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ANNUAL REPORT

For the year ended 31 December 2013 Transnational Corporation of Nigeria Plc

CONTENT
Group Overview 2 5 6 7 9 10 15 18 25 28 29 30 32 33 34 35 36 36 36 36 37 37 37 39 39 39 40 41 41 41 42 42 43 43 44 44 44 44 44 44 44 45 46 46 46 2.10 2.11 2.12 2.13 2.14 2.15 2.16 2.17 2.18 2.19 2.20 2.21 2.22 2.2 2.3 2.4 2.5 2.6 2.7 2.8 2.9 Our Businesses Results at a Glance List of Directors, Officers and Professional Advisers Board of Directors Executive Management Chairmans Statement Chief Executive Officers Report Corporate Governance Report Directors Report Statement of Directors Responsibilities Report of the Audit Committee Report of the Independent Auditors Statement of Financial Position Statement of Comprehensive Income Statement of Changes in Equity Statement of Cash Flows Notes to the Financial Statements 1 2 General information Summary of significant accounting policies 2.1 Basis of preparation 2.1.1 2.1.2 Going concern Changes in accounting policy and disclosures

Consolidation Segment reporting Foreign currency translation Property, plant and equipment Intangible assets Investment properties Impairment of non-financial assets Financial instruments 2.9.1 2.9.2 Classification Recognition and measurement

Offsetting financial instruments Impairment of financial assets Inventories Trade receivables Cash, cash equivalents and bank overdrafts Borrowings Borrowing costs Trade payables Current and deferred tax Employee benefits Revenue recognition Leases Dividend distribution

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47 47 47 47 50 50 51 51 54 55 56 56 60 60 61 61 61 62 62 62 63 64 65 66 66 67 67 67 68 69 69 70 71 71 72 72 72 72 74 75 76 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 3

2.23 2.24 3.1 3.2 3.3

Share capital Treasury shares Financial risk factors Capital risk management Fair value estimation

Financial risk management

Critical accounting estimates and judgements Segmental analysis Property, plant and equipment Intangible assets Investment property Investment in subsidiaries Deferred tax Pre-paid lease rental Inventories Trade and other receivables Debt and equity securities Cash and cash equivalents Trade and other payables Taxation Borrowings Financial instruments and fair values Advance deposits Retirement benefit obligation Revenue Cost of sales Other operating income Administrative and general expenses Particulars of directors and staff Finance income and costs Earnings per share Share capital Non-controlling interest Prior period adjustment Cash generated from operating activities Capital commitments and contingent liabilities Subsequent events Related parties

Value-added Statement Five-year Financial Summary Notice of Annual General Meeting

Attached Proxy form Attached Shareholders E-Service application form IBC Corporate information

IV

GROUP OVERVIEW
OUR VISION
To create sustainable value for our stakeholders in our chosen markets.

OUR MISSION
To build a conglomerate of successful businesses underpinned by excellence, execution and entrepreneurship.

ABOUT TRANSCORP
Transnational Corporation of Nigeria Plc (Transcorp), is an investment company that focuses on acquiring and managing strategic businesses that create long-term shareholder returns and socio-economic impact. The company has interests in four business sectors: Power, Oil and Gas, Hospitality and Agriculture. Incorporated on 16 November, 2004 and quoted on the Nigerian Stock Exchange, Transcorp has a shareholder base of about 300 000 investors, the largest of which is Heirs Holdings Limited, a pan-African proprietary investment company. Transcorps notable businesses include the award-winning Transcorp Hilton Hotel, Abuja; Transcorp Hotels, Calabar; Teragro Commodities Limited, operator of Teragro Benfruit Plant Nigerias first-of-its-kind juice concentrate plant; Transcorp Ughelli Power Limited which acquired Ughelli Power Plc, owner of the 972MW Ughelli Power Plant and Transcorp Energy Limited, operator of OPL 281.

OUR CORE VALUES H.E.I.R.S


Hard Work
Passionate about extraordinary results Discipline Commitment to excellence

Emotional Intelligence
Self-awareness and emotional self-control Respect for others

Integrity
Delivering on your promise Exceeding expectations Living the brand

Resilience
Can-do spirit Breakthrough thinking Following-through to ensure results

Synergy
Collaborating with colleagues Leveraging group relationships

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OUR BUSINESSES

POWER
Transcorp Ughelli Power Limited
Transcorp Ughelli Power Limited (TUPL) is a subsidiary of Transnational Corporation of Nigeria Plc (Transcorp). The company is a leader in the Nigerian power space and drives Transcorps strategic interests in the Power sector. On 25 September 2012, TUPL won the bid for the acquisition of Ughelli Power Plc, one of the six power generation companies of the Power Holding Company of Nigeria (PHCN) privatised by the Federal Government of Nigeria. On 21 August 2013, TUPL made full payment of US$300 million to the Bureau of Public Enterprises (BPE), representing 100% of TUPLs bid price for the plant. Today, TUPL owns 100% of Ughelli Power Plc, operator of the 972 MW Ughelli power plant, and plans to increase its generating capacity from 300 MW to over 3 000MW in the next five years. TUPL plans to make targeted inroads into West Africa and subsequently the rest of Africa.

ENERGY
Transcorp Energy Limited
Transcorp Energy Limited is a fully owned subsidiary which was established in 2008 to spearhead Transcorps push into the energy sector as well as focus on upstream petroleum development. Transcorp Energy oversees a joint venture agreement with Sacoil Holdings Limited (Sacoil) to develop its OPL 281 asset in collaboration with Energy Equity Resources Limited (EER).

OUR BUSINESSES continued


HOSPITALITY
Transcorp Hilton Hotel, Abuja

Transcorp Hilton Hotel is situated in the heart of Nigerias Federal Capital Territory, a 40-minute drive from the Nnamdi Azikiwe International Airport, Abuja. It is a 670-room, 5-star hotel that provides luxury accommodation, exotic cuisine, fully equipped meeting rooms and leisure facilities to business travellers and tourists from all over the world. The hotel offers the benefit of the international-standard guest reward programme, Hilton Honors, which awards points and miles to members who stay at any of the Hilton Groups 3700 hotels world-wide, and airline miles in partnership with over 50 airlines. Under Transcorps effective leadership, the Transcorp Hilton Hotel was named the best Hilton Hotel in Africa, Middle East and Asia for the year 2010. The hotel was also named the winner of Hilton Worldwide Prize for the 2012 GC& E (Group Conference and Events) Sales Team of the year for the Middle East and Africa regions and Nigerias leading hotel for the year 2013 by World Travel Awards.

Transcorp Hotels, Calabar

The 146-room Transcorp Hotels, Calabar, is a premier destination hotel in Calabar, Cross River State, which is fast becoming the destination stop for vacations and conferences in Nigeria. The hotel is located in the heart of Calabar and is a well-known landmark for both locals and visitors. It is the perfect meeting ground for business and pleasure. Transcorp Hotels, Calabar, provides outstanding conferencing facilities: fine dining, 24-hour room service, a fitness centre, complimentary airport pick up, complimentary Wi-Fi connection in all guest rooms and guest discounts with local merchants. Transcorp continues to develop strategies in the medium and long term that will consistently position the hotel as a key player in the hospitality industry.

AGRICULTURE
Teragro Commodities Limited
Teragro Commodities Limited is the agribusiness subsidiary of Transnational Corporation of Nigeria Plc. The business leverages on advanced technology in food processing to produce high quality agricultural products including orange and pineapple concentrates, mango purees and orange peel oil for industrial markets. Incorporated in 2008, the company is the operator of the 26,500 metric tonne capacity Teragro Benfruit Plant in Benue State, Nigerias first-of-its-kind juice concentrate plant. Teragro and its products are certified by the National Agency for Food and Drugs Administration (NAFDAC) of Nigeria and the Global Food Safety Initiative (GFSI) with ISO 9001: 2008 and FSSC 22000:2005. Teragro plans to expand its operations and will capitalise on growing opportunities in food conversion comprising paddy rice to long grain, cassava to sweeteners and full value chain oil palmbusiness.

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RESULTS AT A GLANCE
Group 2013 Nm For the year ended 31 December Gross earnings (Revenue, other operating and finance income) Administrative expenses Profit before tax Profit after tax As at 31 December Non-current assets Current assets Total assets Share capital Equity attributable to owners of the parent Non-controlling interest Per share data Earnings per share (Kobo) Net assets per share (Kobo) Number of employees 25 229 9 213 9 032 6 957 122 212 27 253 149 464 19 361 58 226 28 450 12.17 262 1 902 2012 Nm 15 808 7 523 3 948 2 528 74 942 24 615 99 558 12 907 41 858 22 238 4.04 248 1 527 Company 2013 Nm For the year ended 31 December Gross earnings (Revenue, other operating and finance income) Administrative expenses Profit before tax Profit after tax As at 31 December Non-current assets Current assets Total assets Share capital Shareholders fund Per share data Earnings per share (Kobo) Net assets per share (Kobo) Number of employees 6 778 2 275 3 187 2 821 36 267 12 813 49 080 19 361 32 919 8.52 99 24 2012 Nm 4 804 1 081 2 875 2 539 27 918 10 729 38 647 12 907 17 734 9.08 69 21 Increased/ (Decreased) % 60 22 129 175 63 11 50 50 39 28 201 5 25 Increased/ (Decreased) % 41 110 11 11 30 19 27 50 86 (6) 45 14

Financial highlights
Group Gross earnings (Revenue, other operating and fi nance income) Profi t after tax Headline earnings per share Return on equity Total assets Company Gross earnings (Revenue, other operating and fi nance income) Profi t after tax Headline earnings per share Return on equity Total assets N25.23 billion up 175% to N6.96 billion Earnings per share increased by 201% to 12.17 kobo from 4.04 kobo (restated) 8.0% N149.46 billion N6.78 billion up 11% to N2.82 billion Earnings per share decreased by 6% to 8.52 kobo from 9.08 Kobo (restated) 8.6% N49.08 billion

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LIST OF DIRECTORS, OFFICERS AND PROFESSIONAL ADVISERS


Directors
Tony O. Elumelu, CON Obinna Ufudo Olorogun Otega Emerhor, OON Kayode Fasola Stanley Lawson Mohammed Nasir Umar Chibundu Edozie Emmanuel N. Nnorom Chairman President/CEO Director Director Director Director Director Director

Company Secretary
Chinedu N. Eze

Registered Office
38 Glover Road (Formerly 22B) Ikoyi, Lagos

Auditors
PricewaterhouseCoopers 252E Muri Okunola Street Victoria Island Lagos

Registrar and Transfer Office


Africa Prudential Registrars Plc 220B Ikorodu Road Palmgrove Lagos Tel: 01-4612373-76 info@africaprudentialregistrars.com

BOARD OF DIRECTORS
Tony O. Elumelu, CON
Chairman
An entrepreneur, a philanthropist and the Chairman of Heirs Holdings Limited. He also serves as Chairman of Transcorp. Mr. Elumelu is the author and leading proponent of the philosophy he calls Africapitalism, which is the private sectors commitment to Africas development through long-term investment in strategic sectors of the economy that drive economic prosperity and social wealth. In 2011, he established The Tony Elumelu Foundation, an African-funded philanthropic organisation focused on supporting entrepreneurs in Africa by enhancing the competitiveness of the private sector. Mr. Elumelu has received numerous honours, board and committee appointments and in 2012, he was awarded the National Honour of Commander of the Order of the Niger for his service in promoting private enterprise. In 2013, Mr. Elumelu received the Leadership Award in Business and Philanthropy from the AfricaAmerica Institute (AAI) Awards. He was also named African Business Icon at the 2013 African Business Awards.

Obinna Ufudo
President/CEO
Holds an M.Sc degree in International Securities, Investment and Banking from the University of Reading, UK. He also holds an EMBA from the IESE Business School, University of Navarra, Barcelona Spain and a B.Sc degree in Finance from the Enugu State University of Science and Technology Enugu, Nigeria. He has held senior level positions in securities trading, investment management and financial advisory firms.

Emmanuel N. Nnorom
Non-Executive Director
The President/COO of Heirs Holdings. Prior to joining the Heirs Holdings Group, Emmanuel served as CEO of UBA Africa, overseeing UBAs Africa operations outside Nigeria and executing corporate strategy in 18 African countries. Other senior roles within UBA included Group COO, followed by his appointment as Group CFO, with responsibility for Finance and Risk. Emmanuel is a chartered accountant, and brings over three decades of professional experience in the corporate and financial sectors, working with publicly listed companies. He is an alumnus of Oxford Universitys Templeton College, and a Prize winner and Fellow of the Institute of Chartered Accountants of Nigeria.

Chibundu Edozie
Non-Executive Director
Holds a Bachelor of Science degree in Geology and Mining from the University of Jos and is an alumnus of the New York Institute of Finance, IMD and Lagos Business School. Has over 20 years experience in the capital market and investment banking industry.

Olorogun Otega Emerhor


Non-Executive Director
Known as a turnaround expert due to his involvement/leadership in many turnaround assignments both in the banking and manufacturing sectors. Hold a first class degree in Accounting from The University of Nigeria, a Fellow of the Institute of Chartered Accountants of Nigeria (ICAN), the Institute of Credit and Risk Management of Nigeria and the Academy for Entrepreneurial Studies, respectively. He is also a member of the Institute of Marketing Consultants.

Stanley Lawson
Non-Executive Director
Holds an M.Sc degree in Petroleum Geology and an MBA Finance, both from the University of Ibadan. A multi-disciplinary professional with cognate experience spanning over three decades in the energy and financial services sectors.

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Kayode Fasola
Non-Executive Director
Holds a B.Sc degree in Agricultural Economics from the University of Ibadan and an MBA in Finance from Obafemi Awolowo University, Ile-Ife. He also holds an MBA in Banking from Ladoke Akintola University Ogbomoso. He is an alumnus of the prestigious Lagos Business School and the London Business School. Has over 22 years cognate experience covering all facets of banking and business strategy

Mohammed Nasir Umar


Non-Executive Director
Has vast and varied experience in lands and survey matters spanning over a period of 34 years. Holds an M.Sc degree in Lands and Survey from Ahmadu Bello University, Zaria. A registered surveyor with the Surveyors Council of Nigeria and a Fellow of the Nigerian Institute of Surveyors.

CEOs OF SUBSIDIARIES
Adeoye Fadeyibi
Chief Executive Officer, Transcorp Ughelli Power Limited
Has deep and varied experience in power generation with core expertise in gas turbine technology, design, installation and commissioning, operations and maintenance and power plant services. Has a degree in Mechanical Engineering from New York State University and has attended several technical and management trainings from the General Electric Power Systems University and Management Learning Programs. Completed the Lean Six Sigma training, and participated in the first lean process for power services.

Tony Chukwueke
Director of Transcorp Energy Limited
Responsible for leading a team of specialists to develop the Companys Energy Portfolio including the recent acquisition of the 972MW capacity Ughelli Power Plc. he has over 35 years global oil and gas experience in the upstream and downstream sectors. He holds a B.Sc in Physics, an M.Sc in Applied Geophysics and a Ph.D in Geology, all from the University of Nigeria Nsukka. Tony is also the Technical Director of Tenoil Petroleum and Energy Services, an indigenous Nigerian Oil and Gas exploration and production firm wholly owned by the Heirs Holdings Group. He provides support and consultancy services to a several oil and gas investors in Nigeria and around the world.

Valentine Ozigbo
Chief Executive Officer, Transnational Hotels and Tourism Services Limited
Has over 18 years rich and varied experience in banking (commercial, retail, investment and international), business development and transformation and more recently hospitality asset development and management. Holds a B.Sc. in Accounting and an MBA in Banking and Finance from the University of Nigeria, Nsukka. Graduated from the Lancaster University, UK with a Distinction in M.Sc. Finance. A Fellow of the Institute of Chartered Accountants of Nigeria and an Associate Member of the Chartered Institute of Taxation of Nigeria.

Dr. Jide Adedeji, Ph.D


Chief Executive Officer, Teragro Commodities Limited
Has over two decades of experience in the food flavour, natural products and consumer packaged goods industries. An expert in the creation and development of natural flavour ingredients from reactions and natural sources. Holds a B.Sc. in Agricultural Biochemistry and Nutrition, an M.Sc. and Post-graduate Diploma in Food Science and Technology from the University of Ibadan. Earned doctorate and Masters degrees in Food Science from Rutgers University in New Jersey, USA.

EXECUTIVE MANAGEMENT
The Executive Management of Transcorp comprises the following principal officers: Ibikunle Oriola
Chief Finance Officer
Has over 13 years of corporate experience spanning public and private partnership advisory, project finance, financial modelling, mergers and acquisitions, capital raising and corporate strategy. Holds a second class upper degree in Finance from the University of Lagos. Won a Merit Award for 2nd best overall performance in Foundation Examination of the Institute of Chartered Accountants of Nigeria. Has attended professional trainings in the UK, Belgium, Hungary, South Africa and the UAE.

Janet Mbu
Legal Adviser
Has broad corporate and commercial experience gained across different industry sectors with a particular focus on debt/equity capital raising transactions, corporate governance and general commercial work. She holds a B.A. in History from Sussex University and has a postgraduate diploma in law (CPE) from City University, London. She attended the College of Law, London and trained as a solicitor with City firm, Allen & Overy. She is a member of the UK Law Society and student member of the Institute of Chartered Secretaries and Administrators.

Dupe Olusola
Director of Resources
Has over 17 years experience in Banking, Private Equity, Developmental Business Consulting and Asset Management. Holds a B.A. in Economics from the University of Leicester, UK and an MA in Development Economics from the University of Kent at Canterbury as well as Investor Relations Certification from the UK.

Yemi Okojie
Head, Strategy and Business Transformation
Has extensive experience in Business Transformation, Consulting and Corporate Strategy. Holds a first class degree in Mechanical Engineering from Brunel University in England and an MBA from the University of Chicago Booth School of Business, with concentrations in Finance, Strategy and General Management.

Michelle Matthew-Okojie
Commercial Director
Has over 21 years of professional experience in Strategic Planning, Marketing, Product Management, Business Development and Sales and Team Management across diverse industry verticals. Holds a B.Sc degree in Microbiology from the University of Benin. Has attended several international trainings and is a Member of the International Facility Management Association.

Barnabas Umelo
Acting Chief Internal Auditor
Has over 26 years professional experience spanning over Banking, Asset Management, International Trade and Consultancy. Holds an MBA in Finance and Accounting from Ogun State University. Qualified as a Chartered Accountant in 1992 and became a Fellow of the Institute in 2005.

Chinedu N. Eze

Company Secretary
Has over a decade of corporate, commercial, legal and company secretarial experience in the Banking and Finance industry. Holds an LL.B degree from the University of Nigeria, an LL.M degree from the University of Lagos and another LL.M from the University of British Columbia (UBC), Vancouver, Canada as a recipient of the fellowship of the Law Foundation of British Columbia and graduating with a Class One standing. He is a Member of the Nigerian Bar Association; an Associate of the Chartered Institute of Arbitrators (UK and Nigeria), an Associate Member of the Institute of Capital Market Registrars and a Member of the UK Environmental Law Association.

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CHAIRMANS STATEMENT
Distinguished Shareholders,
I am delighted to welcome you all to the 8th Annual General Meeting of Transnational Corporation of Nigeria Plc (Transcorp and or the Company) and to present the Annual Report and the Audited Financial Statements for the year ended 31 December 2013.

Highlights of Our Performance in 2013

2013 has been a transformational year for our group, and one of which we can all be justifiably proud. Our management has begun to show the results of a disciplined execution of strategy and shareholders have begun to see their rewards. Transcorp achieved very strong financial and operating results in FY 2013, as evidenced by growth in key performance indicators for the Company, as well as consolidated results of its subsidiaries (The Group). FY 2013 gross earnings of N25.23 billion for the Group represents an increase of 60% over prior year gross earnings of N15.81 billion. The Companys gross earnings increased in 2013 by 41% from N4.80 billion in 2012 to N6.78 billion. This impressive gross earnings growth translated into significant operating profit for the Group as 2013 PBT of N9.03 billion represents 129% growth over 2012 PBT of N3.95 billion. Companys 2013 PBT of N3.19 billion increased by 11% from N2.88 billion achieved in 2012. In 2013, the Groups total assets of N149.46 billion grew by 50%, well ahead of the N99.56 billion total assets recorded last year. The total assets of the Company increased to N49.08 billion in 2013 from N38.65 billion in the prior year. The principal cause of asset growth for the Group and Company was our acquisition of the Ughelli Power Plant, Nigerias largest generating facility and where our influence has already seen a doubling of capacity. On the back of this very positive result, your directors are proposing a dividend of 5 kobo per share for your approval. This is the first time since incorporation that your Company will be paying a dividend and marks a significant inflection point. I believe that we will build on the solid foundation laid over the last couple of years to begin an era of steady and increasing dividend payment to our shareholders.

The Global Economy

The recovery of the global economy from the financial crisis of 2008 continued on a slow course during the year, with growth projected to accelerate in 2014. Financial markets across the world continued to benefit from low cost funds throughout the year, as the anticipated decision by the US Federal Reserve to reduce its monthly asset purchases was only announced in December 2013. The US Federal Reserves quantitative easing has helped to restore growth in the US as the economy recorded a growth rate of 1.6%. In Europe, weak domestic demand and existing structural issues contributed to sluggish GDP growth of 0.4%. Issues facing policy makers in the Euro Zone include weak financial markets, high private and public debt and depressed confidence. Despite the challenging conditions, a number of countries in the Euro Zone are beginning to exhibit signs of recovery. For example, Moodys has raised its outlook for Spain from negative to stable citing real improvement in government finances and the economy. Ireland recorded improvements in economic performance as unemployment fell while Greece is expected to grow by 0.6% in 2014 after two years of contraction. In Asia, monetary and fiscal stimuli have re-established the Japanese economy on the path of growth as the Bank of Japan has stated that countrys economy has entered a phase of moderate recovery. Chinas growth rate remained at 7.70%, the same recorded in 2012. The growth in the Chinese economy can be attributed to strong investment activity recorded in the second half of 2013.

