Power of Attorney over the remaining 30% of CLHL. The veracity of the ownership of the 30% as a result the Power of Attorney is in dispute and there are a number of cases in the law courts on this ownership matter. In line with the terms of the MoU, the matters have been transferred to arbitration.
The Board of Transnational Hotels and Tourism Services Limited (THTSL) (formerly NPL) is comprised of six Directors with the Company providing three of those including the Chairman. Accordingly, the Company controls the board of THTSL. It is on the basis of the 70% ownership stake in CLHL, the Power of Attorney over the remaining 30% and the control of the Board of THTSL that the financial statements of THTSL have been consolidated.
Annual Report & Consolidated Financial Statements For the Year Ended 31 December 2010 46
N’000 ii) BGL finance facility In July 2008, Telecommunications Backbone Development Company (TBDC), a wholly-owned subsidiary of Transnational Corporation of Nigeria Plc entered into an agreement with BGL Ltd. A bridge finance facility of N1billion was provided by BGL Ltd at an interest rate of 23%. The settlement of this facility was to include the allotment of shares in TBDC, which was never done. The transaction was executed by the former Group Managing Director and the Company Secretary without the knowledge or authorisation of the Board of Directors.
In October 2009, BGL demanded payment. The board of directors has resolved that Transnational Corporation of Nigeria Plc is not liable to BGL Ltd and will not accept responsibility for any unauthorised action by the person(s) on its behalf. Accordingly, this facility has not been recognised in the financial statements of the Company and the Group.
28 Capital commitments There was no capital commitment at 31 December 2010.
29 Going concern The financial statements have been prepared on a going concern basis. Management have no doubt that the company would remain in existence after 12 months.
30 Subsequent events In February 2011, the Federal Government of Nigeria revalidated the company's oil block which was revoked in September 2009, hence the provisions made for the oil block has been reversed from the books. This has been included as an exceptional item in the profit and loss account.
Also, in May 2011, Teragro Commodities Limited, a wholly owned subsidiary of Transnational Corporation of Nigeria Limited signed a lease agreement with the Benue state Government for the takeover of Benfruit Nigeria Limited, a fruit juice concentrate company. The lease is for a period of 10years and lease rental of N30million will be paid per annum.
Also, subsequent to year end, winding up petitions has been made for the winding up of the followings subsidiaries which have been dormant over the years:
- Transcorp Hotels and Leisure Limited - Transcorp Infrastructure Limited - Transcorp Commodities Limited - Transcorp Hilton Limited - Allied Commodities Limited
31 Related parties a Hilton International UK A subsidiary has an agreement with Hilton International U.K for the management of the operations of the hotel (Transcorp Hilton Hotel). During the year, the subsidiary paid management and incentive fees totaling N1.119 billion (2009: N1.094 billion) to Hilton International UK. A balance of N108 million representing fees for the month of December 2010 was outstanding as at 31 December 2010. b Ministry of Finance Incorporated Ministry of Finance Incorporated (MOFI) owns 49% of Transnational Hotels & Tourism Services Limited (THTSL) shares and is represented on the board of the Company. No transactions occurred between the Company and MOFI during the year. c Loans to Directors No loans were granted to the Directors of the company during the year (2010: Nil). d Due to related parties
Group Company 2010 2009 2010 2009
Transcorp Refining Company Limited - - 1,000 1,000 Transcorp Telecomms Limited - - 10,000 10,000 Telecommunications Backbone Development Company Limited - - 9,900 9,900 Teragro Commodities Limited - - 9,500 9,500 Transcorp Hotels and Leisure Limited - - 9,500 9,500 Transcorp Infrastructure Limited - - 9,500 9,500 Transcorp Trading and Logistics 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 Energy Limited - - 9,900 9,900 Transcorp Properties Limited - - 10,000 10,000 Transnational Hotels and Tourism Services Limited - - 3,834,069 -
- - 3,942,269 108,200
32 Accounting periods For the year ended 31 December 2010, six months financial statement was consolidated for Transcorp Metropolitan Hotel & Conferencing Limited, as against the twelve months period of the parent. This is because the subsidiary was acquired in June 2010.