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CHAIRMANS STATEMENT continued


A review of the performance of the major emerging markets showed mixed results. Russia recorded a decline in growth from 3.40% recorded in 2012 to 1.50% in 2013. India and Brazil registered increased growth rates from 3.20% and 1.00% respectively in 2012 to 4.40% and 2.30% in 2013. Despite higher growth, private capital inflows into Brazil and India remained sensitive to global financial conditions particularly monetary policy conditions in the UnitedStates. The IMFs revised growth rate for Sub-Saharan Africa was 5% for 2013, lower than an initial projection of 5.8%. According to the Fund, the weaker than forecast growth rate for 2013 reflected both a more adverse external environment characterised by rising financing costs, less dynamic emerging markets, and less favourable commodity prices and diverse domestic factors, including slower investment and weakening consumer confidence in some cases, and adverse supply developments in others. These factors notwithstanding, the continent is forecast to experience growth rates of 6% and above in 2014, as possible temporary declines in international commodity prices are not expected to affect growth in the continent.

Left to right: Tony O. Elumelu, CON, Chairman and Chinedu Eze, Company Secretary, during Transcorps Extraordinary General Meeting

The Local Economy


Provisional data from the National Bureau of Statistics (NBS) indicate that real GDP grew 6.87% in 2013, compared to 6.58% in 2012. In terms of contribution to GDP, the agricultural sector was the dominant contributor accounting for 38.6% followed by wholesale and retail trade (20.1%), crude petroleum and natural gas (13.4%) and telecommunication and post (8.2%). The oil sectors relative contribution and importance to GDP dipped during year when compared to 2012, owing to the increased cases of production shut-ins due to the rising incidences of pipeline vandalisation and crude oil theft. The Central Bank of Nigeria (CBN) continued with its tight monetary policy stance in the year, maintaining its benchmark rate at 12% throughout the year. The tight monetary stance and a relatively stable exchange rate regime accounted for moderation in price levels in the economy as the country recorded single digit inflation rate throughout the year. The reduced inflation rate notwithstanding, the CBNs tight monetary stance continues to make borrowing expensive and has reduced the pace of investment in the country.

Left to right: Obinna Ufudo, President/CEO, Transcorp, Vice President Nnamadi Sambo and the President of the Federal Republic of Nigeria, HE, Dr. Goodluck Ebele Jonathan, GCFR, during the official handover of ownership certificate to Transcorp as the winner of the Ughelli Power Plant bid.

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The capital market continued its rally as the All-Share Index (ASI) increased by 47.2% from 28,078.81 on 31 December 2012 to 41,329.19 on 31 December 2013. Market Capitalisation increased by 47.4% from N8.97 trillion to N13.23 trillion during the same period. Improved earnings and investor confidence in macroeconomic management contributed to the rise in stock prices. In line with President Goodluck Jonathans Transformation Agenda, substantial progress was made in the reform of critical sectors of the economy during the year. In the power sector, the privatisation of the Power Holding Company Nigeria (PHCN) Successor Companies was concluded and the new private sector owners including our Company Transcorp have taken control of the power assets. The privatisation process has been widely acclaimed as one of the most comprehensive and transparent in the history of power sector privatisation globally. In agriculture, the governments Agriculture Transformation Agenda is beginning to yield desired results as government select programmes is gradually and increasingly transforming the sector from a developmental project to a self-sustaining business.

Board Changes
At our last Annual General Meeting held on 21 June 2013, Dr. Julius Kpaduwa retired from the Board of the Company. On 11 December 2013, Ms. Angela Aneke resigned as a Director of the Company and on 16 December 2013, Mr. Emmanuel N. Nnorom was appointed to the Board. On behalf of the staff, management, the Board of Directors and our shareholders, I would like to thank Dr. Kpaduwa and Ms. Aneke for their invaluable contributions to the growth of the Company and wish them success in their future endeavours.

Left to right: Tony O. Elumelu, CON, Chairman, Transcorp, Rudi Jagersbacher, President, Hilton World Wide, Middle East and Africa Region and Valentine Ozigbo, MD/CEO, Transnational Hotels and Tourism Services Limited during the management agreement ceremony between Transcorp and Hilton Worldwide for the development of Transcorp Hilton Hotel Ikoyi, Lagos

Significant Achievements in 2013 and Outlook for 2014


Energy
Transcorp Ughelli Power Limited, a subsidiary of Transcorp on 1 November 2013, officially took physical ownership of Ughelli Power Plc, the owner and operator of the 972MW capacity Ughelli Power Plant following a handover ceremony hosted by the Federal Government. Following Transcorps takeover of the plant, power output has more than doubled at the plant from 160MW on handover date to 360MW currently. Our goal is to increase output at the Plant to 700MW by December 2014 by embarking on an extensive rehabilitation programme.

Tony O. Elumelu, CON Chairman Heirs Holdings and Transnational Corporation of Nigeria Plc and Hon. Emeka Wogu, Honourable Minister for Labour and Productivity during the official handing over ceremony of Ughelli Power Plc to Transcorp Ughelli Power Limited on Friday November 1, 2013 at Ughelli, DeltaState

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CHAIRMANS STATEMENT continued


Our investment in this sector is transformational, as it will usher in a new area of economic growth and development in Nigeria and create economic prosperity for all our stakeholders. For our oil and gas business, we have put in place a world class management team and are committed to developing the synergies between our natural resources portfolio and our power interests, creating an integrated energy approach. We expect to begin production on our existing oil block, OPL 281 before the end of 2014.

Hospitality
On 18 September 2013, Transcorp signed a management agreement with Hilton Worldwide for the management of Transcorps proposed Lagos Hotel, the Transcorp Hilton Lagos. The Transcorp Hilton Lagos will be a full-service, 350-room, fivestar hotel on Glover Road, Ikoyi, Lagos. During the year, we commenced the renovation and upgrade of the Transcorp Hilton, Abuja, Nigerias premier five-star hotel. As well as a dramatic transformation of its existing facilities, this project will also see the addition of a 5 000 seat capacity conference centre and 200 serviced luxury apartments to the hotel. As part of efforts to expand our hospitality footprint, we also completed the acquisition of a site in Port Harcourt for the development of another five-star hotel. In 2014, we intend to intensify our efforts in advancing the different construction projects to achieve our 30-month completion target. When these projects are completed, Transcorp will have the largest number of hotel rooms owned by any investor inNigeria.

The proposed Transcorp Hilton Ikoyi Lagos

Agriculture
During the year, Teragro, our juice concentrate producing subsidiary, fulfilled purchase orders for a wide variety of small and medium scale customers. In October 2013, the plant received the ISO 9001: 2008 (Quality Management System) and FSSC 22000: 2005 (Food Safety Management System) certifications, illustrating that our products and processes meet the highest global standards. We plan to increase significantly the size and scope of this business in 2014.

Valentine Ozigbo, MD/CEO, Transnational Corporation of Nigeria Plc receives the Sales Team of the Year Hilton Award

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Conclusion
The past year for Transcorp has been outstanding, we have launched new businesses and projects and have expanded existing ones. The fruits of our efforts have become visible and are rightly being acknowledged by different stakeholders, including the investing public. In 2014, we are determined to surpass the achievements of the past year and deliver on our vision to create value for you our key stakeholder by building a conglomerate of successful businesses. I would like to express our appreciation to you our shareholders for being steadfast and loyal over the years. I would also like to thank the Board, Management and Staff of the Company for their untiring efforts in re-positioning the Company. We look forward to 2014 with a high degree of confidence, in both our Company and the Nigerian economy. As Nigerias only vehicle for mass participation in key growth sectors, we feel a special responsibility in what we do and how we do it; and we look forward to continuing to reward our stake holders. Thank you.

Left to right: Oscar Onyema, CEO, Nigerian Stock Exchange, Tony O. Elumelu, CON, Chairman Transcorp, Obinna Ufudo, President/CEO, Transcorp and Adeoye Fadeyibi, MD/CEO, Transcorp Ughelli Power Limited during the fact-behind-the-figures presentation at the NSE

Tony O. Elumelu, CON Chairman, Board of Directors

Left to right: Obinna Ufudo, President CEO, Transcorp, Jeff Immelt, Chairman, General Electric, Philip Oduzua, MD/CEO, UBA Plc, Tony O. Elumelu, CON, Chairman, Transcorp and Adeoye Fadeyibi, MD/ CEO, TUPL during the agreement signing ceremony between Transcorp and General Electric

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CHIEF EXECUTIVE OFFICERS REPORT


Distinguished Shareholders,
In 2011, we set out a comprehensive agenda to restructure Transcorp for accelerated growth and maximum profitability. This included an aggressive strategy aimed at diversifying our businesses and expanding our income streams. Today, I am pleased to announce that we have made good progress and our 2013 full year audited results underscore our overall performance.

Operating Results and Financial Performance Review


Our Annual Report and Accounts prepared in conformity with International Financial Reporting Standards present the operating results of the group and subsidiaries for the year ended 31 December 2013. In line with our foundation of sound corporate governance and our adherence to regulatory standards, IFRS has provided a uniform and consistent basis of preparing our financial information for comparison and greater transparency group-wide. Transcorp achieved very strong financial and operating results in FY 2013 as evidenced by growth in various key performance indicators for the Company as well as consolidated results of its subsidiaries (the Group).

Revenue
FY 2013 gross earnings of N25.23 billion for the Group represents a growth of 60% over prior year gross earnings of N15.81billion. The Companys gross earnings increased in 2013 by 41% from N4.80 billion in 2012 to N6.78 billion. Strong revenue growth in 2013 was achieved on the back of improved occupancy levels at Transcorp Hilton Abuja, energy sales from newly acquired Ughelli Power Plant and fair value gains from listed equities investments.
Nbn 30 25 20

Profit
The impressive revenue growth combined with tight expense management translated into significant profits. The Group 2013 PBT of N9.03 billion was 129% higher than 2012 PBT of N3.95billion. The Companys 2013 PBT of N3.19 billion increased by 11% from N2.88 billion in 2012.

Nbn 10

6
15

4
10 5 0

2012 Group

2013 Company

2012

2013

2012 Group

2013 Company

2012

2013

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ANNUAL REPORT 2013

Assets
In 2013, the Groups total assets grew by 50% from N99.5 billion to N149.4 billion. The total assets of the company increased to N49.0 billion in 2013 from N38.65 billion in the prior year. The major drivers of this growth included the funds raised through the rights issue undertaken during the year and the significant investments in Transcorp Ughelli.
Nbn 150

We successfully acquired Ughelli Power Plc, the operator of the 972MW Ughelli Power Plant. Remarkably, within two months, the plants generating capacity of 160MW increased from to 360MW. Our long term plan is to increase the plants output to 3000MW within the next three to five years. Our intent to play a leading role in the Nigerian power sector goes beyond power generation. We envision an energy city with the Ughelli plant as a hub that will catalyse industrial development in the country. The planned energy city will comprise fertiliser and petrochemical plants among other heavy industries. We also plan to positively impact our host communities through effective community relations initiatives such as providing educational, health and sporting facilities of global standards. We have stepped up our engagement with the Ministry of Petroleum and regulatory bodies to complete the documentation and pre-drilling activities for our oil block OPL 281. We are further exploring opportunities for the acquisition of oil and gas assets available from ongoing divestiture of onshore assets by IOCs and sale of marginal fields by the federal government.

120

90

60

30

2012 Group

2013 Company

2012

2013

Capital Restructuring and Rights Issue


On 30 January 2013, we held a court-ordered meeting where you voted unanimously for the adoption of a Scheme of Arrangement to ratify the Companys share premium account of N27.07 billion. You will recall that part of this arrangement included offsetting the negative balance on the Companys revenue reserve accounts as at 31 December 2011 of N25.77billion. Further, in June 2013, we recorded a successful Rights Issue of 12 906 999 142 ordinary shares oF 50 kobo each. The Rights recorded a gross proceed of N12.91 billion and an oversubscription level by 32%. These two events represent significant milestones in our corporate history. While the Rights Issue provided us with financial muscle to undertake new investments and improve profitability, the Scheme of Arrangements enabled us to rest the legacy issues that impaired our ability to pay dividends. We are quite excited as a company to have arrived at this point.

Hospitality
Our hospitality business continues to make excellent progress as we focus on developing more hotels as well as expanding and renovating existing ones. Transcorp Hilton Hotel Abuja received the Nigerias Leading Hotel in 2013 award by World Travel Awards. The award-winning hotel also secured hosting rights for the World Economic Forum on Africa in 2014. In line with our hospitality expansion plans, we executed a Management Agreement with Hilton Worldwide for the development of a 350-room five-star Transcorp Hilton in Ikoyi, Lagos. We plan to break ground shortly while targeting completion within the next two to three years. Furthermore, we recently acquired a prime location in Port Harcourt, Rivers State for the development of another 350-room five-star Hotel. We are now negotiating with Hilton Worldwide for the predevelopment works and expect to commence construction by third quarter of 2014. In line with our commitment to continuously improving our customer service delivery, we have commenced the renovation and upgrade of Transcorp Hilton Hotel Abuja. Part of this project includes the construction of a 5 000 seat capacity conference facility and 200 luxury apartments within the hotel premises.

Key Business Achievements


Energy
Our key investment in the Nigerian power profit sector has provided the right platform needed to stimulate growth.

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CHIEF EXECUTIVE OFFICERS REPORT continued


In addition, the hotel is developing operational excellence with increased focus on high-impact projects that will translate to superior guest experience. It has also embarked on trainings as well as service strategy and visioning sessions to equip staff with the right skills and attitude for world class customer service delivery. During the year, we successfully resolved the dispute over the ownership of the 51% stake in THTSL (formerly NIRMSCO Properties Limited), owners of the Transcorp Hilton, Abuja. Transcorp Hotels Calabar has continued to provide world class hospitality to all our discerning guests. We have continued the extensive renovation and upgrade of the hotel we re-launched two years ago. The hotel caters to the needs of leisure travellers and is the preferred centre of choice for several high profile events in Calabar. In our power business, we will focus on concluding the rehabilitation of a number of identified turbines in order to improve generating output at the Ughelli plant to 700MW. Our oil and gas business will witness a speedy take-off as we expect to finalise negotiations of the production sharing contract of OPL281 with the Department of Petroleum Resources. We will embark on aggressive drilling campaign for commercial production before the end of 2014. The focal point of our hospitality business will be to commence construction of our proposed Transcorp Hilton Ikoyi, Lagos. We will also target the completion of the project development activities for the planned Transcorp Hilton Port Harcourt. We expect to conclude the renovation works at Transcorp Hilton, Abuja by the end of the 2015 financial year. In our agriculture space, we plan to close a number of commercial negotiations for our fruit juice concentrates. Subsequently, we will exploit backward integration opportunities through cultivation of a 5000 hectares farm to improve supply of raw materials to the factory.

Agriculture
Our agribusiness subsidiary, Teragro Commodities Limited, was successfully accredited by the Global Food Safety Initiative (GFSI) and was awarded two food safety certifications: ISO 9001: 2008 and FSSC 22000: 2005. These certificates underscore our commitment to global safety standards and clearly position Teragro as the leading fruit juice concentrate producer in Nigeria. We launched an informative and interactive Teragro website www.teragro-ng.com a platform that provides pertinent information on Teragros essence and guides our prospective and current customers on our methodology, and product specifications in line with international standards. In the medium term, we are backward integrating with a planned development of our own mango and orange farms to significantly enhance the scope of our business. We believe that we will build capacity to respond to the increasing demand for our fruit juice concentrates and purees.

Closing
In closing, I would like to thank the Board of Directors, the management and staff for their commitment and support. We believe that Transcorp is well positioned to become the foremost conglomerate in Nigeria, driving positive change and growth in its defined business sectors. Thank you.

Obinna Ufudo Chief Executive Officer

Outlook
2014 promises to be very bright as we are well on track to again deliver on all our set objectives. Our key target is to grow Group profits to over N25billion during the year. We intend to achieve this by the continued diversification and deepening of our existing businesses.

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ANNUAL REPORT 2013

CORPORATE GOVERNANCE REPORT


Transnational Corporation of Nigeria Plc (Transcorp or the Company) is committed to high standards of Corporate Governance. At Transcorp, the principles of good corporate governance are at the centre of our business and an important ingredient in creating and sustaining value for our key stakeholders. During the year ended 31 December 2013, Transcorp complied with the provisions of the Code of Corporate Governance issued by Securities and Exchange Commission (SEC) and all laws regulating corporate governance.

1.Overview
During the year under review, the Company further entrenched good corporate governance practices. This is in line with our conviction that corporate governance practices should be proactive and self-propagated practice that will enhance performance and uphold the Companys brand equity, rather than a knee-jerk response to regulatory impositions and sanctions. Consequently, we have continued to work relentlessly towards improving not only the Groups financial performance but also the self-induced good corporate governance practices without which such financial performances cannot be sustained in the long run. To help the Board realise these objectives are the Nominations and Governance Committee (NGC) and Finance and Investment Committee (FIC). Our corporate governance policies approved by the Board of Directors remained operational throughout the period under review. These are: Group Policy Governance Framework This framework explains the governance laws applicable to the Companys businesses. It provides for policy development and application, policy classification, review and revision as well as policy deviations and guiding templates. Board Governance and Board Committees Governance Charter This charter provides the governance framework for the Group Board and Board Committees, which framework would promote effective governance of the Group. Executive Management Charter This charter provides for the Executive Management Committee (EMC) of the Company its composition, role, terms of reference, proceedings and general governance framework. Subsidiary Governance Charter The Subsidiary Governance Charter provides for Group subsidiary governance, subsidiary boards of directors, subsidiary governance structure, subsidiary board committees, executive management and organisation structure.

2. Board of Directors
2.1General
The Board of Directors consists of eight members made up of one executive and seven non-executive directors. In accordance with the provisions of the Companies and Allied Matters Act, Cap C20, Laws of the Federation of Nigeria 2004 (CAMA) and the Board Governance Charter of the Company, the Chairman of the Board of Directors presides over Board proceedings. The Board meets at least four times in a year. However, during the year under review the Board met five times inclusive of emergency board meetings. The details of Directors attendance of Board meetings are disclosed on page 21 of the Annual Report. The Board establishes formal delegation of authority, defining the limits of Managements power and authority and delegating to Management certain powers to run the day-to-day operations of the Company. The delegation of authority conforms to statutory limitations specifying responsibilities of the Board that cannot be delegated to Management. Any responsibility not delegated remains with the Board and its committees. The Company has continued to benefit tremendously from the wealth of experience of its Directors, all successful individuals who have distinguished themselves in their chosen fields.

2.2 Membership of the Board


During the year under review, a number of changes took place at the Board level. Dr. Julius Kpaduwa (representing Nashville Capital Partners Limited) retired at the last Annual General Meeting held on 21 June 2013 while Ms. Angela Aneke resigned from the Board on 11December 2013. Mr. Emmanuel N. Nnorom was appointed to the Board on 16 December 2013. Consequent upon the foregoing, the Board of Directors of the Company comprised the following as at the end of the year.

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CORPORATE GOVERNANCE REPORT continued


Mr. Tony Elumelu, CON Chairman Appointed: 2011 Tony O. Elumelu is an entrepreneur, a philanthropist and the Chairman of Heirs Holdings Limited. He also serves as Chairman of Transcorp. In his early career, Mr. Elumelu made a name for himself by turning the nearly bankrupt Standard Trust Bank into a top-five player in Nigeria. In 2005, he led the largest merger in the banking sector in sub-Saharan Africa, acquiring United Bank for Africa (UBA). In five years he transformed it from a single-country bank to a pan-African institution with over 7 million customers in 19 African countries. Following his retirement from UBA in 2010, Mr. Elumelu set up Heirs Holdings Group and founded The Tony Elumelu Foundation, an Africa-based and African-funded philanthropic organisation dedicated to the promotion of entrepreneurship in Africa through interventions in the areas of business leadership, policy and access to finance. He serves as a member of the USAIDs Private Capital Group for Africa Partners Forum. He sits on the Nigerian Presidents Agricultural Transformation Implementation Council and serves as Co-Chair of the Aspen Institute Dialogue Series on Global Food Security. He played a leading role in the formation of the National Competitiveness Council of Nigeria and now serves as its vice chairman. He chairs the Ministerial Committee to establish world-class hospitals and diagnostic centres across Nigeria, at the invitation of the Federal Government. Mr. Elumelu is the author and leading proponent of the philosophy he calls Africapitalism, which is the private sectors commitment to Africas development through long-term investment in strategic sectors of the economy that drive economic prosperity and socialwealth. In 2003, the Federal Government of Nigeria conferred the national honour of Member of the Federal Republic on Mr. Elumelu. In 2012 he was awarded the National Honour of Commander of the Order of the Niger for his service in promoting private enterprise. In 2013, Mr. Elumelu received the Leadership Award in Business and Philanthropy from the Africa-America Institute (AAI) Awards. He was also named African Business Icon at the 2013 African Business Awards. Mr. Obinna Ufudo President/CEO Appointed: 2011 Mr. Obinna Ufudo holds an M.Sc. degree in International Securities, Investment and Banking from the University of Reading, United Kingdom as a British Chevening Scholar. He also holds an Executive Master of Business Administration (EMBA) from the IESE Business School, University of Navarra, Barcelona, Spain, and a B.Sc in Finance from Enugu State University of Technology, Enugu, Nigeria. Mr. Ufudo has held senior level positions in securities trading, investment management and financial advisory firms. Prior to his appointment as President/CEO of Transcorp, he was the Chief Operating Officer of the Heirs Holdings Group, where he optimised dayto-day operations of the Group and supervised its various subsidiaries. Mr. Ufudo is an Associate Member of the Chartered Institute of Bankers of Nigeria and is an International Fixed Income and Derivatives Certified Professional. Olorogun Otega Emerhor, OON Non-executive Director Appointed: 2007 Olorogun Otega Emerhor holds a First Class Honours Degree from the University of Nigeria, Nsukka. He is a fellow of the Institute of Chartered Accountants of Nigeria (ICAN), Institute of Credit and Risk Management of Nigeria and Academy for Entrepreneurial Studies. He is also a member of the Institute of Marketing Consultants. Olorogun Emerhor is currently the Group CEO of Standard Alliance Group; Chairman, THTSL, owners of Transcorp Hilton Hotel, Abuja; Chairman, Synetics Technologies Ltd and Heroes Group. He trained as a chartered accountant with the renowned PricewaterhouseCoopers and has worked in several banks like Citi Bank, Fidelity Bank Plc, GTBank. He was the Managing Director of erstwhile Crystal Bank, now part of UBA. He is on the board of several companies and has received numerous prestigious awards.

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ANNUAL REPORT 2013

Alhaji Mohammed Nasir Umar Non-executive Director Appointed: 2008 A member of the Finance and Investment Committee of the Board, Alhaji Mohammed Nasir Umar is a graduate of Ahmadu Bello University, Zaria. He holds an MSc. in Land Surveys and is a registered surveyor with the Surveyors Council of Nigeria. He is also a fellow of the Nigerian Institute of Surveyors. Alhaji Umar started his career with Sokoto Rima River Basin Development Authority in 1977. He has vast and varied experience in lands and survey matters spanning over a period of 32 years. He has held many important position and responsibilities which include Director of Planning and Survey of the Federal Capital Development Authority (FCDA), Chairman, Resettlement Task Force of the FCDA and many others. Alhaji Umar is presently, the Chairman/CEO of Em-N Surveys and Engineering. Mr. Kayode Fasola Non-executive Director Appointed: 2009 Mr. Kayode Fasola is a member of the Nomination and Governance Committee as well as the Finance and Investment Committee of the Board. He is also a member of the Statutory Audit Committee of the Company. He holds a B.Sc (Agricultural Economics) degree from University of Ibadan and an MBA (Finance) degree from Obafemi Awolowo University, Ile-Ife. Mr. Fasola also holds an MBA (Banking) degree from Ladoke Akintola University, Ogbomoso. He is an alumnus of the prestigious Lagos Business School and the London Business School. An Associate member of the Chartered Institute of Management and National Institute of Marketing of Nigeria, Mr. Fasola is an Honorary Senior Member, Chartered Institute of Bankers Nigeria. He is a professional banker with over 20 years cognate experience covering all facets of banking and business strategy. He was at various times the Directorate Head of Commercial Banking and Public Sector of Wema Bank. Mr. Fasola was until recently the Regional Executive in charge of South West Business Group in Wema Bank Plc. Dr. Stanley Lawson Non-executive Director Appointed: 2011 Mr. Stanley I. Lawson holds an M.Sc degree in Petroleum Geology and an MBA degree in Finance both from the University of Ibadan. He is the Managing Partner of Financial Advisory and Investment Consultants; an oil and gas-sector focused financial advisory services firm. He is a widely respected expert with multi-disciplinary professional experience spanning over three decades in the energy and financial sectors. He spent the early years of his career as a Resident Geologist/Drilling Engineer after which he proceeded to the Banking/Finance Industry where he spent over 17 years rising to the position of Managing Director/Chief Executive of African Express Bank in 2003. In December 2004, Mr. Lawson was appointed Group Executive Director, Finance and Accounts at the Nigerian National Petroleum Corporation (NNPC), a position he held for almost five years. He had core responsibilities for funding, budgeting and cash flow planning of the oil industry. Mr. Lawson has attended several international leadership and management courses. He is presently running a doctoral programme at the University of Phoenix, Arizona. Mr. Chibundu Edozie Non-executive Director Appointed: 2011 The Chairman of the Finance and Investment Committee of the Board and a member of the Nomination and Governance Committee, Mr. Chibundu Edozie holds a Bachelor of Science degree in Geology and Mining from the University of Jos. He is an alumnus of the New York Institute of Finance, IMD, Switzerland and Lagos Business School.

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CORPORATE GOVERNANCE REPORT continued


Mr. Edozie is the Group Deputy Managing Director of BGL Plc overseeing strategic business platforms including BGL Asset Management Limited, BGL Private Equity Limited, BGL Securities Limited and the Investment Banking Group. He also oversees the international expansion of BGL Plcs operations. With over 18 years experience in the capital market and investment banking industry, Mr. Edozie is a consummate professional committed to the growth of the Nigerian capital market alongside global financial markets. He is an authorised dealing clerk of the Nigerian Stock Exchange, a Fellow of the Chartered Institute of Stockbrokers and a past Member of the Governing Council of the Institute. He is also a member of the Nigerian Mining and Geosciences Society. Mr. Edozie also serves as a director on the boards of BGL Asset Management Limited, BGL Private Equity Limited and BGL Securities Limited, wholly-owned subsidiaries of BGL Plc. Emmanuel N. Nnorom Non executive Director Appointed: 2013 Emmanuel N. Nnorom is the President/COO of Heirs Holdings. Prior to joining the Heirs Holdings Group, Emmanuel served as CEO of UBA Africa, overseeing United Bank of Africas operations outside Nigeria and executing corporate strategy in 18 African countries. Other senior roles within UBA included Group COO UBA, followed by his appointment as UBAs Group CFO, with responsibility for Finance and Risk. Emmanuel is qualified as a chartered accountant, and brings over 3 decades of professional experience in the corporate and financial sectors, working with publicly listed companies. He is an alumnus of Oxford Universitys Templeton College, and a prize winner and Fellow of the Institute of Chartered Accountants of Nigeria.

2.3 Board Meeting Attendance


Total number of meetings obliged to attend 5 Total number of meetings attended 5 Dates of meetings attended (dd/mm/yy) 21/2/13, 14/5/13, 20/6/13, 26/6/13, 16/12/13 21/2/13, 14/5/13, 20/6/13, 26/6/13, 16/12/13 21/2/13, 20/6/13, 16/12/13 21/2/13, 14/5/13, 20/6/13, 26/6/13, 21/2/13, 20/6/13 Number of meetings not attended N/A Dates of meetings not attended (dd/mm/yy) N/A

Directors Mr. Tony Elumelu, CON

Mr. Obinna Ufudo

N/A

N/A

Olorogun Otega Emerhor, OON Ms. Angela Aneke (Resigned on 11 December 2013) Dr. Julius Kpaduwa (representing Nashville Capital Partners Ltd) (Retired on 21 June 2013) Alhaji Mohammed Nasir Umar Mr. Kayode Fasola

5 4 3

3 4 2

2 N/A 1

14/5/13, 26/6/13 N/A 14/5/13

5 5

4 5

21/2/13, 14/5/13, 20/6/13, 26/6/13 21/2/13, 14/5/13, 20/6/13, 26/6/13, 16/12/13 21/2/13, 14/5/13, 26/6/13, 16/12/13/ 21/2/13, 14/5/13, 20/6/13, 26/6/13, 16/12/13 N/A

1 N/A

16/12/13 N/A

Mr. Stanley Inye Lawson

20/06/13

Mr. Chibundu Edozie

N/A

N/A

Mr. Emmanuel N. Nnorom (Appointed 16 December 2013)


N/A means Not Applicable

N/A

N/A

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2.4 Board Committees and Executive Management Committee


(a) Nominations and Governance Committee (formerly Establishment Committee) The functions of the Nomination and Governance Committee (NGC) include the following: Establish procedures for the nomination of Directors. Advise and recommend to the Board the composition of the Board. Approve recruitments, promotions, redeployments and disengagements for the Company/Group heads of departments that make up the Executive Management Committee. Review and evaluate the skills of members of the Board. Recommend to the Board compensation for all staff of the Company and subsidiary Boards. Advise the Board on corporate governance standards and policies. Review and approve all human resources and governance policies for the Group. Review and recommend to the Board and Shareholders any changes to the memorandum and articles of association. Evaluate and appraise the performance of the Board and Board Committees and its members annually in conjunction with consultants.

During the year, the Committee, amongst other things, continued to work in line with its mandate and made recommendations to the Board on the functions stated above and other issues, which in the opinion of the Committee deserved the attention of the Board. The Committee comprises the following: The Committee comprises: 1. Mr. Emmanuel N. Nnorom 2. Mr. Kayode Fasola 3. Mr. Chibundu Edozie Chairman Member Member

The table below shows the frequency of meetings of NGC and members attendance: Total number of meetings obliged to attend 1 1 1 0 Total number of meetings attended 1 1 1 0 Dates of meetings attended (dd/mm/yy) 25/03/13 25/03/13 25/03/13 N/A Number of meetings not attended N/A N/A N/A N/A Dates of meetings not attended (dd/mm/yy) N/A N/A N/A N/A

Directors Ms. Angela Aneke (Resigned on 11 Dec 2013) Mr. Kayode Fasola Mr. Chibundu Edozie Mr. Emmanuel N. Nnorom (Appointed 16 Dec 2013)
1

Mr. Emmanuel N. Nnorom was appointed to the Board and its Committees on 16 December 2013 and with effect therefrom, chairs the Committee. He replaced Ms. Angela Aneke as the Chairman.

(b) Finance and Investment Committee The functions of the Finance and Investment Committee (FIC) include the following: Discharge the Boards responsibilities with regard to strategic direction and budgeting. Provide oversight on financial matters an0d the performance of the Group. Review and recommend investment opportunities or initiatives to the Board for decision. Recommend financial and investment decisions within its approved limits. Assist the Board in fulfilling its oversight responsibilities with regard to audit and control. Ensure that effective system of financial and internal control is in place.

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CORPORATE GOVERNANCE REPORT continued


Monitor and assess the overall integrity of the financial statements and disclosures of the financial condition and results of the Group. Monitor and evaluate on a regular basis, the qualifications, independence and performance of external and internal auditors and the financial control departments.

During the year, the Committee amongst other things, reviewed the Companys process of accepting credit facilities from financial institutions, quarterly financial statements, tax related matters, funding requirements of operating businesses, budgets, progress on legal disputes involving key investments, disposal of fixed assets, etc. The Committee took certain decisions on the above mentioned matters and made recommendations to the Board for approval. The Committee comprises: 1. Mr. Chibundu Edozie 2. Mr. Obinna Ufudo 3. Mr. Kayode Fasola 4. Mr. Emmanuel N. Nnorom
2

Chairman Member Member Member Member

5. Alhaji Mohammed Nasir Umar

The table below shows the frequency of meetings of FIC and members attendance: Total number of meetings obliged to attend 4 4 4 4 4 0 Total number of meetings attended 4 4 4 4 3 0 Dates of meetings attended (dd/mm/yy) 11/3/13, 25/3/13, 14/5/13, 30/10/13 11/3/13, 25/3/13, 14/5/13, 30/10/13 11/3/13, 25/3/13, 14/5/13, 30/10/13 11/3/13, 25/3/13, 14/5/13, 30/10/13 11/3/13, 25/3/13, 14/5/13 N/A number of meetings not attended N/A N/A N/A N/A 1 N/A Dates of meetings not attended (dd/mm/yy) N/A N/A N/A N/A 30/10/13 N/A

Directors Mr. Chibundu Edozie Mr. Obinna Ufudo Mr. Kayode Fasola Mrs. Angela Aneke (Resigned 11 December 2013) Alhaji Mohammed Nasir Umar Emmanuel N. Nnorom
2

Mr. Emmanuel N. Nnorom was appointed to the Board on 16 December 2013 and replaced Ms. Angela Aneke on the Committee.

(a) The Statutory Audit Committee The Statutory Audit Committee (SAC) is broadly empowered to, amongst other things, review the Groups financial reporting process, its system of audit, internal control and management of financial risk with a view to ensuring compliance with statutory, regulatory and professional requirements. The Committee, which also reviews the performance of external auditors to the Company, is chaired by a shareholder and has two other shareholders and three directors as members. In addition to the powers conferred on it by CAMA, the Committee is empowered to engage the services of independent consultants in the discharge of its duties. The Committee comprises: 1. Mr. Matthew Esonanjor 3 2. Alhaji Abu Jimah 3. Mr. John Isesele 4. Mr. Kayode Fasola 5. Mr. Chibundu Edozie 6. Mr. Emmanuel N. Nnorom 4
3

Chairman Member Member Member Member Member

Mr. Matthew Esonanjor was elected to the Committee on 21 June 2013 at the Annual General Meeting. He replaced Chief Sylvanus Ezendu as the substantive Chairman of the Committee on 30October 2013, taking over from Alhaji Abu Jimah who was the Acting Chairman. Mr. Emmanuel N. Nnorom was appointed to the Board on 16 December 2013 and replaced Ms. Angela Aneke on the Committee.

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The table below shows the frequency of meetings of SAC and members attendance: Total number of meetings obliged to attend 0 1 2 2 2 2 2 0 Total number of meetings attended 0 1 2 2 2 2 2 0 Dates of meetings attended (dd/mm/yy) N/A 30/10/13 14/5/13, 30/10/13 14/5/13, 30/10/13 14/5/13, 30/10/13 14/5/13, 30/10/13 14/5/13, 30/10/13 N/A Number of meetings not attended N/A N/A N/A N/A N/A N/A N/A N/A Dates of meetings not attended (dd/mm/yy) N/A N/A N/A N/A N/A N/A N/A N/A

Committee members Chief Sylvanus C. Ezendu 5 Mr. Matthew Esonanjor Alhaji Abu Jimah Mr. John Umobuarie Isesele Mr. Kayode Fasola Mr. Chibundu Edozie Ms. Angela Aneke (Resigned 11 December 2013) Mr. Emmanuel Nnorom 6 (Appointed 16 December 2013)
5 6

Chief Ezendu passed away on 17 March 2013. Mr. Emmanuel N. Nnorom was appointed to the Board on 16 December 2013 and replaced Ms. Angela Aneke on the Committee.

Executive Management Committee (formerly Executive Management Team) The Executive Management Committee (EMC) is charged with the following responsibilities: Articulating the strategy of the Group and recommending same to the Board for approval. Discussing strategic matters and their impact on the Groups investment portfolio Articulating the manner through which investment sectors/new business areas and geographies will be chosen and making recommendations to the Board in that regard. Recommending to the Board the framework or policy for investment; and monitoring the implementation of investment procedures. In line with Board approvals, outlining of philosophy, policy, objectives and resultant tasks to be accomplished. Recommending to the Board structures and systems through which activities are arranged, defined and coordinated in terms of specific objectives. Preparation of annual financial plans for the approval of the Board and ensuring the achievement of set objectives. Reviewing and approval of the structure and framework for performance reporting of subsidiary companies.

The Executive Management Committee comprises: 1. President/CEO 2. Chief Financial Officer 3. Director of Resources 4. Head, Strategy and Business Transformation 5. Legal Adviser 6. Commercial Director 7. Chief Internal Auditor 8. Company Secretary

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DIRECTORS REPORT
The Directors present their annual report on the affairs of Transnational Corporation of Nigeria Plc (the Company) together with the audited financial statements for the year ended 31 December 2013, to the members of the Company. This report discloses the state of the Company and the Group.

Incorporation and address


The Company was incorporated on 16 November 2004 as a public limited liability company domiciled in Nigeria in accordance with the requirements of the Companies and Allied Matters Act. Following a successful initial public offer (IPO), the Company was in December 2006, listed on the Nigerian Stock Exchange. The shares of the Company have continued to be traded on the floor of the Exchange. The Company maintains controlling interests in the following companies, referred to as portfolio companies: Capital Leisure and Hospitality Limited Transnational Hotels and Tourism Services Limited Transcorp Metropolitan Hotels and Conferencing Limited Ughelli Power Plc Transcorp Ughelli Power Limited Transcorp Staff Share Ownership Trust Company Limited Transcorp Energy Limited Transcorp Properties Limited Teragro Commodities Limited Telecommunication Backbone Development Company Limited (TDBC) (inactive) Transcorp Telecomms Limited (inactive) Transcorp Trading and Logistic Limited (inactive) Transcorp Refining Company Limited (in liquidation) Transcorp Hotels and Leisure Limited (in liquidation) Transcorp Infrastructure Limited (in liquidation) Transcorp Commodities Limited (in liquidation) Transcorp Hilton Limited (in liquidation) Allied Commodities Limited (in liquidation)

All the companies above indicated as being in liquidation are currently undergoing the process of voluntary winding up under the supervision of the court.

Principal activities
The Companys business is the investment in and operation of portfolio companies in hospitality, energy and agriculture. The Company has retained subsidiaries and affiliates providing services and sale of goods in these sectors.

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ANNUAL REPORT 2013

Results
The Company and Groups detailed results for the year ended 31 December 2013, are set out on page 33 of this report. The summarised results are presented below: Group 2013 N000 Revenue Gross profit Profit before tax Taxation Profit from continuing operations Other comprehensive income Total comprehensive income Total comprehensive income attributable to Owners of the parent Non controlling interest Total comprehensive income 4 029 758 2 928 144 6 957 902 1 224 029 1 486 672 2 710 701 2 821 012 2 821 012 2 539 177 2 539 177 18 825 278 14 373 743 9 032 151 (2 074 249) 6 957 902 6 957 902 Company 2013 N000 2 142 000 2 142 000 3 186 963 (365 951) 2 821 012 2 821 012

2012 N000 13 244 845 9 768 281 3 948 215 (1 420 467) 2 527 748 182 953 2 710 701

2012 N000 2 325 697 2 325 697 2 874 600 (355 423) 2 539 177 2 539 177

Dividend
The Directors are recommending the payment of dividend of 5 kobo per share to the Shareholders.

Directors interests in contracts


At the 38th meeting of the Board of Directors of the Company, the Chairman, Mr. Tony Elumelu, CON, declared the interest of Heirs Holdings Limited in the property lying at No. 38 Glover Road (formerly 22B) Ikoyi, Lagos, which property currently serves as the Registered Office of the Company. Furthermore, at the 44th meeting of the Board of Directors of the Company (adopted at the 45th meeting), the Board approved a technical services agreement between the Company and Heirs Holdings Limited for technical services rendered to the Company by Heirs Holdings Limited. Mr. Elumelu has shareholding interests in and is presently the Chairman of Heirs Holdings Limited.

Directors and their interests


The Directors who held office during the year, together with their direct and indirect interests in the shares of the Company, were as follows: Name of Director Director Mr. Tony O. Elumelu, CON Mr. Obinna Ufudo Olorogun Otega Emerhor, OON Ms. Angela Aneke 6 Dr. Julius Kpaduwa Mr. Kayode Fasola Mr. Stanley Inye Lawson Mr. Chibundu Edozie Mr. Emmanuel N. Nnorom Total
6 7 7

Number of shares held at 31 December 2013 Direct 1 973 051 468 2 901 973 4 106 720 1 500 000 29 250 000 2 010 810 161 Indirect 48 187 370 221 430 773 1 012 622 537 33 333 334 3 735 500 10 228 066 Total 15 085 865 631 17 058 917 099 51 089 343 221 430 773 1 016 729 257 33 333 334 3 735 500 1 500 000 29 250 000 10 228 066

Percentage holding % 44.056 0.132 0.572 2.626 0.086 0.010 0.004 0.076 0.026 47.588

Alhaji Mohammed Nasir Umar

16 415 403 211 18 426 213 372

Ms. Angela Aneke resigned from the Board on 11 December 2013. Dr. Julius Kpaduwa (representing Nashville Capital Partners Ltd) retired from the Board at the last Annual General Meeting, being 21 June 2013.

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DIRECTORS REPORT continued


Alternate directorship
There was no alternate directorship during the year under review.

Shareholding Analysis
Share Range

The shareholding structure of the Company as at 31 December 2013 was as follows: Number of Shareholders 2 425 215 064 60 506 11 120 1 604 137 34 4 290 894 % of Total 0.834 73.932 20.800 3.823 0.551 0.047 0.012 0.001 100.00 Number of Holdings 1 111 928 528 374 951 1 392 678 503 2 675 542 686 3 586 023 174 3 447 491 196 9 658 871 834 17 430 903 153 38 720 997 425 % of Total 0.002 1.365 3.597 6.910 9.261 8.903 24.945 45.017 100.00

1 999 1 000 9 999 10 000 99 999 100 000 999 999 1 000 000 9 999 999 10 000 000 99 999 999 100 000 000 999 999 999 1 000 000 000 9 999 999 999

Substantial Interest in Shares Fixed Assets

As at 31 December 2013, only Mr. Tony O. Elumelu, CON directly and/or indirectly held 5% or more of the issued share capital of the Company. Mr. Elumelu held a total of 44.06% of the issued share capital of the Company.

Information relating to changes in the fixed assets of the Company is given in Note 6 to the financial statements.

Employment of Physically Challenged Persons

The Group has a policy of fair consideration of job applications by physically challenged persons having regard to their abilities and aptitude. The Groups policy prohibits discrimination against such persons in the recruitment, training and career development of its employees. In the event of members of staff becoming physically challenged, every effort is made to ensure that their employment with the Group continues, and that appropriate training is arranged for them.