Annual Report & Consolidated Financial Statements For the Year Ended 31 December 2010 47
Group 2010 2009 N'000 % N’000 %
Revenue 13,927,551 134 12,995,152 159 Other income 432,999 4 1,558,965 19 Bought in services (local) (2,374,213) (23) (3,843,076) (47) Bought in services (foreign) (1,582,809) (15) (2,562,050) (31)
Value added 10,403,528 100 8,148,991 100
Distributed as follows:
Employees: - To pay salaries, wages and other staff costs 2,017,760 19 1,744,117 21
Government: Taxation 1,518,430 15 2,006,583 25
Providers of capital: - To pay interest on borrowings 137,053 1 2,043,882 25
Maintenance and expansion of assets: - Depreciation 1,340,499 13 1,127,832 14 -Profit for the year 5,389,786 52 1,226,577 15
Value distributed 10,403,528 100 8,148,991 100
Company 2010 2009 N'000 % N'000 %
Revenue 2,382,396 60 2,785,717 110 Bought in services (local) 947,291 24 (152,031) (6) Bought in services (foreign) 631,527 16 (101,354) (4)
Value added 3,961,214 100 2,532,332 100 Distributed as follows: Employees: - To pay salaries, wages and other staff costs 323,326 8 346,311 14
Government: - Taxation 132,590 3 83,600 3
Providers of capital: - To pay interest on borrowings 137,053 3 2,043,882 80
Maintenance and expansion of assets: - Depreciation 43,986 1 41,173 2 - Profit for the year 3,324,259 85 17,366 1
Value distributed 3,961,214 100 2,532,332 100
Annual Report & Consolidated Financial Statements For the Year Ended 31 December 2010 48
N’000 Group Balance sheet Year ended Year ended Year ended Year ended 8 months ended 31 December, 2010 31 December, 2009 31 December, 2008 31 December, 2007 31 December, 2006
Non current assets 30,329,672 25,347,658 88,776,440 89,432,098 89,970,345 Current assets 12,636,027 9,405,026 12,363,448 17,883,047 7,354,937 Current liabilities (12,604,157) (9,855,460) (74,179,033) (75,195,638) (77,886,234) Long term liabilities (3,722,622) (1,950,093) (1,591,663) (875,418) (359,607)
Net assets 26,638,920 22,947,132 25,369,192 31,244,089 19,079,441
Capital and reserves
Share capital 12,906,999 11,256,836 11,256,836 11,256,836 25,000 Share premium 27,071,664 28,721,827 28,721,827 28,721,827 - Deposit for shares - - - - 17,738,865 Revenue reserve (18,612,264) (23,128,157) (24,816,465) (19,842,070) (11,971,282) Non-controlling interest 5,272,521 6,096,626 10,206,994 11,107,496 13,286,858
Shareholders fund 26,638,920 22,947,132 25,369,192 31,244,089 19,079,441
Profit and loss accounts 12 months 12 months 12 months 12 months 8 months 31 December 31 December 31 December 31 December 31 December 2010 2009 2008 2007 2006
Turnover 13,927,551 12,995,152 11,064,022 8,762,280 7,116,119 Profit/(Loss) before taxation 6,908,216 3,233,160 (3,760,254) (6,861,825) (8,080,754) Taxation (1,518,430) (2,006,583) (1,367,571) (1,008,963) (1,284,045)
Profit/(Loss) after taxation 5,389,786 1,226,577 (5,127,825) (7,870,788) (9,364,799)
Basic Profit/(Loss) per share (Naira) 0.21 0.05 (0.23) 0.84 (199.78)
Company Balance sheet Year ended Year ended Year ended Year ended 8 months ended 31 December, 2010 31 December, 2009 31 December, 2008 31 December, 2007 31 December, 2006
Non current assets 19,095,139 14,528,041 77,739,268 77,680,554 77,697,741 Current assets 2,427,863 1,872,675 5,457,661 12,859,603 1,751,483 Current liabilities (4,957,297) (646,631) (67,460,210) (69,361,851) (73,617,296) Long term liabilities (1,321,429) - - - -
Net assets 15,244,276 15,754,085 15,736,719 21,178,306 5,831,928
Capital and reserves Share capital 12,906,999 11,256,836 11,256,836 11,256,836 25,000 Share premium 27,071,664 28,721,827 28,721,827 28,721,827 - Deposit for shares - - - - 17,738,865 Revenue reserve (24,734,387) (24,224,578) (24,241,944) (18,800,357) (11,931,937)
Shareholder’s funds 15,244,276 15,754,085 15,736,719 21,178,306 5,831,928
Profit and loss accounts 12 months 12 months 12 months 12 months 8 months 31 December 31 December 31 December 31 December 31 December 2010 2009 2008 2007 2006
Turnover 2,382,396 2,785,717 2,561,652 3,067,072 466,595 Profit/(Loss) before taxation 3,456,849 100,966 (5,410,238) (6,868,420) (9,936,828) Taxation - (83,600) (31,349) - - Profit/(Loss) after taxation 3,324,259 17,366 (5,441,587) (6,868,420) (9,936,828)
Basic Profit/(Loss) per share (Naira) 0.13 0.00 (0.24) (0.73) (211.99)
Annual Report & Consolidated Financial Statements For the Year Ended 31 December 2010 49
Proxy Form NUMBER OF SHARES HELD
TRANSNATIONAL CORPORATION OF NIGERIA PLC (RC 611238) Resolutions For Against 5th ANNUAL GENERAL MEETING TO BE HELD at Transcorp Hilton Hotel, Abuja at 11am on the 15th of September 2011. 1 To receive and consider the Audited accounts for the period ended 31st December 2010 and I/WE...... the reports of the Directors, Auditors and Audit Committee thereon. Being member/members of TRANSNATIONAL CORPORATION OF NIGERIA PLC.