Employee Health, Safety and Welfare

The Group maintains business premises and work environments that guarantee the safety and health of its employees and other stakeholders. The Groups rules and practices in these regards are reviewed and tested regularly. Also, the Group provides free medical insurance for its employees and their families through selected health management organisations and hospitals.

Employee Training and Involvement

The Group places a high premium on the development of its manpower and consults with employees on matters affecting their well-being. Formal and informal channels of communication are employed in keeping staff abreast of various factors affecting the performance of various businesses in the Group. In-house and external trainings are carried out at various levels across the business chains in the Group. The Groups skill base has been extended by a range of training provided to employees.

Donations and Gifts Auditors

During the year under review, the Group made donations of N400 million (2012: N100 million) to the National Committee on flood relief and rehabilitation.

Messrs PricewaterhouseCoopers have indicated their willingness to continue in office as the auditors of the Company in accordance with section 357(2) of the Companies and Allied Matters Act, 1990 (CAMA). By order of the Board

Chinedu N. Eze Company Secretary FRC/2013/NBA/00000002586 7 February 2014

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ANNUAL REPORT 2013

STATEMENT OF DIRECTORs RESPONSIBILITIES


In accordance with the provisions of sections 334 and 335 of the Companies and Allied Matters Act, Cap C20, Laws of the Federation of Nigeria, 2004 (CAMA), the Directors are responsible for the preparation of the financial statements, which give a true and fair view of the state of affairs of the Group and of the profit or loss for the period ended 31 December 2013, and in so doing they ensure that: Proper accounting records are maintained; Applicable accounting policies are adopted and consistently applied; Judgments and estimates made are reasonable and prudent; The going concern basis is used, unless it is inappropriate to presume that the Company will continue in business; and Internal control procedures are instituted which as far as reasonably possible, safeguard the assets of the Group and prevent and detect fraud and other irregularities.

The Directors accept responsibility for the annual consolidated financial statements, which have been prepared using appropriate accounting policies supported by reasonable and prudent judgments and estimates in conformity with International Financial Reporting Standards (IFRS) and the requirements of CAMA. The Directors are of the opinion that the 2013 consolidated Financial Statements give a true and fair view of the state of the financial affairs of the Company and Group. The Directors accept responsibility for the maintenance of accounting records that may be relied upon in the preparation of the financial statements as well as adequate systems of internal control. Nothing has come to the attention of the Directors to indicate that the Company and its subsidiaries will not remain going concerns for at least twelve months from the date of this statement. Signed on behalf of the directors

Obinna Ufudo President/CEO 7 February 2014 Tony O. Elumelu, CON Chairman

28

REPORT OF THE AUDIT COMMITTEE


To the Members of Transnational Corporation of Nigeria Plc
In compliance with section 359(6) of the Companies and Allied Matters Act Cap C20 LFN 2004 (CAMA), members of the Audit Committee of Transnational Corporation of Nigeria Plc (the Company) hereby report as follows: The Audit Committee met in exercise of its statutory responsibilities in accordance with section 359(6) of CAMA; We have examined the auditors report including the financial statements for the year ended 31 December 2013; We have also deliberated with the external auditors, reviewed their findings and recommendations and confirm that the auditors report for this period is consistent with our review; and We are satisfied that the accounting and reporting policies of the Company are in accordance with legal requirements and meet ethical standards.

Matthew Esonanjor Chairman, Audit Committee 7 February 2014

Members of the Audit Committee 1. Mr. Matthew Esonanjor 8 2. Alhaji Abu Jimah 3. Mr. John Isesele 4. Mr. Kayode Fasola 5. Mr. Chibundu Edozie 6. Mr. Emmanuel N. Nnorom 9
8

Chairman Member Member Member Member Member

Mr. Matthew Esonanjor was elected to the Committee on 21 June 2013 at the Annual General Meeting. He replaced Chief Sylvanus Ezendu as the substantive Chairman of the Committee on 30October 2013, taking over from Alhaji Abu Jimah who was the protem Chairman. Upon the resignation of Ms. Angela Aneke from the Board, Mr. Nnorom replaced her on the Audit Committee.

29

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ANNUAL REPORT 2013

Report of the independent aUditors

30

REPORT OF THE INDEPENDENT AUDITORS continued

31

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ANNUAL REPORT 2013

STATEMENT OF FINANCIAL POSITION


as at 31 December 2013
Group 31 December 2012 31 December as restated 2013 note 31 Note N000 N000 Assets Non-current assets Property, plant and equipment Intangible assets Investment property Investment in subsidiaries Prepaid lease rental Current assets Inventories Trade and other receivables Prepaid lease rental Debt and equity securities Cash and cash equivalents Total assets Liabilities Current liabilities Trade and other payables Current income tax liabilities Borrowings Advance deposits Non-current liabilities Borrowings Deferred tax Retirement benefit obligation Total liabilities EQUitY Ordinary share capital Share premium Treasury shares Retained earnings Equity attributable to owners of the parent Non-controlling interest Total equity Net equity and liabilities 29 29 29 Company 1 January 2012 as restated 31 December 31 December note 31 2013 2012 N000 N000 N000

6 7 8 9 11

88 586 001 31 985 609 1 575 000 65 000 122 211 610 1 431 175 8 445 628 30 000 8 150 771 9 195 229 27 252 803 149 464 413

48 656 004 24 691 298 1 500 000 95 000 74 942 302 706 834 2 633 425 30 000 15 695 241 5 549 863 24 615 363 99 557 665

49 161 996 24 676 741 1 467 000 120 000 75 425 737 784 966 2 170 858 30 000 110 826 6 903 161 9 999 811 85 425 548

77 960 5 078 782 1 575 000 29 535 120 36 266 862 4 644 178 8 150 771 17 680 12 812 629 49 079 491

48 485 5 080 258 1 500 000 21 288 723 27 917 466 3 139 255 7 472 139 117 860 10 729 254 38 646 720

12 13 11 14 15

16 17 18 20

6 283 466 3 921 635 3 656 983 1 875 000 15 737 084 39 452 293 7 598 529 47 050 822 62 787 906 19 360 499 7 213 368 (25 784) 31 678 187 58 226 270 28 450 237 86 676 507 149 464 413

6 597 984 4 107 977 3 764 127 2 126 258 16 596 346 10 003 427 7 279 642 1 581 606 18 864 675 35 461 021 12 906 999 27 071 664 1 879 727 41 858 390 22 238 254 64 096 644 99 557 665

3 629 596 4 572 027 259 111 1 935 551 10 396 285 2 104 965 7 647 269 1 656 588 11 408 822 21 805 107 12 906 999 27 071 664 338 497 40 317 160 23 303 281 63 620 441 85 425 548

4 107 816 216 123 762 665 1 875 000 6 961 604 9 198 952 9 198 952 16 160 556 19 360 499 7 213 368 6 345 068 32 918 935 32 918 935 49 079 491

5 539 376 228 931 3 264 170 1 876 799 10 909 276 10 003 427 10 003 427 20 912 703 12 906 999 27 071 664 (22 244 646) 17 734 017 17 734 017 38 646 720

18 10 21

30

The notes on pages 36 to 73 are an integral part of these financial statements. The financial statements on pages 32 to 35 were approved and authorised for issue by the Board of Directors on 7 February 2014 andwere signed on its behalf by

Tony O. Elumelu CON Chairman, Board of Directors FRC/2013/CIBN/00000002590

Ibikunle Orlola Obinna Ufudo Chief Finance Officer President, Chief Executive Officer FRC/2013/ICAN/00000004372 FRC/2013/CIBN/00000002585

32

STATEMENT OF COMPREHENSIVE INCOME


for the year ended 31 December 2013
Group 31 December 31 December 2013 2012 N000 N000 18 825 278 (4 451 535) 14 373 743 25 24 27 27 (9 213 184) 5 089 950 10 250 509 1 313 513 (2 531 871) (1 218 358) 9 032 151 17 (2 074 249) 6 957 902 4 029 758 2 928 144 6 957 902 Other comprehensive income: Items that will not be reclassified to profit or loss Actuarial gains Tax charge on actuarial gains Other comprehensive income for the year, net of tax Total comprehensive income for the year Attributable to: Owners of the parent Non-controlling interest Total comprehensive income for the year Basic EPS (kobo) Diluted EPS (kobo) 28 28 4 029 758 2 928 144 6 957 902 12.17 12.17 1 224 029 1 486 672 2 710 701 4.04 4.04 2 821 012 2 821 012 8.52 8.52 2 539 177 2 539 177 9.08 9.08 21 10 6 957 902 261 363 (78 410) 182 953 2 710 701 2 821 012 2 539 177 13 244 845 (3 476 564) 9 768 281 (7 522 739) 1 519 002 3 764 544 1 043 917 (860 246) 183 671 3 948 215 (1 420 467) 2 527 748 1 130 724 1 397 024 2 527 748 Company 31 December 31 December 2013 2012 N000 N000 2 142 000 2 142 000 (2 274 757) 4 032 287 3 899 530 603 905 (1 316 472) (712 567) 3 186 963 (365 951) 2 821 012 2 821 012 2 821 012 2 325 697 2 325 697 (1 081 343) 2 028 286 3 272 640 449 951 (847 991) (398 040) 2 874 600 (335 423) 2 539 177 2 539 177 2 539 177

Note Revenue Cost of sales Gross profit Administrative expenses Other operating income Operating profit Finance income Finance cost Net finance (cost)/income Profit before taxation Taxation Profit for the year Profit attributable to: Owners of the parent Non-controlling interest 22 23

The results shown above relate to continuing operations. The notes on pages 36 to 73 are an integral part of these financial statements.

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ANNUAL REPORT 2013

statement of changes in eQUitY


for the year ended 31 December 2013
Share capital N000 12 906 999 12 906 999 12 906 999 12 906 999 6 453 500 19 360 499 Share premium N000 27 071 664 27 071 664 27 071 664 27 071 664 5 910 406 7 213 368 Attributable to owners of the parent Treasury shares N000 (25 784) Retained earnings N000 (11 218 968) 11 557 465 338 497 1 130 724 93 305 317 201 1 879 727 1 879 727 25 768 702 4 029 758 Total controlling interest N000 28 759 695 11 557 465 40 317 160 1 130 724 93 305 317 201 41 858 390 41 858 390 12 363 906 4 029 758 (25 784) 58 226 270 Share premium N000 27 071 664 (25 768 702) 5 910 406 7 213 368 Noncontrolling interest N000 12 199 049 11 104 232 23 303 281 1 397 024 89 648 (2 234 498) (317 201) 22 238 254 22 238 254 2 928 144 (2 058 000) 5 341 839 28 450 237 Retained earnings N000 (22 244 646) 25 768 702 2 821 012 6 345 068 Total equity N000 40 958 744 22 661 697 63 620 441 2 527 748 182 953 (2 234 498) 64 096 644 64 096 644 12 363 906 6 957 902 (2 058 000) (25 784) 5 341 839 86 676 507

Group Balance at January 2012 Prior period adjustments (Note 31) 1 January 2012 as restated Profit for the year Other comprehensive income for the year Dividend paid Sale of interest to non-controlling interest Balance at 31 December 2012 Balance at 1 January 2013 Share capital reconstruction Rights issue Profit for the year Dividend paid Acquisition of treasury shares Increase in subsidiary investment Balance at 31 December 2013

(25 768 702)

(25 784) 31 678 187 Share capital N000 12 906 999 6 453 500 19 360 499

Company Balance at 1 January 2013 Share capital reconstruction Rights issue Profit for the year Balance at 31 December 2013 The notes on pages 36 to 73 are an integral part of these financial statements.

Total N000 17 734 017 12 363 906 2 821 012 32 918 935

34

STATEMENTS OF CASH FLOWS


for the year ended 31 December 2013
Group 2013 N000 (324 796) (483 229) 17 (1 727 504) (2 535 529) 27 1 313 513 32 3 104 10 781 529 5 341 839 (525 934) (48 850 000) (31 935 949) 2012 N000 6 628 043 (517 728) (2 097 983) 4 012 332 1 043 917 (1 500) 23 721 (1 102 532) (3 238 963) (3 444 738) (6 318 716) 190 707 (787 175) (35 758) (13 671 037) Company 2013 N000 (2 097 626) (164 559) (2 262 185) 603 905 24 2 558 428 (8 246 397) (54 666) (5 138 706) 2012 N000 1 080 379 (109) 1 080 270 449 951 (34 535) 17 401 (1 102 532) (3 038 363) (1 740 952) 179 1 661 320 (7 312 000) (47 885) (2 723) (11 150 139) Note Cash flows from operating activities Cash (used in)/generated from operations VAT paid Tax paid Net cash (used in)/generated from operating activities Cash flows from investing activities Interest received Oil Prospecting License Proceeds from sale of property plant and equipment Purchase of equity securities Fixed income investment Investment in treasury bills Purchase of government backed asset notes Advance payment received for OPL Proceeds from sale of subsidiary Investment in subsidiary Purchase of property, plant and equipment Acquisition of subsidiary Purchase of computer software Net cash used in investing activities Cash flows from financing activities Proceeds from borrowings Repayments of borrowings Dividend paid to non-controlling interest Proceeds from rights issue Interest payment Net cash flow from financing activities Net increase/(decrease) in cash, cash equivalents and bank overdrafts Cash, cash equivalents and bank overdrafts at the beginning of the year Foreign exchange gain/(loss) on cash and cash equivalents Cash, cash equivalents and bank overdrafts at the end of the year 15 27 46 927 292 (17 584 853) (2 058 000) 12 363 906 (2 531 871) 37 116 474 2 644 996 5 549 863 1 000 370 9 195 229 17 032 789 (5 629 311) (2 234 498) (860 246) 8 308 734 (1 349 971) 6 903 161 (3 327) 5 549 863 13 828 397 (17 584 853) 12 363 906 (1 316 472) 7 290 978 (109 913) 117 860 9 733 17 680 16 532 831 (5 629 310) (847 991) 10 055 530 (14 339) 135 526 (3 327) 117 860 32

The notes on pages 36 to 73 are an integral part of these financial statements.

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ANNUAL REPORT 2013

NOTES TO THE FINANCIAL STATEMENTS


1. General information
Transnational Corporation of Nigeria Plc (the Company or Transcorp), was incorporated on 16 November 2004 as a private limited liability Company domiciled in Nigeria in accordance with the requirements of the Companies and Allied Matters Act. Following a successful initial public offer (IPO), the Company was in December 2006, listed on the Nigerian Stock Exchange. The shares of the Company have continued to be traded on the floor of the Exchange. The Company is domiciled in Nigeria and the address of its registered office is 38, Glover Road, Ikoyi, Lagos, Nigeria. The Company maintains controlling interests in the following companies. The Company, together with the subsidiaries are known as the Transcorp Group (the Group) Capital Leisure and Hospitality Limited Transnational Hotels and Tourism Services Limited Transcorp Metropolitan Hotels and Conferencing Limited Transcorp Energy Limited Teragro Commodities Limited Transcorp Ughelli Power Limited Transcorp Staff Share Ownership Trust Company Limited Transcorp Properties Limited Telecommunication Backbone Development Company Limited (TDBC) (inactive) Transcorp Telecomms Limited (inactive) Transcorp Trading and Logistic Limited (inactive) Transcorp Refining Company Limited (in liquidation) Transcorp Hotels and Leisure Limited (in liquidation) Transcorp Infrastructure Limited (in liquidation) Transcorp Commodities Limited (in liquidation) Transcorp Hilton Limited (in liquidation) Allied Commodities Limited (in liquidation) Ughelli Power Plc

The Companys business is the investment in and operation of portfolio companies in the hospitality, energy and agro-allied sectors. These financial statements are presented in Nigerian Naira, being the functional currency of the primary economic environment in which the Company operates.

2. Summary of significant accounting policies


2.1 Basis of preparation The consolidated financial statements have been prepared in compliance with the Companies and Allied Matters Act (CAMA) and the International Financial Reporting Standards (IFRSs) , including International Accounting Standards (IAS) and interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC) applicable to companies reporting under IFRS. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Groups accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in note 4. The preparation of financial statements, in conformity with generally accepted accounting principles under IFRS, requires the directors to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of

36

NOTES TO THE FINANCIAL STATEMENTS continued


the financial statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on the directors best knowledge of the amount, event or actions, actual results ultimately may differ from those estimates. The financial statements have been prepared on a historical cost basis except for the fair value basis applied to certain property plant and equipment, intangible assets, investment property and equity investments. The financial statements are presented in Naira being the functional currency of the primary economic environment in which the Company operates. All values are rounded to the nearest thousand (N000), except when otherwise indicated. 2.1.1 Going concern The financial statements have been prepared on a going concern basis. The directors have no doubt that the Company would remain in existence after 12 months.

2.1.2 Changes in accounting policy and disclosures New and amended standards adopted by the Group The following standards have been adopted by the Group for the first time for the financial year beginning on or after 1 January 2013 and have a material impact on the Group. The IAS 1, Financial statement presentation: Amendment to IAS 19, Employee benefits Published June 2011. IFRS 10, Consolidated financial statements. Published May 2011. IFRS 12, Disclosure of interest in other entities. Published May 2011. Amendments to IFRS 10, 11 and 12 on transition guidance. Published July 2012. IFRS 13, Fair value measurement. Published May 2011. IAS 27 (revised 2011) Separate financial statements. Published May 2011. Amendment to IAS 32, Financial instruments: Presentation, on offsetting financial assets and financial liabilities. Published December 2011. 2.2 Consolidation (a) Subsidiaries Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are accounted for at cost in the separate financial statements of Transcorp. In the consolidated financial statements, subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases. The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The Group recognises any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either at fair value or at the present ownership instruments proportionate share of the recognised amounts of acquirees identifiable net assets for components that are present and entitle their holders to a proportionate share of net assets in the events of liquidation. All other components of non-controlling interests are measured at fair value. Acquisition-related costs are expensed as incurred.

37

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ANNUAL REPORT 2013

If the business combination is achieved in stages, the acquisition date carrying value of the acquirees previously held equity interest in the acquiree is re-measured to fair value at the acquisition date; any gains or losses arising from such re-measurement are recognised in profit or loss. Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognised in accordance with IAS 39 either in profit or loss or as a change to other comprehensive income. Contingent consideration that is classified as equity is not re-measured, and its subsequent settlement is accounted for within equity. The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the identifiable net assets acquired is recorded as goodwill. If the total of consideration transferred, non-controlling interest recognised and previously held interest measured is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognised directly in the income statement. Inter-Company transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated. When necessary amounts reported by subsidiaries have been adjusted to conform with the Groups accounting policies. (b) Changes in ownership interests in subsidiaries without change of control Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions that is, as transactions with the owners in their capacity as owners. The difference between fair value of any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity. Disposal of subsidiaries When the Group ceases to have control, any retained interest in the entity is remeasured to its fair value at the date when control is lost, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss.

(c)

(d) Associates Associates are all entities over which the Group has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for at cost in the separate financial statements of Transcorp. In the consolidated financial statements, associates are accounted for using the equity method of accounting. Under the equity method, the investment is initially recognised at cost, and the carrying amount is increased or decreased to recognise the investors share of the profit or loss of the investee after the date of acquisition. The Groups investment in associates includes goodwill identified on acquisition. If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the amounts previously recognised in other comprehensive income is reclassified to profit or loss where appropriate. The Groups share of post-acquisition profit or loss is recognised in the income statement, and its share of post-acquisition movements in other comprehensive income is recognised in other comprehensive income with a corresponding adjustment to the carrying amount of the investment. When the Groups share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.

38

NOTES TO THE FINANCIAL STATEMENTS continued


The Group determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognises the amount adjacent to share of profit/(loss) of associates in the income statement. (e) Common control transactions The Group applies predecessor values method in accounting for business combination under common control. The financial statements are prepared using predecessor book values, i.e. the book values of the net assets of the acquiree Company in the consolidated accounts of the Group before the transaction, without any step up to fair value. The difference between any consideration given and the aggregate book value of the assets and liabilities (as of the date of the transaction) of the acquired entity is recorded as an adjustment to equity. This is recorded in retained earnings. No additional goodwill is created by the transaction.

2.3

Segment reporting Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Directors of Transcorp. Foreign currency translation (a) Functional and presentation currency Items included in the financial statements of each of the Groups entities are measured using the currency of the primary economic environment in which Transcorp operates (the functional currency). The functional currency of Transcorp and its subsidiaries is the Nigerian Naira (N). All entities in the Group have the same functional currency. The consolidated financial statements are also presented in Naira. (b) Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement. Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the income statement within finance income or costs. All other foreign exchange gains and losses are presented in the income statement within other (expenses)/income net. Translation differences related to changes in amortised cost are recognised in profit or loss.

2.4

2.5

Property, plant and equipment Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditures that are directly attributable to the acquisition of the asset. Subsequent costs are included in the assets carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost can be measured reliably. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred. Land is not depreciated. Depreciation on other assets is calculated using the straight line method to allocate their costs or revalued amounts to their residual values over their estimated useful lives, as follows: Leasehold buildings Plant and machinery Turbines Plant and machinery Others Furniture and fittings Office equipment Motor vehicles
I ANNUAL REPORT 2013

5% 2% 10% 20% 10% 25%

39

TRANSCORP

The assets residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. The Group allocates the amount initially recognised in respect of an item of property, plant and equipment to its significant parts and depreciates separately each such part. The carrying amount of a replaced part is derecognised when replaced. Residual values, method of amortisation and useful lives of the assets are reviewed annually and adjusted if appropriate. Where an indication of impairment exists, an assets carrying amount is written down immediately to its recoverable amount if the assets carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in the income statement. 2.6 Intangible assets (a) Goodwill Goodwill arises on the acquisition of subsidiaries and represents the excess of the consideration transferred over Transcorps interest in the net fair value of the net identifiable assets, liabilities and contingent liabilities of the acquiree and the fair value of the non-controlling interest in the acquiree. For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash generating units (CGUs), or Groups of CGUs, that is expected to benefit from the synergies of the combination. Each unit or Group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is monitored at the operating segment level. Goodwill impairment reviews are undertaken annually or more frequently if events or changes in circumstances indicate a potential impairment. The carrying value of goodwill is compared to the recoverable amount, which is the higher of value in use and the fair value less costs to sell. Any impairment is recognised immediately as an expense and is not subsequently reversed. (b) Computer software Costs associated with maintaining computer software programmes are recognised as an expense as incurred. Development costs that are directly attributable to the design and testing of identifiable and unique software products controlled by the Group are recognised as intangible assets when the following criteria are met: it is technically feasible to complete the software product so that it will be available for use; the directors intends to complete the software product and use or sell it; there is an ability to use or sell the software product; it can be demonstrated how the software product will generate probable future economic benefits; adequate technical, financial and other resources to complete the development and to use or sell the software product are available; and the expenditure attributable to the software product during its development can be reliably measured.

Directly attributable costs that are capitalised as part of the software product include the software development employee costs and an appropriate portion of relevant overheads. Other development expenditures that do not meet these criteria are recognised as an expense as incurred. Development costs previously recognised as an expense are not recognised as an asset in a subsequent period. Computer software development costs recognised as assets are amortised over their estimated useful lives. The estimated useful lives of the software of the Group is between three to eight years.

40

NOTES TO THE FINANCIAL STATEMENTS continued


(c) Oil Prospecting License The Group accounts for expenditures on the Oil Prospecting License having regard to the requirements of IFRS 6 Exploration for and Evaluation of Mineral Resources. Expenditures related to the oil prospecting license are capitalised at cost. Such expenditures include costs of acquisition of License, geological and geophysical surveys and directly attributable overheads and administrative expenses. General prospecting or evaluation costs incurred prior to having obtained the legal rights to explore an area are expensed directly to the income statements as they are incurred, if they do not meet the capitalisation criteria as specified in the IFRS framework. The capitalised costs are not depleted but are carried forward until technical feasibility and commercial viability of extracting oil is considered to be determined. This is when proven and/or probable reserves are determined to exist. A review of the exploration license or field is carried out, at least annually, to determine whether proven and/ or probable reserves have been discovered. Upon determination of proven and/or probable reserves, exploration and evaluation assets attributable to those reserves are tested for impairment and then are transferred to property plant and equipment as oil and gas assets. 2.7 Investment properties Properties that are held for long-term rental yields or for capital appreciation or both, and that are not occupied by the entities in the consolidated Group, are classified as investment properties. Recognition of investment properties takes place only when it is probable that the future economic benefits that are associated with the investment property will flow to the entity and the cost can be measured reliably. This is usually the day when all risks are transferred. Investment properties are measured initially at cost, including transaction costs. The carrying amount includes the cost of replacing parts of an existing investment property at the time the cost was incurred if the recognition criteria are met; and excludes the costs of day-to-day servicing of an investment property. Subsequent to initial recognition, investment properties are stated at fair value, which reflects market conditions at the date of the consolidated statement of financial position. Gains or losses arising from changes in the fair value of investment properties are included in the consolidated income statement in the year in which they arise. Subsequent expenditure is included in the assets carrying amount only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance costs are charged to the consolidated profit or loss during the financial period in which they are incurred. The fair value of investment properties is based on the nature, location and condition of the specific asset. The fair value is obtained from professional third party valuers contracted to perform valuations on behalf of the Group. The fair value of investment property does not reflect future capital expenditure that will improve or enhance the property and does not reflect the related future benefits from this future expenditure. These valuations are performed annually by external appraisers. 2.8 Impairment of non-financial assets Assets that have an indefinite useful life for example, goodwill are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the assets carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an assets fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are Grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Prior impairments of non-financial assets (other than goodwill) are reviewed for possible reversal at each reporting date. Financial instruments Financial assets and liabilities are recognised when the Group becomes a party to the contractual provisions of the instrument. Financial assets are derecognised when the rights to receive cash flows from the assets have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership. Financial liabilities are derecognised when the obligation specified in the contract is discharged, cancelled or expires.

2.9

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2.9.1 Classification The directors determine the classification of its financial instruments at initial recognition. (a) Financial assets and liabilities at fair value through profit or loss Financial assets or liabilities at fair value through profit or loss are financial assets or liabilities held for trading. A financial asset or liability is classified in this category if acquired principally for the purpose of selling in the short term. Assets in this category are classified as current assets if expected to be realised within 12 months, otherwise, they are classified as non-current. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the end of the reporting period. These are classified as non-current assets. The Groups loans and receivables comprises trade and other receivables and cash and cash equivalents in the balance sheet. Available-for-sale investments Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless the investment matures or directors intends to dispose of it within 12 months of the end of the reporting period. Held-to-maturity investments Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the directors have the positive intention and ability to hold to maturity, other than: (i) those that the Group upon initial recognition designates as at fair value through profit or loss; (ii) those that the Group designates as available-for-sale; and (iii) those that meet the definition of loans and receivables. (e) Financial liabilities at amortised cost Financial liabilities at amortised cost include trade payables, bank debt and long-term debt.

(b)

(c)

(d)

2.9.2 Recognition and measurement (a) Financial assets and liabilities at fair value through profit or loss Financial instruments in this category are recognised initially and subsequently at fair value. Transaction costs are expensed in the consolidated statement of income. Gains and losses arising from changes in fair value are presented in the consolidated statement of income within other gains and losses (net) in the period in which they arise. Non-derivative financial assets and liabilities at fair value through profit or loss are classified as current except for the portion expected to be realised or paid beyond twelve months of the reporting date, which are classified as long-term. Interest swaps and warrants are classified as current. (b) Loans and receivables Loans and receivables are initially recognised at the amount expected to be received, less, when material, a discount to reduce the loans and receivables to fair value. Subsequently, loans and receivables are measured at amortised cost using the effective interest method less a provision for impairment. Available-for-sale investments Available-for-sale investments are recognised initially at fair value plus transaction costs and are subsequently carried at fair value. Gains or losses arising from remeasurement are recognised in other comprehensive income except for exchange gains and losses on the translation of debt securities, which are recognised in the consolidated statement of income. When an available-for-sale investment is sold or impaired, the accumulated gains or losses are moved from accumulated other comprehensive income to the income statement. Available-for-sale investments are classified as non-current, unless an investment matures within twelve months, or the directors expects to dispose of it within twelve months.

(c)

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(d) Held-to-maturity investments Held-to-maturity investments are initially recognised at fair value including direct and incremental transaction costs and measured subsequently at amortised cost, using the effective interest method. Financial liabilities at amortised cost Trade payables are initially recognised at the amount required to be paid, less, when material, a discount to reduce the payables to fair value. Subsequently, trade payables are measured at amortised cost using the effective interest method. Bank debt and long-term debt are recognised initially at fair value, net of any transaction costs incurred, and subsequently at amortised cost using the effective interest method. These are classified as current liabilities if payment is due within twelve months. Otherwise, they are presented as non-current liabilities.

(e)

2.10 Offsetting financial instruments Financial assets and liabilities are offset and the net amount reported in the statement of financial position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. 2.11 Impairment of financial assets (a) Assets carried at amortised cost The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or Group of financial assets is impaired. A financial asset or a Group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a loss event) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or Group of financial assets that can be reliably estimated. Evidence of impairment may include indications that the debtors or a Group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation, and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults. The Group first assesses whether objective evidence of impairment exists. For loans and receivables category, the amount of the loss is measured as the difference between the assets carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial assets original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in the consolidated income statement. If a loan or held-tomaturity investment has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. As a practical expedient, the Group may measure impairment on the basis of an instruments fair value using an observable market price. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtors credit rating), the reversal of the previously recognised impairment loss is recognised in the consolidated income statement. (b) Assets classified as available for sale The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or a Group of financial assets is impaired. For debt securities, the Group uses the criteria referred to in (a) above. In the case of equity investments classified as available for sale, a significant or prolonged decline in the fair value of the security below its cost is also evidence that the assets are impaired. If any such evidence exists for available-forsale financial assets, the cumulative loss measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss is removed from equity and recognised in profit or loss. Impairment losses recognised in the consolidated income statement on

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equity instruments are not reversed through the consolidated income statement. If, in a subsequent period, the fair value of a debt instrument classified as available for sale increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in profit or loss, the impairment loss is reversed through the consolidated income statement. 2.12 Inventories Inventories are stated at the lower of cost and estimated net realisable value. Cost is determined using the weighted average method. This includes the cost of direct materials to the Companys premises and other direct costs. Net realisable value is the estimated selling price in the ordinary course of business, less selling expenses. 2.13 Trade receivables Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest rate method, less provision for impairment. A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. If collection is expected in one year or less, they are classified as current assets. If not, they are presented as non-current assets. 2.14 Cash, cash equivalents and bank overdrafts Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less and bank overdrafts. 2.15 Borrowings Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method. 2.16 Borrowing costs General and specific borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, (i.e. Capitalised) until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation. All other borrowing costs are recognised in profit or loss in the period in which they are incurred. 2.17 Trade payables Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payables are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method. 2.18 Current and deferred tax The tax for the period comprises current and deferred tax. Tax is recognised in the income statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case the tax is recognised in other comprehensive income or directly in equity, respectively. The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Groups liability for current tax is calculated using tax rates that have been enacted or substantively enacted at the reporting date.

44

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Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit. Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited to the income statement, except when it relates to items charged or credited to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax liabilities on a net basis. Deferred tax assets and liabilities are presented as non-current in the statement of financial position. 2.19 Employee benefits (a) Gratuity scheme Some subsidiaries operate an unfunded defined benefit gratuity scheme. The level of benefit provided is based on the length of service and earnings of the person entitled. The cost of defined benefit plans is determined using the projected unit credit method. The related pension liability recognised in the statement of financial position is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. Actuarial valuations for defined benefit plans are carried out annually. The discount rate applied in arriving at the present value of the pension liability represents the yield on high quality corporate bonds denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating the terms of the related pension liability. Actuarial gains and losses are recognised in full in the period in which they occur, in other comprehensive income. Current service cost, the recognised element of any past service cost and the interest expense arising on the pension liability are included in the same line items in the income statement as the related compensation cost. (b) Defined contribution scheme The Group operates a defined contributory pension scheme in line with the provisions of the Pension Reform Act 2004. The employers contributions are recognised as employee benefit expenses when they are due. The Group has no further payment obligation once the contributions have been paid. Profit-sharing and bonus plans The Group recognises a liability and an expense for bonuses and profit-sharing, based on a formula that takes into consideration the profit attributable to the shareholders after certain adjustments. The Group recognises a provision where contractually obliged or where there is a past practice that has created a constructive obligation.

(c)

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2.20 Revenue recognition Revenue is measured at the fair value of the consideration received or receivable stated net of discounts, returns and value added taxes. The Group earns revenue from the sale of goods and services. The Company earns revenue from dividends received. Income from investments is recognised when it is earned. Income is earned as follows: (i) (ii) Dividends are earned in the profit and loss account on the date the Companys right to receive payment is established; and Interest earned on cash investments in money market instruments is recognised in the profit and loss account as it accrues evenly over the period of the investment. Recognition of revenue for goods and services is recognised when it is earned. Revenue is earned when: The significant risks and rewards of ownership have been transferred to the customer or the service has been rendered. The Group does not retain effective control over goods sold. The amount of revenue can be reliably measured. It is possible that the economic benefits associated with the transaction will flow to the Company. The costs incurred in respect of the sale can be measured reliably.

For goods and services, this implies when the goods have been delivered to the customer and when the service has been performed. The Transcorp Hilton Hotel Abuja offers a customer loyalty programme called the Hilton Honours guest reward programme on behalf of Hilton International. Under this programme, registered members earn points when they pay for rooms or services at the Hotel. The Group accounts for the points as a separately identifiable component of the sales transaction in which they are granted (the initial sale of rooms or service). The consideration received or receivable in respect of the initial sale is allocated between the points and the sale of rooms or service with reference to the fair value of the points. Revenue is measured as the net amount retained by the hotel, i.e. the difference between the consideration allocated to the award credits and the amount payable to the Hilton International for supplying the awards. 2.21 Leases Operating lease Leases in which a significant portion of the risks and rewards of ownership are retained by another party, the lessor, are classified as operating leases. Payments, including prepayments, made under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straight-line basis over the period of the lease. When an operating lease is terminated before the lease period has expired, any payment required to be made to the lessor by way of penalty is recognised as an expense in the period in which termination takes place. Finance lease Leases of items by the Group where the Group has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the leases commencement at the lower of the fair value of the asset and the present value of the minimum lease payments. Each lease payment is allocated between the liability and finance charges. The corresponding rental obligations, net of finance charges, are included in other long-term payables. The interest element of the finance cost is charged to the income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The property, plant and equipment acquired under finance leases is depreciated over the shorter of the useful life of the asset and the lease term. 2.22 Dividend distribution Dividend distribution to the Groups shareholders is recognised as a liability in the Groups financial statements in the period in which the dividends are approved by the Groups shareholders. In respect of interim dividends these are recognised when declared by the Board of Directors.

46

NOTES TO THE FINANCIAL STATEMENTS continued


2.23 Share capital Ordinary shares are classified as share capital in equity. Any premium received over and above the par value of the shares is classified as share premium in equity. 2.24 Treasury shares The cost of the Transcorp Plcs own equity instruments that has been reacquired (treasury shares) by the Company or by other members of the consolidated Group is deducted from equity. Gain or loss is not recognised on the purchase, sale, issue, or cancellation of treasury shares. The difference between the cost and consideration received is recognised directly in retained earnings.

3.

Financial risk management


3.1 Financial risk factors The Groups activities expose it to a variety of financial risks: market risk (including foreign exchange risk, interest rate risk, and price risk), credit risk and liquidity risk. The Groups overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Groups financial performance. The Group does not hedge any of its risk exposures. Risk management is carried out in line with policies approved by the board of directors. The board provides written policies for overall risk management, as well as set the overall risk appetite for the Group. Specific risk management approaches are defined for respective risks such as interest rate risk, credit risk, liquidity and investment risk. The Groups overall risk management programme seeks to minimise potential adverse effects on the Groups financial performance. (a) Market risk (i) Foreign exchange risk Foreign exchange risks arise from future commercial transactions and recognised assets. The Group makes payments and receipts primarily in Nigerian Naira. Periodically however, receipts and payments are made in other currencies, mostly in the US dollar. The directors approach to managing foreign exchange risk is to hold foreign currency bank accounts which act as a natural hedge for these transactions. At 31 December 2013, if the Naira had weakened/strengthened by 10% against the US dollar with all other variables held constant, post-tax profit for the year of the Group would have decreased or increased by N89.3 million (Company N0.75 million) mainly as a result of foreign exchange gains/losses on translation of US dollar-denominated bank balances. (ii) Price risk The Group is exposed to equity securities price risk because of investments classified on the statement of financial position as equity investments held for trading and measured at fair value through profit or loss . The Group is not exposed to commodity price risk. To manage its price risk arising from investments in equity securities, the Group engages a third party expert; BGL Asset Management Limited who offers advice on sale and purchase. If the market price of investments in equity securities had increased by 5% at the reporting date profit of the Group and the Company would have increased by N201.14 million (2012: N94.25 million) after taxes. (iii) Interest rate risk The Groups interest rate risk arises from short-term and long-term borrowings. Borrowings are issued at fixed rates and expose the Group to fair value interest rate risk. The Groups policy on managing interest rate risk is to negotiate favourable terms with the bank(s) to reduce the impact of its exposure to this risk. The interest rate risk is significantly concentrated with United Bank of Africa (UBA) being the major lender of all borrowings by the Group. The borrowings are disclosed in note 18.

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(b)

Credit risk Credit risk arises from cash and cash equivalents, deposits and debt securities with banks and financial institutions as well as credit exposures to customers, including outstanding receivables and committed transactions. Credit risk is the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group does not have any significant concentrations of credit risk. Credit risk is managed by the Chief Executive Officer and the Chief Finance Officer, except for credit risk relating to trade receivable balances. For deposits, the Group only deals with or invests in independently rated top 10 banks in Nigeria. The Group analyses the risk profile of the obliger before making investments in debt securities. Investments are only made when such analysis are deemed satisfactory. The credit rating for debt securities held are highlighted below: Credit rating by counter party Group Company N000 N000 BB+ BB+ Fixed income investment 3 630 763 3 630 763 3 630 763 3 630 763

Most of the Groups trade customers are not independently rated, therefore the quality of the customer is considered by taking into account its financial position, past experience and other factors. Each subsidiary is responsible for managing and analysing the credit risk for each of their new customers before standard delivery terms and conditions are offered. The continuous credit worthiness of the existing customers is analysed periodically based on history of performance of the obligations and settlement of their debt. The Group does not hold any collateral as security, no receivables have had their terms renegotiated. No financial assets are past due except for trade receivables. As at 31 December 2012, trade receivables of N4.5 billion (2012: N230 million) were fully performing, N1.9 billion (2012: N825 million) were past due but not impaired and N140 million (2012: N531 million) were impaired. The aging analysis of the latter two categories of receivables is as follows: Group 2013 N000 Past due but not impaired Up to 3 months 3 to 6 months Over 6 months Impaired Up to 3 months 3 to 6 months Over 6 months 1 964 903 570 104 192 474 1 202 325 139 567 38 600 42 646 58 321 2012 N000 824 689 564 104 80 144 180 441 530 947 28 394 273 057 229 496

48

NOTES TO THE FINANCIAL STATEMENTS continued


The credit quality of trade receivables that are neither past due nor impaired can be assessed by reference to historical information about default rates. Group 2013 N000 Receivable from related party New customers (less than 6 months) Existing customers (more than 6 months) Customers with no history of default Existing customers with some past defaults which were fully recovered Total unimpaired trade receivables 3 460 614 1 038 284 4 498 898 2012 N000 6 249 24 420 30 669 Company 2013 N000 2 574 895 2 574 895 2012 N000 2 292 092 2 292 092

13 275 4 512 173

199 329 229 998

2 574 895

2 292 092

Concentration of credit risk is determined by the percentage of trade receivable due form a counterparty in proportion to the total trade receivables of the Group. Any receivable equal or greater than 25% of the total trade receivable of the Group is considered significant. For the years ended 31 December 2013 and 2012, the Group has no significant concentration of credit risk. (c) Liquidity risk Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. Cash flow forecasts are prepared by the Group Chief Finance Officer to monitor the Groups liquidity requirements and ensure it has sufficient cash to meet operational needs at all times so that the Group does not breach borrowing limits on any of its borrowing facilities. Such forecasts take into consideration the Groups committed and expected debt financing plans, internal and administrative cashflow requirements in arriving at the headroom for investments. Surplus cash held by the Group over and above the balance required for working capital management are invested in debt or equity securities. These can be realised in the short term to provide sufficient head room as determined by the abovementioned forecasts. The table below analyses the Groups financial liabilities into relevant maturity Groupings based on the remaining period at the reporting date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows. There is concentration risk in this regard as United Bank for Africa Plc is the major lender to the Group. Less than 6 months N000 750 807 5 182 659 2 073 570 Less than 6 months N000 3 875 851 2 722 133 2 284 848 Between 6 months and 1 year N000 1 583 413 Between 6 months and 1 year N000 1 890 724 Between 1 and 2 years N000 9 107 145 Between 1 and 2 years N000 1 272 875 Between 2 and 5 years N000 16 881 303 Between 2 and 5 years N000 1 475 951

Group At 31 December 2013 Trade and other payables Accruals and other creditors Borrowings

Over 5 years N000 13 463 845

At 31 December 2012 Trade and other payables Accruals and other creditors Borrowings

Over 5 years N000 6 843 156

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Company At 31 December 2013 Accruals and other creditors Due to related parties Borrowings

Less than 6 months N000 144 139 3 963 677 904 295 Less than 6 months N000 575 331 4 964 045 1 784 891

Between 6 months and 1 year N000 1 817 600 Between 6 months and 1 year N000 1 890 724

Between 1 and 2 years N000 530 242 Between 1 and 2 years N000 1 272 875

Between 2 and 5 years N000 197 303 Between 2 and 5 years N000 1 475 951

Over 5 years N000 6 512 177

At 31 December 2012 Accruals and other creditors Due to related parties Borrowings 3.2

Over 5 years N000 6 843 156

Capital risk management The Groups objectives when managing capital are to safeguard the Groups ability to continue as a going concern to in order to maximise returns for shareholders. Consistent with others in the industry, the Group monitors capital on a monthly basis using the gearing ratio. This ratio is calculated as total debt divided by total equity. Total debt is a sum of the short- and long-term borrowings. Total equity is calculated as the sum of all equity components of the statement of financial position. In order to maintain or adjust the capital structure, the Group may increase or reduce its borrowings to obtain an appropriate gearing ratio. During 2013, the Groups strategy, which was unchanged from 2012, was to maintain the gearing ratio not greater than 75% for financing its long-term investments in the agriculture, power, oil and gas and hospitality sectors. The gearing ratios at 31 December 2013 and 2012 are as follows: Group 2013 N000 Total debt Less: cash and cash equivalents Net debt Total equity Gearing ratio 43 109 276 (9 195 229) 33 914 047 86 676 507 39% 2012 N000 13 767 554 (5 549 863) 8 217 691 64 096 644 13% Company 2013 N000 9 961 617 17 680 9 979 297 32 918 935 30% 2012 N000 13 267 597 (117 860) 13 149 737 17 734 017 74%

The increase in the gearing ratio for the Group during 2013 resulted from an increase of over $215 million in loans for the acquisition of Ughelli Power Plc. Details have been presented in note 18. 3.3 Fair value estimation The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows: Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1). Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (Level 2). Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (Level 3).