2 To re-elect retiring directors
Hereby appoint...... Professor Ndi Okereke-Onyiuke, OON Or failing him/her, the Chairman of the meeting as my/our proxy to act and vote for me/us Otunba Funso Lawal, OON and on my/our behalf at the Annual General Meeting of the company to be held at Mr. Adegboyega Olulade ...... on the...... , 2011 and at any adjournment thereof. High Chief O. B. Lulu-Briggs (Alternate Chief Mrs. Seinye O. B. Lulu Briggs) Dates this...... day of...... 2011 Olorogun O' tega Emerhor, OON
Signature...... Alhaji Mohammed Nasir Umar
Notes Mr. Kayode Fasola
1. This form of proxy together with the power of attorney or other authority, if any, under which it is designed of a notarially certified copy thereof must reach the Registrars, 3 To confirm the appointments of Afribank Ltd, No. 2A Gbagada Expressway, Anthony Village, Lagos not later than 48 Mr. Tony Elumelu, MFR and hours before the time for holding the meeting. Dr. Julius Kpaduwa to the Board of Directors
2. Where the appointer is a corporation, this form may be under seal or under hand of any 4 To fix the remuneration of the Directors officer or attorney duly authorized.
5 To re-appoint the Auditors 3. This proxy will be used only in the event of poll being directed, or demanded.
4. In the case of joint holders, the signature of anyone of them will suffice, but the names 6 To authorise the Directors to fix of all joint holders should be shown. The remuneration of the Auditors.
5. It is a legal requirement that all entrustments of proxy must bear appropriate stamp 7 To elect members of the Audit Committee duty from the Stamp Duties Office, and not adhesive postage stamps.
Please indicate with ‘X’ in the appropriate square how you wish your Before posting the above form, please cut off this part and retain it. votes to be cast on the resolutions set out above.
Admission Card
TRANSNATIONAL CORPORATION OF NIGERIA PLC (RC 611238)
5th ANNUAL GENERAL MEETING TO BE HELD at 11.00 am on Thursday the 15th of September 2011 at the Transcorp Hilton Hotel, 1, Aguiyi Ironsi Street, Maitama, Abuja Abuja, F.C.T.
Name of Shareholder
......
IF YOU ARE UNABLE TO ATTEND THE MEETING A member (shareholder) who is unable to attend Annual General Meeting is allowed by law to vote by proxy. A proxy need not be a member of the company. The above proxy card has been prepared to enable you exercise your right to vote if you cannot personally attend.
No. Of share Name and Address of Shareholder
Annual Report & Consolidated Financial Statements For the Year Ended 31 December 2010 50
E-DIVIDEND MANDATE
The Registrar, ABUJA BRANCH OFFICE AFRIBANK REGISTRARS LTD AFRIBANK REGISTRARS LTD 2A Gbagada Expressway, Afribank House, Anthony Village, Lagos. 3, Kaura Namode Street2A Gbagada P.M.B. 12974, Lagos. Off Tafawa Balewa Way Tel: 01-2799133-4, 01-7735967, 01-7735963 Abuja F.C.T Fax: 012799132 Tel: 09-8700937, 09-8700074 Website: www.afribankregistrars.com Abuja E-mails: [email protected] E-mails: [email protected] customercare!afribankregistrars.com
Dear Sir,
I/we hereby request that all dividend(s) due to me/us from my/our holding in Transnational Corporation Nigeria Plc be paid directly to my/our Bank named below:
NAME OF BANK BRANCH
BANK ADDRESS
BANK ACCOUNT NO.
SHAREHOLDER’S FULL NAME SURNAME TITLE
OTHER NAMES FULL ADDRESS
CSCS NO CHN NO:
BROKER’S NAME
MOBILE (GSM) NO LAND LINE
E-MAIL FAX
SHAREHOLDER’S SIGNATURE(S)/COY SEAL BANK’S AUTHORIZED SIGNATURE/STAMP
1 1
2 2
Annual Report & Consolidated Financial Statements For the Year Ended 31 December 2010 51
Annual Report & Consolidated Financial Statements For the Year Ended 31 December 2010 52
Annual Report & Consolidated Financial Statements For the Year Ended 31 December 2010