50

NOTES TO THE FINANCIAL STATEMENTS continued


The following table presents the Groups financial assets and liabilities that are measured at fair value at 31 December 2013: Assets Financial assets at fair value through profit or loss Equity securities at fair value through profit or loss Level 1 4 520 008 Level 2 Level 3 Total 4 520 008

There were no transfers between Levels 1 and 2 during the year. Financial instruments in Level 1 The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry Group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arms length basis. The quoted market price used for financial assets held by the Group is the current bid price. These instruments are included in Level 1. Instruments included in Level 1 comprise primarily equity investments listed on the Nigerian Stock Exchange (NSE) classified as Equity securities at fair value through profit or loss.

4. Critical accounting estimates and judgements


Critical accounting policies and key sources of estimation uncertainty The preparation of financial statements requires the directors to use judgement in applying its accounting policies and estimates and assumptions about the future. Estimates and other judgements are continuously evaluated and are based on the directors experience and other factors, including expectations about future events that are believed to be reasonable under the circumstances. The following discusses the most significant accounting judgements and estimates that the Group has made in the preparation of the financial statements: Impairment of goodwill The Group reviews goodwill at least annually and other non-financial assets when there is any indication that the asset might be impaired. The Group has estimated the value in use and fair value of operating segments to which goodwill is allocated using discounted cash flow models that required assumptions about future cash flows, margins, and discount rates. See note 7 for methods and assumptions used in estimating net recoverable amount.

5. Segmental analysis
The Group The chief operating decision-maker has been identified as the Board of Directors of Transcorp. The Board reviews the Groups internal reporting in order to assess performance and allocate resources. The directors have determined the operating segments based on these reports. The Board considers the business from an industry perspective and has identified 4 operating segments. (i) Hospitality The hospitality business is made up of its direct subsidiary Transnational Hotels and Tourism Services Limited (THTSL) and an indirect subsidiary, Transcorp Metropolitan Hotel and Conferencing Limited (TMHCL) which is fully owned by THTSL. Agriculture This relates to a subsidiary Teragro Commodities Limited.

(ii)

(iii) Energy Two subsidiaries make up the Energy segment namely Transcorp Energy Limited, Transcorp Ughelli Power Limited and an indirect subsidiary, Ughelli Power Plc which is fully owned by Transcorp Ughelli Power Limited. (iv) Corporate Centre This segment is the parent Company, Transnational Corporation of Nigeria Plc and the other non-operational subsidiaries. The Board assesses the performance based on operating profits for each operating segment that is reviewed by the Board. Other information provided, except as noted below, to the Board is measured in a manner consistent with that of the financial statements. Total segment assets exclude tax related assets. These are included in the reconciliation to the total statement of financial position assets.

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Hospitality N000 As at 31 December 2013 External revenues Inter-segment revenue Reportable segment revenue Finance income Finance cost Depreciation and amortisation Profit/(loss) before taxation Taxation Segmental assets Segmental liabilities Additions to non-current assets As at 31 December 2012 External revenues Inter-segment revenue Reportable segment revenue Finance income Finance cost Depreciation and amortisation Profit before taxation Taxation Segmental assets Segmental liabilities Additions to non-current assets 15 349 794 15 349 794 402 879 (1 314 589) 6 144 978 (1 708 298) 68 316 832 24 629 357 454 819 13 243 501 13 243 501 468 965 (1 239 194) 4 522 661 (1 085 044) 39 217 858 17 446 447 652 494

Agriculture N000 14 871 14 871 (34 998) (19 570) (198 971) 400 507 847 494 22 633 1 344 1 344 (12 255) (17 125) (181 340) 93 141 614 889 86 797

Energy N000 3 460 613 3 460 613 291 311 (1 146 231) (168 960) 2 045 416 92 427 636 33 977 469 40 924 148 125 002 (393 591) 8 656 479 7 040 069

Corporate Centre N000 2 142 000 2 142 000 619 323 (1 350 642) (16 536) 3 186 963 (365 951) 49 079 491 16 160 561 54 667 2 325 697 2 325 697 449 950 (847 991) (36 574) 2 874 600 (335 423) 38 894 277 21 619 094 85 142

Total N000 18 825 278 2 142 000 20 967 278 1 313 513 (2 531 871) (1 519 655) 11 178 386 (2 074 249) 210 224 466 75 614 881 41 456 267 13 244 845 2 325 697 15 570 542 1 043 917 (860 246) (1 292 893) 6 822 330 (1 420 467) 86 861 755 46 720 499 824 433

Revenues from transactions with other operating segments relates to dividend income from subsidiary Transnational Hotels and Tourism Services Limited to the Company, Transnational Corporation of Nigeria Plc.

52

NOTES TO THE FINANCIAL STATEMENTS continued


Reconciliations of reportable segment revenues, profit or loss, assets and liabilities. The totals presented for the Groups operating segments reconcile to the key financial figures as presented in its financial statements as follows: 31 December 31 December 2013 2012 N000 N000 Revenues Total revenue for reportable segments Elimination of inter-segment revenue Consolidated revenue Profit or loss Total profit or loss for reportable segments Elimination of inter-segment profits Consolidated profit before taxation Assets Total assets of reportable segments Consolidation eliminations Consolidated total assets Liabilities Total liabilities of reportable segments Consolidation eliminations Consolidated total liabilities Entity-wide information The following is an analysis of the Groups revenue from continuing operations from its major products and services. 31 December 2013 N000 9 741 880 4 406 057 460 088 356 546 10 554 374 669 14 871 1 792 727 1 667 886 18 825 278 31 December 2012 N000 8 354 846 3 792 116 439 756 281 618 8 169 366 996 1 344 13 244 845 75 614 881 (12 826 975) 62 787 906 46 720 499 (11 259 478) 35 461 021 210 224 466 (60 760 053) 149 464 413 86 861 755 12 695 910 99 557 665 11 178 386 (2 146 235) 9 032 151 6 822 330 (2 874 115) 3 948 215 20 967 278 (2 142 000) 18 825 278 15 570 542 (2 325 697) 13 244 845

Analysis of revenue by category: Rooms Food and beverage Shop rental Service charge Laundry Other operating revenue Juice concentrate Capacity charge Energy sent out Total

The Group is domiciled in Nigeria where it generates all its external revenue. The total non-current assets of the Group are all located in Nigeria. No transaction with any external customer accounted for more than 10% of revenue for all the years presented.

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6. Property, plant and equipment


Building Plant and and Land improvements machinery N000 N000 N000 11 067 185 20 291 328 31 358 513 11 359 899 3 665 887 141 839 15 167 625 2 008 360 373 358 (5 464) 2 376 254 Furniture Computer and and office fittings equipments N000 N000 1 664 805 145 125 (30 766) 1 779 164 57 336 25 002 (36 596) 45 742 Motor vehicles N000 261 752 101 851 (15 216) 348 387 Capital Work in Progress N000 Total N000

Group Cost Balance as at 1 January 2012 Prior period adjustments (Note 31) Additions Disposals Balance as at 31 December 2012 Depreciation and impairment losses Balance as at 1 January 2012 Prior period adjustments (Note 31) Depreciation for the year Disposals Balance as at 31 December 2012 Balance as at 1 January 2013 Additions Acquisition of subsidiary Disposals/reclassifications Depreciation and impairment losses Balance as at 1 January 2013 Depreciation for the year Disposals Balance as at 31 December 2013 Carrying amounts

26 419 337 23 957 215 787 175 (88 042)

51 075 685

31 358 513 6 876 376 497

263 346 3 752 264 732 531 830 15 167 625 29 532

327 087 351 105 (3 310) 674 882 2 376 254 159 357 48 462

512 677 550 646 (25 821) 1 037 502 1 779 164 194 724 1 973 888

41 002 14 524 (34 084) 21 442 45 742 8 906 9 238 (2 722) 61 164

66 692 89 185 (1 852) 154 025 348 387 83 085 97 706 (15 936) 513 242

43 454 (48 462)

1 210 804 3 752 1 270 192 (65 067) 2 419 681 525 934 (18 658)

51 075 685 65 529 40 923 745 60 521 92 506 706

1 354 096 39 020 679 16 551 253 41 604 752

Balance as at 31 December 2013 31 741 886

31 358 513 31 358 513 31 741 886

531 830 409 804 941 634 14 758 688 14 635 795

674 882 518 414 1 193 296 1 681 273 1 701 372

1 037 502 472 837 1 510 339 1 152 128 741 662 463 549

21 442 6 752 (592) 27 602 16 334 24 300 33 562

154 025 99 010 (5 201) 247 834 195 060 194 362 265 408

2 419 681 1 506 817 (5 793) 3 920 705

At 1 January 2012 At 31 December 2012 At 31 December 2013


Company Balance as at 1 January 2013 Additions Disposals Balance as at 31 December 2013 Depreciation and impairment losses Balance as at 1 January 2013 Depreciation for the year Disposals Balance as at 31 December 2013 Carrying amounts At 31 December 2012 At 31 December 2013

49 161 996 48 656 004 60 521 88 586 001

15 609 619 40 411 456

3 173 23 403 26 576

1 632 3 248 4 880

11 446 10 729 22 175

21 927 7 369 (2 722) 26 574

44 947 4 375 (13 202) 36 120

5 542 5 542

83 125 54 666 (15 924) 121 867

162 2 485 2 647 3 011 23 929

1 121 65 1 186 511 3 694

9 415 826 10 241 2 031 11 934

14 272 2 669 (592) 16 349 7 655 10 225

9 670 9 015 (5 201) 13 484 35 277 22 636

5 542

34 640 15 060 (5 793) 43 907 48 485 77 960

54

NOTES TO THE FINANCIAL STATEMENTS continued


7. Intangible assets
Goodwill N000 At 1 January 2013 Addition Disposal As at 31 December 2013 Accumulated amortisation and impairment At 1 January 2013 Amortisation charge (Note 25) As at 31 December 2013 Net book value Cost Accumulated amortisation and impairment At 31 December 2013 Net book value Cost Accumulated amortisation and impairment At 31 December 2012 19 482 953 7 361 411 26 844 364 Group Oil Computer Prospecting software Licence N000 N000 177 754 2 780 (57 042) 123 492 5 075 818 5 075 818 Company Oil Computer Prospecting software Licence N000 N000 12 966 12 966 5 075 818 5 075 818

Total N000 24 736 525 7 364 191 (57 042) 32 043 674

Total N000 5 088 784 5 088 784

26 844 364 26 844 364 19 482 953 19 482 953

45 227 12 838 58 065 123 492 58 065 65 427 177 754 45 227 132 527

5 075 818 5 075 818 5 075 818 5 075 818

45 227 12 838 58 065 32 043 674 58 065 31 985 609 24 736 525 45 227 24 691 298

8 526 1 476 10 002 12 966 10 002 2 964 12 966 8 526 4 440

5 075 818 5 075 818 5 075 818 5 075 818

8 526 1 476 10 002 5 088 784 10 002 5 078 782 5 088 784 8 526 5 080 258

Goodwill is not amortised but tested for impairment annually. The remaining amortisation period for computer software cost is between 3 to 6 years. Goodwill has been allocated to the following CGUs: 31 December 31 December 2013 2012 N000 N000 Transcorp Metropolitan Hotels and Conferencing Limited (TMHCL) Transnational Hotels and Tourism Services Limited (THTSL) Transcorp Ughelli Power Limited (TUPL) 863 163 20 369 790 5 611 411 26 844 364 863 163 18 619 790 19 482 953

Goodwill arose from the excess of the consideration over acquisition-date fair values of identifiable assets and liabilities of subsidiaries acquired. The goodwill amount relates to pre-existing goodwill from previous business combinations. No additional goodwill was recorded for the business combination under common control. In assessing goodwill for impairment at 31 December 2013 and 2012 , the Company compared the aggregate recoverable amount of the assets included in the CGUs below to their respective carrying amounts. Recoverable amount has been determined based on the value in use of the CGUs using five year cash flow budgets approved by directors that made maximum use of observable markets for inputs and outputs. For periods beyond the budget period, cash flows were extrapolated using growth rates that do not exceed the long-term average for the business. Key assumptions included the following: 31 December 2013 TMHCL THTSL Budgeted gross margin % Weighted average growth rate Pre-tax discount rate 74% 6% 14.19% 66% 6% 17.67% 31 December 2012 TMHCL THTSL 67% 6% 14.95% 66% 6% 17.67%

Reasonably possible changes in key assumptions would not cause the recoverable amount of goodwill to fall below the carrying value.

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8. Investment property
Investment property relates to a piece of land at Rumens Road Ikoyi measuring approximately 4 876 151 square metres. An independent valuation of the Companys land was performed by Ubosi Eleh and Co to determine the fair value of the land as at 31 December 2013 and 31 December 2012. The following table analyses the non-financial assets carried at fair value, by valuation method. The current market prices of the land were used to determine the fair value as at these dates. Group Company 31 December 31 December 31 December 2013 2012 2013 N000 N000 N000 At 1 January 2013 Opening net book amount At 31 December 2013 1 500 000 75 000 1 575 000 1 467 000 33 000 1 500 000 1 500 000 75 000 1 575 000

2012 N000

1 467 000 33 000 1 500 000

Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1).  Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (Level 2). Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (Level 3). Fair value measurements at 31 December 2013 using Quoted prices in active Significant markets for other Significant identical observable unobservable assets inputs inputs (Level 1) (Level 2) (Level 3) Recurring fair value measurements Land There were no transfers between Levels 1 and 2 during the year. Valuation techniques used to derive Level 2 fair values Level 2 fair values of land have been derived using the sales comparison approach. Sales prices of comparable land in close proximity are adjusted for differences in key attributes such as property size. The most significant input into this valuation approach is price per square foot. 1 575 000

9. Investment in subsidiaries

Company 31 December 31 December 2013 2012 N000 N000 19 618 523 9 808 397 108 200 29 535 120 21 288 723 8 246 397 29 535 120 13 868 523 7 312 000 108 200 21 288 723 15 638 043 7 312 000 (1 661 320) 21 288 723

Transnational Hotels and Tourism Services Limited Transcorp Ughelli Power Limited Other subsidiaries companies Movement in investment in subsidiaries is analysed as follows: January 2013 Additions cost Reduction in equity holding in subsidiary (9b) At 31 December 2013

56

NOTES TO THE FINANCIAL STATEMENTS continued


(a) On 1 November 2013, Transcorp Ughelli Power Limited completed the acquisition of 100% shareholding in Ughelli Power Plc. The fair values of the assets and liabilities of Ughelli Power Plc as at 1 November 2013 is shown below: N000 Non-current assets Inventory Cash and cash equivalents Total assets Total liabilities Net assets Purchase consideration Excess of purchase consideration over equity acquired/Goodwill 40 299 376 819 606 369 607 41 488 589 41 488 589 47 100 000 5 611 411

The revenue and profit of Ughelli Power Plc since acquisition as included in the consolidated statement are N3.46 billion and N2.086 billion respectively. Company 31 December 31 December 2013 2012 N000 N000 (b) Investments in subsidiary companies eliminated on consolidation isshown below: Transnational Corporation investment in subsidiary: Transnational Hotels and Tourism Services Limited (THTSL) Transcorp Refining Company Limited Transcorp Telecomms Limited Telecommunications Backbone Development Company Limited Teragro Commodities Limited Transcorp Hotels and Leisure Limited Transcorp Infrastructure Limited Transcorp Trading and Logistics Limited Transcorp Commodities Limited Transcorp Hilton Limited Allied Commodities Limited Transcorp Energy Limited Transcorp Properties Limited Transcorp Ughelli Power Limited (TUPL) THTSL investment in subsidiary: Transcorp Metropolitan Hotels and Conferencing Limited TUPL investment in subsidiary Ughelli Power Plc 19 618 523 1 000 10 000 9 900 9 500 9 500 9 500 10 000 9 500 9 900 9 500 9 900 10 000 9 808 397 29 535 120 1 661 320 47 100 000 13 868 523 1 000 10 000 9 900 9 500 9 500 9 500 10 000 9 500 9 900 9 500 9 900 10 000 7 312 000 21 288 723 1 661 320

All the subsidiary companies except Transnational Hotels and Tourism Services Limited, Transcorp Metropolitan Hotels and Conferencing Limited, Transcorp Energy Limited, Transcorp Properties Limited, Teragro Commodities Limited, Transcorp Employee Share Scheme and Transcorp Ughelli Power Limited are dormant and are undergoing voluntary winding up proceedings. The subsidiaries to be wound up have no assets, liabilities, income or expenses as these subsidiaries were incorporated but no further activities were performed. Hence there are no assets held for sale and no income or expenses from discontinued operations.

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(c) Other relevant details of the investments are as follows: Issued share capital (in thousands) 5 000 1 000 NonGroups controlling interest interest 51% 100% 49% 0%

Subsidiaries Transnational Hotels and Tourism Services Limited (THTSL) Transcorp Refining Company Limited Transcorp Telecomms Limited Telecommunications Backbone Development Company Limited Teragro Commodities Limited (TRG) Transcorp Hotels and Leisure Limited Transcorp Infrastructure Limited Transcorp Trading and Logistics Limited Transcorp Commodities Limited Transcorp Employee Share Scheme Transcorp Hilton Limited

Nature of business Rendering of hospitality services Oil and gas consultancy exploration, refining and marketing Distribution of global systems for mobile Internet service providers browsing and e-mail services Cultivate the soil and grow food, cash and fodder crops Car rental, hiring and protocol services Power generation, distribution and sale General maritime operations including Dealers in agricultural and mineral products Manages shares ownership scheme set up for the employees Manage hotels, cafeterias, eateries, dinners, canteens cafes, pizzerias, snack bars, etc Sale and purchase of wholesale and retail commodities which the Company may lawfully deal in Mining, refining and supply merchants of mining produce Building, contractors, decorators, merchants and dealers in stone, sand, lime, iron, etc. Rendering of hospitality services

Parents interest 51% 100%

10 000 10 000 10 000 10 000 10 000 10 000 10 000 10 10 000

100% 99% 95% 95% 95% 100% 95% 1% 99%

100% 100% 100% 100% 100% 100% 100% 1% 100%

0% 0% 0% 0% 0% 0% 0% 99% 0%

Allied Commodities Limited

10 000

95%

100%

0%

Transcorp Energy Limited Transcorp Properties Limited

10 000 10 000

99% 100%

100% 100%

0% 0%

Transcorp Metropolitan Hotels and Conferencing Limited (TMHCL) Transcorp Ughelli Power Limited (TUPL) Ughelli Power Plc

5 000

0%

51%

49%

Investment in power generation Power generation

66 152 10 000

65% 0%

65% 65%

35% 35%

All these subsidiaries are incorporated in Nigeria.

58

NOTES TO THE FINANCIAL STATEMENTS continued


(d) Summarised financial information on subsidiaries with material non-controlling interests Set out below are the summarised financial information for each subsidiary that has non-controlling interests that are material to the Group. Transnational Hotels and Transcorp Ughelli Tourism Services Limited Power Limited (THTSL) (TUPL) 2013 2012 2013 2012 N000 N000 N000 N000 Summarised balance sheet Current Asset Liabilities Total current net assets Non-current Assets Liabilities Total non-current net assets Net assets Summarised statement of comprehensive income Revenue Profit/(loss) before income tax Income tax expense Post-tax profit/(loss) from continuing operations Other comprehensive income Total comprehensive income Total comprehensive income allocated to non-controlling interests Dividends paid to non-controlling interests Summarised cash flows Cash flows from operating activities Cash generated from operations Interest paid Income tax paid Net cash generated from operating activities Net cash used in investing activities Net cash used in financing activities Net increase/(decrease) in cash and cash equivalents Cash, cash equivalents and bank overdrafts at beginning of year Cash and cash equivalents at end of year 8 835 697 (1 202 174) 7 633 523 28 034 (4 200 000) 3 461 557 5 128 648 8 590 205 7 000 668 (1 729 561) 5 271 107 (2 319 470) (4 560 190) (1 608 553) 6 738 512 5 129 959 (540 884) (540 884) (46 535 157) 39 099 558 (7 976 483) 8 485 178 508 695 (322 961) (322 961) 112 139 8 696 000 8 485 178 8 485 178 15 349 794 6 144 978 (1 708 298) 4 436 680 4 436 680 2 173 973 2 058 000 13 258 127 4 503 648 (1 162 177) 3 341 471 261 365 3 602 836 1 765 390 2 234 498 3 460 613 2 154 774 2 154 774 2 154 774 754 171 (372 147) (372 147) (372 147) (130 251) 48 997 539 (7 612 457) 41 385 082 42 990 965 49 858 888 (8 236 961) 41 621 927 43 184 479 46 366 279 (30 253 341) 16 112 938 16 859 828 1 627 853 16 956 923 (15 351 040) 1 605 883 11 264 471 (9 701 919) 1 562 552 4 550 570 (3 803 680) 746 890 8 684 288 (7 056 435) 1 627 853

The information above is the amount before inter-Company eliminations.

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10. Deferred tax

Group 2013 N000

2012 N000

The movement in deferred tax is as follows: Deferred tax liability At 1 January 2013 Income statement charge (Note 17) Prior period adjustments (Note 31) Tax charge relating to components of other comprehensive income At 31 December 2013 Retirement Accelerated benefit tax obligation depreciation N000 N000 At 1 January 2012 Prior period adjustments (Note 31) Charged/(credited) to the income statement Charged to other comprehensive income At 31 December 2012 At 1 January 2013 Charged to the income statement Charged to other comprehensive income At 31 December 2013 (38 140) (164 759) 78 410 (124 489) (124 489) (124 489) 901 052 (200 565) 700 487 700 487 700 487 Fair Value Gains N000 5 492 591 1 291 765 6 784 356 6 784 356 6 784 356 7 279 642 318 887 7 598 529 6 355 503 (446 036) 1 291 765 78 410 7 279 642

Provisions N000 (84 571) (84 571) (84 571) 318 887 234 316

Others N000 3 859 3 859 3 859 3 859

Total N000 6 355 503 1 291 765 (446 036) 78 410 7 279 642 7 279 642 318 887 7 598 529

Deferred tax assets are recognised for tax losses carried forward to the extent that the realisation of the related tax benefit through future taxable profits is probable. The Company and Group did not recognise deferred income tax assets of N4.7 billion (31 December 2012: N4.2 billion) in respect of losses amounting to N14.9 billion (31 December 2012: N13.1 billion) that can be carried forward against future taxable income.

11. Pre-paid lease rental

Group 31 December 31 December 2013 2012 N000 N000 125 000 (30 000) 95 000 (30 000) 65 000 65 000 150 000 (22 500) 127 500 (2 500) (30 000) 95 000 95 000

At 1 January Utilisation Additions At 31 December Fees Less minimum lease payments for the next 12 months Non current lease payments Non current lease payments has been analysed as follows: Due between 1 to 5 years Due after 5 years

Pre-paid lease rental represents amounts paid to Benfruit Nigeria Limited by one of the subsidiaries, Teragro Commodities Limited for lease of facilities and equipment. The lease is for a 10 year period, commencing from the date of commissioning at an initial lease rental of N30million per annum subject to a renewal option for the lessee of further terms of 5 years each.

60

NOTES TO THE FINANCIAL STATEMENTS continued


12. Inventories
Group 31 December 31 December 2013 2012 N000 N000 242 380 12 186 409 431 171 858 595 320 1 431 175 102 420 6 222 408 652 152 593 36 947 706 834

Food and beverage Fuel Engineering spares Guest supplies Other raw materials

All inventory are stated at cost. The cost of inventories recognised as an expense and included in cost of sales amounted to N1.78 billion (2012: N1.047 billion). An impairment charge of N30.6 million (2012: N323 million) was recorded on the Groups inventory in the income statement.

13. Trade and other receivables

Group

Company

31 December 31 December 31 December 31 December 2013 2012 2013 2012 N000 N000 N000 N000 Trade receivables Less: Provision for impairment of trade receivables Trade receivables net Other receivables and prepayments Due from related companies (Note 35) Dividend receivable 4 754 479 (139 567) 4 614 912 3 830 716 8 445 628 1 585 634 (215 520) 1 370 114 1 263 311 2 633 425 2 069 283 647 095 1 927 800 4 644 178 847 163 198 965 2 093 127 3 139 255

31 December 31 December 2013 2012 N000 N000 Balance (Recovery)/impairment losses recognised on receivables 215 520 (75 953) 139 567 118 827 96 693 215 520

14. Debt and equity securities

Group

Company

31 December 31 December 31 December 31 December 2013 2012 2013 2012 N000 N000 N000 N000 Equity securities at fair value through profit or loss Investment in AkwaIbom State Government asset backed note Investment in Treasury Bills Fixed income investment 4 520 008 3 630 763 8 150 771 2 692 824 6 318 716 3 444 738 3 238 963 15 695 241 4 520 008 3 630 763 8 150 771 2 692 824 1 740 952 3 038 363 7 472 139

Fixed income investments and equity securities at fair value through profit or loss represent investments of the Company under the management of BGL. The original amount invested in equity securities was N1.3 billion (2012: 1.24 billion). These investments have recorded a fair value gain of N2.78 billion (2012: N 1.45 billion) as at the end of the year.

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15. Cash and cash equivalents

Group Company 31 December 31 December 31 December 31 December 2013 2012 2013 2012 N000 N000 N000 N000 9 195 229 5 549 863 17 680 117 860

Cash and bank balance

16. Trade and other payables

Group Company 31 December 31 December 31 December 31 December 2013 2012 2013 2012 N000 N000 N000 N000 750 807 5 182 659 350 000 6 283 466 3 875 851 2 722 133 6 597 984 144 139 3 963 677 4 107 816 575 331 4 964 045 5 539 376

Trade creditors Accruals and other liabilities Due to related companies (Note 35) Total

17. Taxation

Group Company 31 December 31 December 31 December 31 December 2013 2012 2013 2012 N000 N000 N000 N000 1 441 870 99 292 1 541 162 214 200 318 887 2 074 249 1 526 368 107 565 1 633 933 232 570 (446 036) 1 420 467 4 572 027 1 633 933 (2 097 983) 4 107 977 151 757 151 751 214 200 365 951 228 931 151 751 (164 559) 216 123 102 853 102 853 232 570 335 423 126 187 102 853 (109) 228 931

Income tax Education tax Tax on franked investment income Deferred tax (Note 10) The movement in tax payable is as follows: At 1 January Provision for the year Payment during the year At 31 December A reconciliation between tax expense and the product of accounting profit multiplied by Nigerias domestic tax rate for the years ended 31 December 2011 and 2012 is as follows: Profit before tax Tax at Nigeria Corporation tax rate of 30% (2012: 30%) Education tax Tax on franked investment income Tax losses for which no deferred income tax asset was recognised Minimum tax adjustments Effect of timing differences Tax charge for the year

4 107 977 1 541 162 (1 727 504) 3 921 635

9 032 151 2 709 645 99 292 214 200 151 751 (1 100 639) 2 074 249

3 948 215 1 184 465 107 565 232 570 11 804 105 412 (221 349) 1 420 467

3 186 963 956 089 214 200 151 751 (956 089) 365 951

2 874 600 862 380 232 570 102 853 (862 380) 335 423

62

NOTES TO THE FINANCIAL STATEMENTS continued


18. Borrowings
Group Company 31 December 31 December 31 December 31 December 2013 2012 2013 2012 N000 N000 N000 N000 3 656 983 39 452 293 43 109 276 (c) The Groups borrowings are analysed below:
Outstanding Outstanding Principal/ Principal/ drawdown drawdown as at as at Interest 31 December 31 December rate 2013 2012 2 153 898 4 358 305

(a) (b)

Borrowings falling due within a year Borrowings falling due after one year

3 764 127 10 003 427 13 767 554

762 665 9 198 952 9 961 617

3 264 170 10 003 427 13 267 597

Purpose To restructure the existing credit obligation of the Company which were provided to support its investments in Oil and Gas and Hospitality businesses To finance the Company's investment in target sectors To augment the Company's working capital requirements

Principal (N000) Loan type 4 400 000 Term loan

Tenor 8 years and 2 months (repayment from March 2013)

Other terms/ Security

Pledge of investment 17% per in treasury bill held annum amounting to not less than N1.2b Pledge of the Company's direct/indirect shareholding in THTSL Tripartite legal mortgage over Metro Hotels property 17% per annum

11 600 000 Term loan 7 years Negative charge on fixed (Restructured) inclusive of and floating assets of the 12 months Company moratorium 1 000 000 Revolving term loan 365 days Negative charge on fixed repayable and floating assets of the on demand; Company available for 5 years 5 years with Irrevocable domiciliation 180 days of specific contract to review cycle repay drawdown 5 years Charge on Transcorp investment in Akwa ibom State note worth N300m providing 120% cover

4 000 000

6 012 000

17% per annum

204 624

1 000 000

To provide working capital support to the Company business To finance the staff share scheme

3 000 000 Revolving overdraft 250 000 Mediumterm loan

17% per annum 17% per annum

3 000 000

1 501 700

194 561

232 911

To buy Ughelli Power Plc from Vendor (BPE and Ministry of Finance) $215 million

33 383 050 Mediumterm loan

7 years

Share charge, the Libor Deed of Corporate plus Guarantee, the assignment 8.5% of contracts agreement and Trust Deed

33 383 050

53 633 050

42 936 133

13 104 916

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19. Financial instruments and fair values


Measurement categories The following table shows the carrying values of financial assets and liabilities for each of these categories at 31 December 2013 and 2012. 31 December 2013 31 December 2012 Loans and Held for Loans and Held for receivables trading receivables trading Group N000 N000 N000 N000 Financial assets Debt and equity securities Cash and cash equivalents 3 630 763 9 195 229 12 825 992 4 520 008 4 520 008 13 002 417 5 549 863 18 552 280 2 692 824 2 692 824

31 December 31 December 2013 2012 Other Other financial financial liabilities at liabilities at amortised amortised cost cost N000 N000 Financial liabilities Trade payables and other liabilities Borrowings 6 283 466 43 109 276 49 392 742 31 December 2013 Loans and Held for receivables trading N000 N000 4 644 178 3 630 763 17 680 8 292 621 4 520 008 4 520 008 6 597 984 13 767 554 20 365 538

Company Financial assets Trade and other receivables Debt and equity securities Cash and cash equivalents

31 December 2012 Loans and Held for receivables trading N000 N000 3 139 255 4 779 315 117 860 8 036 430 2 692 824 2 692 824

31 December 31 December 2013 2012 Other Other financial financial liabilities at liabilities at amortised amortised cost cost N000 N000 Financial liabilities Trade payables Borrowings 4 107 816 9 961 617 14 069 433 5 539 376 13 267 597 18 806 973

64

NOTES TO THE FINANCIAL STATEMENTS continued


Fair values, including valuation methods and assumptions The following table shows the assets on the balance sheet that are measured at fair value in a hierarchy that is based on significance of the inputs used in making the measurements. Level 1: Level 2: Level 3: Quoted prices (unadjusted) in active markets for identical assets. Inputs other than quoted prices included within Level 1 that are observable for the asset, either directly (that is, as prices) or indirectly (that is, derived from prices). Inputs for the asset that are not based on observable market data (that is, unobservable inputs).

There were no transfer of financial assets between fair value levels of hierarchy. Fair value hierarchy Group Equity investments held-for-trading Company Equity investments held-for-trading Level 1 4 520 008 2 692 824 The carrying values of financial assets and liabilities on the statement of financial position approximate their fair values. The methods and assumptions used in estimating fair value are as follows: Cash and cash equivalents, debt securities, trade and other receivables and trade and other payables are highly liquid investments which are due on demand or within one year. Equity investments are carried at fair value based on market prices as at the reporting date. Level 1 4 520 008 2 692 824 31 December 31 December 2013 2012 N000 N000

20. Advance deposits

Group Company 31 December 31 December 31 December 31 December 2013 2012 2013 2012 N000 N000 N000 N000 1 875 000 1 875 000 249 459 1 876 799 2 126 258 1 875 000 1 875 000 1 876 799 1 876 799

Customers EER Total advance deposits

Advance deposits from EER relates to an advance payment of $12.5 million received from EER/Sacoil as farm-in fees for Oil Prospecting License (OPL 281). The approval of the Production Sharing Contract (PSC) of OPL is being awaited from the Department of Petroleum Resources.

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21. Retirement benefit obligations


The Companys subsidiaries, Transnational Hotel and Tourism Services Limited and Transcorp Metropolitan Hotels and Conferencing Limited operated a gratuity scheme for employees . An agreement was entered with employees of both subsidiaries to discontinue the schemes. The outstanding liabilities has been settled to the employees. Group 31 December 31 December 2013 2012 N000 N000 Amounts recognised in income statements are shown below: Current service cost Interest cost Write back of provision Curtailment gain Total, included in employee benefits expense (Note 26c) Amounts recognised in other comprehensive income are shown below; Actuarial losses Change in assumption Actuarial losses Experience The movement in the defined benefit obligation over the years was as follows: Defined benefit obligation at the beginning of the year Current service cost Interest cost Plan participants contribution. Actuarial losses Change in assumption Actuarial losses/(gains) Experience Write back of provision Benefits paid Curtailment gain Defined benefit obligation at end of year 1 581 606 558 574 (189 926) (1 950 254) 1 656 588 231 206 219 002 118 801 143 282 (433 096) (354 177) 1 581 606 118 081 143 282 261 363 558 574 (189 926) 368 648 231 206 219 002 (317 142) 133 066

22. Revenue

Group Company 31 December 31 December 31 December 31 December 2013 2012 2013 2012 N000 N000 N000 N000 9 741 880 4 406 057 460 088 356 546 10 554 374 669 14 871 1 792 727 1 667 886 18 825 278 8 354 846 3 792 116 439 756 281 618 8 169 366 996 1 344 13 244 845 2 142 000 2 142 000 2 325 697 2 325 697

Rooms Food and beverage Shop rental Service charge Laundry Other operating revenue Juice concentrate Dividend income Capacity charge Energy sent out All the revenue was generated in Nigeria.

66

NOTES TO THE FINANCIAL STATEMENTS continued


23. Cost of sales
Group Company 31 December 31 December 31 December 31 December 2013 2012 2013 2012 N000 N000 N000 N000 598 687 1 189 535 1 581 288 721 941 115 100 162 177 82 807 4 451 535 574 906 1 529 427 1 326 565 45 666 3 476 564

Rooms Staff costs (Note 26) Food and beverage Natural gas and fuel costs Repairs and maintenance Depreciation Other operating departments

24. Other operating income

Group Company 31 December 31 December 31 December 31 December 2013 2012 2013 2012 N000 N000 N000 N000 2 005 345 3 069 742 14 517 346 5 089 950 13 247 1 479 466 25 543 746 1 519 002 962 545 3 069 742 4 032 287 230 1 479 466 548 590 2 028 286

Other operating income Fair value gains Gain on sale of investment Profit on fixed asset disposal

25. Administrative and general expenses

Group Company 31 December 31 December 31 December 31 December 2013 2012 2013 2012 N000 N000 N000 N000 1 469 882 1 344 640 12 838 95 000 1 724 283 182 662 436 879 70 648 10 107 880 297 15 428 18 418 723 669 203 001 15 696 160 532 75 997 31 200 1 742 007 9 213 184 1 118 780 1 270 192 22 701 75 000 782 836 805 515 308 164 65 720 946 746 113 284 150 525 676 844 155 820 160 888 310 852 87 710 471 162 7 522 739 365 260 15 060 1 476 35 000 700 000 208 711 212 564 41 332 10 107 10 312 14 887 15 539 14 048 82 115 14 621 80 007 27 468 31 200 395 050 2 274 757 189 753 36 574 2 102 30 000 232 469 179 516 40 637 16 875 69 078 9 989 12 744 58 359 47 406 43 041 15 277 97 523 1 081 343

Staff costs (Note 26) Depreciation Amortisation Auditors remuneration Management and incentive fees Professional fees Directors remuneration (Note 26) Rent and rates Loss on asset disposal Repairs and maintenance Advertising Insurance Energy cost Travel and accommodation Licenses and fees Business development Bank charges Acquisition expenses on investments Other operating expenses

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26. Particulars of directors and staff


(a) The average number of persons, (excluding directors), employed by the Group and Company during the year was as follows: Group Company 31 December 31 December 31 December 31 December 2013 2012 2013 2012 Number Number Number Number Managerial Senior staff Others 39 333 1,530 1 902 26 65 1,436 1 527 8 6 10 24 7 4 10 21

(b) The table below shows the number of employees (excluding directors), who earned over N240,000 as emoluments in the year and were within the bands stated: Group Company 31 December 31 December 31 December 31 December 2013 2012 2013 2012 Number Number Number Number N240,001 N500,000 N500,001 N1,000,000 N1,000,001 N2,000,000 N2,000,001 N4,000,000 Above N4,000,000 678 742 212 183 87 1 902 (c) Staff costs for the above persons (excluding Directors): Group Company 31 December 31 December 31 December 31 December 2013 2012 2013 2012 N000 N000 N000 N000 Salaries and wages Gratuity net charge Defined contribution cost 2 168 644 368 648 122 125 2 659 417 (d) Analysis of staff costs Group Company 31 December 31 December 31 December 31 December 2013 2012 2013 2012 N000 N000 N000 N000 Cost of revenue Administrative and general expenses 1 189 535 1 469 882 2 659 417 1 529 427 1 118 780 2 648 207 365 260 365 260 254 978 254 978 2 402 588 133 066 112 553 2 648 207 355 620 9 640 365 260 183 636 6 117 254 978 1 035 427 26 14 25 1 527 6 4 14 24 6 4 11 21

68

NOTES TO THE FINANCIAL STATEMENTS continued


(e) Emoluments of Directors The remuneration paid to the Directors of the Company was: Group Company 31 December 31 December 31 December 31 December 2013 2012 2013 2012 N000 N000 N000 N000 The remuneration paid to the Directors of the Company was: Salaries Fees Defined contribution Benefits in kind Amount paid to the highest paid Director (excluding pension contributions) Chairman's emoluments Fees Benefit in kind 1 600 43 879 45 479 1 800 37 226 39 026 1 600 43 879 45 479 1 800 37 226 39 026 138 507 159 421 1 427 137 524 436 879 64 065 109 331 7 252 2 638 188 943 308 164 63 689 62 638 10 975 1 427 137 524 212 564 64 065 63 689 4 225 1 536 110 066 179 516 63 689

The number of directors of the Group (including the highest paid Director) whose remuneration, excluding pension contributions in respect of services to the Company fell within the following ranges: Group Company 31 December 31 December 31 December 31 December 2013 2012 2013 2012 Number Number Number Number Less than N10,000,000 Over N10,000,000 7 10 17 9 17 26 9 9 2 8 10

27. Finance income and costs

Group Company 31 December 31 December 31 December 31 December 2013 2012 2013 2012 N000 N000 N000 N000 (2 531 871) 1 313 513 (1 218 358) (860 246) 1 043 917 183 671 (1 316 472) 603 905 (712 567) (847 991) 449 951 (398 040)

Interest expense on loans Interest income

28. Earnings per share


Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the year excluding ordinary shares purchased by the Company and held as treasury shares. Group Company 31 December 31 December 31 December 31 December 2013 2012 2013 2012 Profit attributable to shareholders Weighted average number of ordinary shares in issue Basic earnings per share (Kobo) Diluted earnings per share (Kobo) 4 029 758 33 123 990 12.17 12.17 1 130 724 25 813 998 4.04 4.04 2 821 012 33 123 990 8.52 8.52 2 539 177 25 813 998 9.08 9.08

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29. Share capital


(a) Authorised Group Company 31 December 31 December 31 December 31 December 2013 2012 2013 2012 45 000 000 000 (2012: 36 000 000 000) ordinary shares of 50kobo each 22 500 000 18 000 000 22 500 000 18 000 000

Group and Company Number of shares thousands 25 813 998 12 906 999 38 720 997 Ordinary shares 12 906 999 6 453 500 19 360 499

Allotted, called up and fullypaid: At 1 January 2012 Shares issued At 31 December 2013

Total 12 906 999 6 453 500 19 360 499

The Company held an Extraordinary General Meeting on 28 March 2013, where the shareholders approved the creation of additional 9 billion ordinary shares of the Company to bring the total authorised shares of the Company to 45 billion Ordinary Shares. The Company undertook a rights issue of 12 906 999 142 ordinary shares of 50 kobo each at N1.00 per share to existing shareholders on the basis of 1 new share for every 2 shares held at closure date of 10 April 2013. The new shares issued ranks pari passu in all respects with existing shares of the Company. The rights issue opened on 3 May 2013 and closed 7 June 2013 with all the shares on offer fully allotted to shareholders. Net proceeds of N12.36 billion was realised from the rights issue after deducting transaction costs amounting to N543 million. The proceed was primarily used to refinance bank loan utilised for the acquisition of Ughelli Power Plc. (b) Share premium Group Company 31 December 31 December 31 December 31 December 2013 2012 2013 2012 N000 N000 N000 N000 At 1 January Share reconstruction Right issue Transaction cost At 31 December 27 071 664 (25 768 702) 6 453 500 (543 094) 7 213 368 27 071 664 27 071 664 27 071 664 (25 768 702) 6 453 500 (543 094) 7 213 368 27 071 664 27 071 664

In 2011, the Company commenced the process of investigating and reconciling the proceeds received or receivable for its issued share capital to enable it confirm the completeness and accuracy of its share premium. As at 31 December 2012, the Company had obtained the approval of the Securities and Exchange Commission (SEC) and a court sanction permitting the Company to hold a meeting of its members to pass a resolution approving the balance in the share capital and share premium accounts as at 31 December 2011 as complete and accurate. The extraordinary general meeting (EGM) was held 30 January 2013 and the Shareholders of the Company passed a resolution approving the balances as complete and accurate. (c) Treasury shares Treasury shares represent the Companys shares held by the Employee Share Scheme as at 31 December 2013.

70

NOTES TO THE FINANCIAL STATEMENTS continued


30. Non-controlling interest
Transnational Transcorp Hotels and Metropolitan Tourism Hotels and Transcorp Services Conferencing Ugheli Power Ugheli Power Limited Limited Limited Plc (THTSL) (TMHCL) (TUPL) (UPP) Opening balance Prior period adjustments (note 31) THTSL profit for the year Dividend received UPP post-acqusition profit TMHCL profit for the year TUPL profit for the year Increase in TUPL share capital 11 635 555 11 104 232 2 176 388 (2 058 000) 22 858 175 (371 281) (2 415) (373 696) (130 252) 24 203 5 341 839 5 235 790 729 968 729 968

Group 11 134 022 11 104 232 2 176 388 (2 058 000) 729 968 (2 415) 24 203 5 341 839 28 450 237

31. Prior period adjustments


In preparing its first set of IFRS financial statements as at 31 December 2012, the Group elected to use the IFRS 1 exemption and carry all classes of property, plant and equipment (PPE) at their respective fair values at transition date. A qualified external valuer (Jide Taiwo and Co) was engaged to perform the valuation of PPE as at transition date (1 January 2011). While preparing the standalone IFRS financial statement of one of its subsidiaries, Transnational Hotels and Tourism Services Limited (THTSL), the qualified valuer identified an error in valuation of Transcorp Hilton Hotels in Abuja used in preparing the consolidated IFRS financial statements for Transnational Corporation of Nigeria Plc for the year ended 31 December 2012. The impact of this understated the deemed cost of land, building and improvements by N23.96 billion at 31 December 2011 and at 31 December 2012. The non-controlling interest reported at 31 December 2011 and at 31 December 2012 was also understated by N11.10 billion. There was also a corresponding understatement of net deferred tax liabilities of N1.29 billion for those respective periods.

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32. Cash generated from operating activities

Group Company 31 December 31 December 31 December 31 December 2013 2012 2013 2012 N000 N000 N000 N000 9 032 151 1 506 817 9 761 57 042 12 838 (75 000) (3 237 059) 30 000 (25 784) 2 531 871 (1 313 513) (214 200) (1 000 371) 3 948 215 1 270 192 (746) 22 701 (33 000) (1 479 466) 25 000 860 246 (1 043 917) (232 570) 3 327 1 316 472 (603 905) (214 200) (9 733) 847 991 (449 951) (232 570) 3 327 3 186 963 15 060 10 107 1 476 (75 000) (3 237 059) 2 102 (33 000) (1 479 466) 2 874 600 36 574

Profit before tax Adjustment for non-cash items Depreciation of fixed assets Loss/(profit) on disposal of property, plant and equipment Loss on disposal of intangible asset Amortisation of intangible assets Fair value gain investment property Fair value gains on trading investment securities Amortisation of prepaid lease rental Treasury shares Finance cost Finance income Tax on franked investment income Foreign exchange loss Other adjustments to reconcile expenses for the year to cash from operating activities Increase in debtors and prepayment (Increase)/decrease in inventory Increase/(decrease) in payables and accrued expenses (Decrease)/increase in retirement benefit obligation Net cash generated from/(used in) operations In the statement of cash flows, proceeds from sale of property plant and equipment comprise: Net book amount (Loss)/profit on disposal of property plant and equipment Proceeds from sale of property, plant and equipment

(6 378 131) (724 341) 1 044 729 (1 581 606) (324 796)

(462 567) 78 132 3 486 115 186 381 6 628 043

(1 620 381) (867 426) (2 097 626)

(1 340 681) 851 453 1 080 379

12 865 (9 761) 3 104

22 975 746 23 721

10 131 (10 107) 24

17 401 17 401

33. Capital commitments and contingent liabilities


There were no litigations in the ordinary course of business as at the balance sheet date. The directors are of the opinion that all known liabilities and commitments which are relevant in assessing the state of affairs of the Company have been taken into consideration in the preparation of these financial statements.

34. Subsequent events


The shareholders of Transnational Hotels and Tourism Services Limited (THTSL) at an extraordinary general meeting held on 13 January 2014 approved the creation of additional 20 million ordinary shares to bring the authorised share capital of the Company to 30 million ordinary shares. In addition, at the said meeting the shareholders ratified the allotment of 16 million ordinary shares of the Company to existing shareholders via a rights issue that was previously approved by the Board of Directors.

35. Related parties


(a) Heirs Holdings Limited Transcorp entered into a technical services agreement with Heirs Holdings Limited for the latters provision of corporate and financial advisory services, governance support, brand and communications services and business development support. The terms of the technical service agreement are established on an arms length basis.

72

NOTES TO THE FINANCIAL STATEMENTS continued


(b) Key management personnel Name Mr. Tony Elumelu, CON Mr. Obinna Ufudo Olorogun Otega Emerhor, OON Mr. Kayode Fasola Alhaji Mohammed Nasir Umar Mr. Emmanuel N. Nnorom (c) (d) Designation Chairman President/CEO Director Director Director Director Name Dr. Julius Kpaduwa Ms. Angela Aneke Mr. Stanley Inye Lawson Mr. Chibundu Edozie Mr. Ibikunle Oriola Designation Director Director Director Director CFO

Subsidiaries Details of the subsidiaries have been disclosed in note 9c. Related party transactions Nature of relationship Nature of transactions Outstanding balance at 1 January 2013 Outstanding Net value of balance at transactions 31 December in 2013 2013 700 000 350 000

Name of party Group Heirs Holdings Limited Company Transnational Hotels and Tourism Services Limited Teragro Commodities Limited Transcorp Energy Limited Transcorp Ughelli Power Limited Transcorp Staff Share Ownership Trust Company Limited Ughelli Power Plc Transcorp Refining Company Limited (Inactive) Transcorp Telecomms Limited (Inactive) Telecommunications Backbone Development Company Limited Teragro Commodities Limited Transcorp Energy Limited Transcorp Hotels and Leisure Limited (Inactive) Transcorp Infrastructure Limited (Inactive) Transcorp Trading and Logistics Limited (Inactive) Transcorp Commodities Limited (Inactive) Transcorp Hilton Limited (Inactive) Allied Commodities Limited (Inactive) Transcorp Properties Limited Heirs Holding Limited

Controlled by Technical fee key management personnel

Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Sub-subsidiary

Receivable Receivable Receivable Receivable Receivable Receivable

112 278 45 356 41 331

55 256 217 289 109 293 (35 704) 21 805 80 191

55 256 329 567 154 649 5 627 21 805 80 191 647 095 1 000 10 000 9 900 9 500 9 900 9 500 9 500 10 000 9 500 9 900 9 500 10 000 350 000 3 505 477 3 963 677

Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Controlled by key management personnel

Payable Payable Payable Payable Payable Payable Payable Payable Payable Payable Payable Payable Technical fee Payable

1 000 10 000 9 900 9 500 9 900 9 500 9 500 10 000 9 500 9 900 9 500 10 000 4 855 845

700 000 (1 350 368)

Transnational Hotels and Tourism Services Limited Subsidiary

None of the transactions incorporate special terms and conditions and no guarantees were given or received. The amounts outstanding are unsecured and will be settled in cash. No expense has been recognised in the current or prior years for bad or doubtful debts in respect of the amounts owed by related parties. There are no future commitments or obligation by or to any related party

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valUe-added statement
for the year ended 31 December 2013
2013 N000 Revenue Other income Bought in services Local Foreign Value added Distribution Employees Salaries and benefits Provider of funds Interest Government Taxation The future Depreciation Retained profit 1 506 817 6 957 902 15 730 256 10 44 100 1 270 192 2 710 701 8 909 813 14 30 100 15 060 2 821 012 4 883 435 0 58 100 36 574 2 539 177 4 014 143 1 63 100 2 074 249 13 1 420 467 16 365 951 7 335 423 8 2 531 871 16 860 246 10 1 316 472 27 847 991 21 2 659 417 17 2 648 207 30 364 940 7 254 978 6 8 420 519 1 077 966 9 498 485 15 730 256 6 115 115 782 836 6 897 951 8 909 813 1 894 757 1 894 757 4 883 435 789 791 789 791 4 014 143 18 825 278 6 403 463 25 228 741 Group % 2012 N000 2013 N000 2 142 000 4 636 192 6 778 192 Company % 2012 N000 % %

13 244 845 2 562 919 15 807 764

2 325 697 2 478 237 4 803 934

74

FIVE-YEAR FINANCIAL SUMMARY


for the year ended 31 December 2013
2013 N000 122 211 610 27 252 803 (15 737 084) (47 050 822) 86 676 507 19 360 499 7 213 368 (25 784) 31 678 187 28 450 237 86 676 507 Comprehensive income Revenue Profit before taxation Taxation Profit after taxation Other comprehensive income for the year, net of tax Total comprehensive income for the year, net of tax Basic earnings per share (kobo) Company Balance sheet Non-current asset Current asset Current liabilities Non-current liabilities Net assets Capital and reserves Share capital Share premium Revenue reserves Comprehensive income Revenue Profit before taxation Taxation Profit after taxation 2 142 000 3 186 963 (365 951) 2 821 012 2 325 697 2 874 600 (335 423) 2 539 177 2 833 333 1 313 375 (361 516) 951 859 2 382 396 3 456 849 (132 590) 3 324 259 2 785 717 100 966 (83 600) 17 366 19 360 499 7 213 368 6 345 068 32 918 935 12 906 999 27 071 664 (22 244 646) 17 734 017 12 906 999 27 071 664 (24 783 823) 15 194 840 12 906 999 27 071 664 (24 734 387) 15 244 276 11 256 836 28 721 827 (24 241 944) 15 736 719 36 266 862 12 812 629 (6 961 604) (9 198 952) 32 918 935 27 917 466 10 729 254 (10 909 276) (10 003 427) 17 734 017 22 204 720 2 044 926 (6 949 841) (2 104 965) 15 194 840 19 095 139 2 427 863 (4 957 297) (1 321 429) 15 244 276 14 528 041 1 872 675 (646 631) 15 754 085 18 825 278 9 032 151 (2 074 249) 6 957 902 6 957 902 12.2 13 244 845 3 948 215 (1 420 467) 2 527 748 182 953 2 710 701 4.0 13 901 453 4 605 925 1 255 696 5 861 621 (157 534) 5 704 087 7.1 13 927 551 6 908 216 (1 518 430) 5 389 786 5 389 786 11.1 12 995 152 3 233 160 (2 006 583) 1 226 577 1 226 577 2.8 2012 N000 74 942 302 24 615 363 (16 596 346) (18 864 675) 64 096 644 12 906 999 27 071 664 1 879 727 22 238 254 64 096 644 2011 N000 75 425 737 9 999 811 (10 396 285) (11 408 822) 63 620 441 12 906 999 27 071 664 338 497 23 303 281 63 620 441 Prepared under local GAAP 2010 2009 N000 N000 30 329 672 12 636 027 (12 604 157) (3 722 622) 26 638 920 12 906 999 27 071 664 (18 612 264) 5 272 521 26 638 920 25 347 658 9 405 026 (9 855 460) (1 950 093) 22 947 131 11 256 836 28 721 827 (23 128 157) 6 096 625 22 947 131

Group Balance sheet Non-current asset Current asset Current liabilities Non-current liabilities Net assets Capital and reserves Share capital Share premium Treasury shares Revenue reserves Non-controlling interest

The balances for 2013, 2012 and 2011 have been stated in accordance with International Financial Reporting Standard (IFRS) as issued by the International Accounting Standard Board (IASB). For all periods up to and including the year ended 31 December 2010 the balances have been stated in accordance with local General Accepted Accounting Practice (Local GAAP).

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Notice of annUal general meeting


NOTICE IS HEREBY GIVEN that the Eighth Annual General Meeting (AGM) of Transnational Corporation of Nigeria Plc (the Company) willhold on Monday, 31 March, 2014 at the Grand Ballroom, Lagos Oriental Hotel, 3 Lekki Road, Victoria Island, Lagos at 10.00 am to transact the following businesses:

Ordinary business
1. To receive the Audited Financial Statements for the year ended December 31, 2013 and the reports of the Directors, Auditors and Audit Committee thereon. 2. To declare a dividend. 3. To re-elect retiring Directors. 4. To authorise the Directors to fix the remuneration of the Auditors. 5. To elect/re-elect members of the Audit Committee.

Special business
1. To approve the appointment of a Director.

Proxy
A member entitled to attend and vote at the AGM is entitled to appoint a proxy to attend and vote in his/her stead. A proxy need notbe a member of the Company. For the appointment to be valid, a completed and duly stamped proxy form must be deposited at the registered office of the Registrar, Africa Prudential Registrars Plc (Formerly UBA Registrars), 220B Ikorodu Road, Palmgrove, Lagos notlessthan 48 hours before the time fixed for the meeting. A blank proxy form is attached to the Annual Report. Dated this 7th day of February 2014. By order of the Board

Chinedu N. Eze Company Secretary FRC/2013/NBA/00000002586 Company Secretary Transnational Corporation of Nigeria Plc 38 Glover Road (formerly 22b) Ikoyi, Lagos Nigeria

76

NOTES 1. Closure of register For the purpose of qualifying for the dividend and attendance to the AGM, the Register of Members and transfer books of the Company will be closed from 10 March, 2014 to 14 March, 2014, both dates inclusive. 2. Dividend warrants If the dividend recommended by the Directors is approved, dividend warrants will be posted on 1 April, 2014 to all shareholders whose names appear in the Companys Register of Members at the close of business on 7 March, 2014. 3. Audit committee In accordance with Section 359(5) of the Companies and Allied Matters Act, Cap C20, LFN, 2004, any member may nominate a shareholder for election as a member of the Audit Committee by giving notice in writing of such nomination to the Company Secretary at least 21 days before the AGM. 4. Biographical details of directors for re-election and for approval The biographical details of Directors standing for re-election or whose appointment is sought to be approved are provided in the Annual Report 2013. 5. Annual report published on the website The electronic version of the Annual Report 2013 will be hosted on the Companys website: www.transcorpnigeria.com.

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PROXY FORM
PROXY FORM
EIGHTH ANNUAL GENERAL MEETING TO BE HELD AT 10.00 AM ON MONDAY, MARCH 31, 2014 AT THE RESOLUTION GRAND BALLROOM, LAGOS ORIENTAL HOTEL, 3 LEKKI ROAD, VICTORIA ISLAND, LAGOS I/WE ___________________________________________ being a member/members of TRANSNATIONAL CORPORATION OF NIGERIA PLC, hereby appoint: __________________________________________________ or failing him, the Chairman of the meeting as my/our proxy to act and vote for me/us and on my/our behalf at the Eighth Annual General Meeting of the Company to be held on Monday, March 31, 2014 and at any adjournment thereof. To receive the Audited Financial Statements for the year ended December 31 2013, together with the Report of the Directors, Auditors and Audit Committee thereon. To declare a dividend To re-elect retiring Directors To authorize Directors to fix the remuneration of the Auditors. To elect/re-elect Committee. members of the Audit

FOR

AGAINST

To approve the appointment of a Director. A member (Shareholder) who is unable to attend an Annual General Meeting is allowed by law to vote by proxy. The above proxy form has been prepared to enable you exercise your right to vote, in case you cannot personally attend the meeting. Please sign this proxy form and forward it, so as to reach the registered office of the Registrar, Africa Prudential Registrars Plc (Formerly UBA Registrars), 220B Ikorodu Road, Palmgrove, Lagos, not later than 48 hours before the time fixed for the meeting. If executed by a Corporation, the Proxy Form must be under its common seal or under the hand of a duly authorized officer or attorney. It is a requirement of the law under the Stamp Duties Act, Cap S8, Laws of the Federation of Nigeria, 2004 that any instrument of proxy to be used for the purpose of voting by any person entitled to vote at any meeting of shareholders must be stamped by the Commissioner for Stamp Duties. The Proxy must produce the Admission Card below to gain entrance into the Meeting.

Please indicate with an X in the appropriate square how you wish your votes to be cast on the resolutions set out above. Unless otherwise instructed, the proxy will vote or abstain from voting at his discretion.

...
TRANSNATIONAL CORPORATION OF NIGERIA PLC

Eighth Annual General Meeting

_____________________________________________________________ Name of Shareholder _____________________________________________________________ Address of Shareholder _____________________________________________________________ Number of Shares Held _____________________________________________________________ Signature

ADMISSION C ARD Please admit the Shareholder named on this Card or his duly appointed proxy to the Annual General Meeting of the Company to be held on Monday, March 31, 2014 at the Grand Ballroom, Lagos Oriental Hotel, 3 Lekki Road, Lagos. This admission card must be produced by the Shareholder in order to gain entrance into the Annual General Meeting.

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ANNUAL REPORT 2013

shareholders e-service application form


Dear esteemed shareholder,
The E-shareholder data form below has been attached to this report for your use. Kindly fill in your details and return to the registrar. This will enable us to have your current information in our database.

Africa Prudential Registrars Plc


SHAREHOLDER E-SERVICE APPLICATION FORM
(*= Compulsory fields)
1. *SURNAME/COMPANY NAME:
Please tick against the company(ies) where you have shareholding

CLIENTELE

2. *FIRST NAME:
3. OTHER NAME:
4. SPOUSE' NAME:

5. *MOTHER'S MAIDEN NAME:

6. *E-MAIL:
7. ALTERNATE E-MAIL:
8. *MOBILE No.:

9. SEX: MALE

FEMALE

10. PHONE No. (HOME): 11. *POSTAL ADDRESS:

12. *CSCS CLEARING HOUSE No.: 13. NAME OF STOCKBROKER:


14. OCCUPATION: 15. NATIONALITY:

16. NEXT OF KIN:

E-SHARE REGISTRATION ACTIVATION MANDATE (Please tick the box below

) Please take this as authority to activate my account(s) on your 3iOP e-Share Registration Portal where I will be able to view and manage my investment portfolio online with ease.

BANK DETAILS FOR E-DIVIDEND MANDATE


Please take this as authority to credit my/our under-mentioned account with any dividend payment(s)/ lost/misplaced/stale/unclaimed dividend warrants due on my/our shareholding in the aforementioned company(ies).

17. *ACCOUNT NAME: 18. *BANK ACCOUNT NUMBER: 20. *AGE OF ACCOUNT:
Must be confirmed by the bank Must be NUBAN

19. *BANK:
*BANK'S AUTHORISED SIGNATURE & STAMP

DECLARATION
I hereby declare that the information I have provided is true and correct and that I shall be held personally liable for any of my personal details.

1. AFRICA PRUDENTIAL REGISTRARS PLC 2. ABBEY BUILDING SOCIETY PLC 3. AFRILAND PROPERTIES PLC 4. A & G INSURANCE PLC 5. ARM PROPERTIES PLC 6. A.R.M LIFE PLC 7. ADAMAWA STATE GOVERNMENT BOND 8. BECO PETROLEUM PRODUCTS PLC 9. BUA GROUP 10. BENUE STATE GOVERNMENT BOND 11. CAP PLC 12. CAPPA AND D'ALBERTO PLC 13. CEMENT COY OF NORTHERN NIG. PLC 14. CSCS PLC 15. CHAMPION BREWERIES PLC 16. COMPUTER WAREHOUSE GROUP 17. EBONYI STATE GOVERNMENT BOND 18. GOLDEN CAPITAL PLC 19. INFINITY TRUST SAVINGS & LOANS 20. INTERNATIONAL BREWERIES PLC 21. INVESTMENT & ALLIED ASSURANCE PLC 22. JAIZ BANK PLC 23. KEBBI STATE GOVERNMENT BOND 24. NEM INSURANCE PLC 25. NEXANS KABLEMETAL NIG. PLC 26. OMOLUABI SAVINGS AND LOANS PLC 27. PERSONAL TRUST & SAVINGS LTD 28. P.S MANDRIDES PLC 29. PORTLAND PAINTS & PRODUCTS NIG. PLC 30. PREMIER BREWERIES PLC 31. RESORT SAVINGS & LOANS PLC 32. ROADS NIGERIA PLC 33. SCOA NIGERIA PLC 34. TRANSCORP PLC 35. TOWER BOND 36. THE LA CASERA CORPORATE BOND 37. UAC OF NIG. PLC 38. UBA BALANCED FUND 39. UBA BOND FUND 40. UBA CAPITAL PLC 41. UBA EQUITY FUND 42.UBA MONEY MARKET FUND 43. UNITED BANK FOR AFRICA PLC 44. UNIC INSURANCE 45. UPDC 46. UTC NIGERIA PLC 47. WEST AFRICAN GLASS IND PLC
OTHERS: ______________________________ _____________________________________

Signature: ______________________

Signature : ______________________
for joint/corporate accounts only

LAGOS: 220B, Ikorodu Road, Palmgrove, Lagos. Tel: 01-4606460 | ABUJA: 11, Lafia Close, Area 8, Garki, Abuja. Tel: 09-2900873 PORT-HARCOURT: Plot 137, Oluobasanjo Road, (2nd floor), Port Harcourt, Rivers State. Tel: 084-303457 E-MAIL: info@africaprudentialregistrars.com | WEBSITE: www.africaprudentialregistrars.com

Africa Prudential Registrars

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ANNUAL REPORT 2013

Corporate Information
Company registration number Registered office Board of Directors RC 611238 38 Glover Road, Ikoyi, Lagos, Nigeria Mr. Tony O. Elumelu, CON Mr. Obinna Ufudo Olorogun Otega Emerhor, OON Mr. Kayode Fasola Alhaji Mohammed Nasir Umar Dr. Stanley Inye Lawson Mr. Chibundu Edozie Mr. Emmanuel N. Nnorom Chairman President/CEO

Auditors PricewaterhouseCoopers Chartered Accountants Plot 252E Muri Okunola Street Victoria Island, Lagos Bankers Company Secretary Registrars UBA Plc First Bank of Nigeria Plc Wema Bank Plc Keystone Bank Plc Fidelity Bank Plc First City Monument Bank Plc Africa Finance Corporation Mr. Chinedu N. Eze 38 Glover Road Ikoyi, Lagos Africa Prudential Registrars Plc 220B Ikorodu Road Palmgrove, Lagos

www.transcorpnigeria.com