November 19, 2013/NSE
Transcorp Plc has notified The Exchange of a letter written by its Chairman Tony O. Elumelu, CON, to its shareholders as follows:
Dear Fellow Shareholder,
You will recall that your Company recently raised additional capital, through a Rights Issue, in order to accelerate our bold growth strategy.
I am writing to thank you for your support and to report that we are already seeing the first fruits of our plans to deliver value. Significant recent successes include:
The acquisition of the 1000MW capacity Ughelli Power Plc through our subsidiary – Transcorp Ughelli Power Ltd (TUPL). TUPL paid $300m for 100% ownership of the Plant. On November 1, 2013, TUPL successfully took over ownership and physical possession of the plant. We will significantly raise output, from the current 160MW to at least 1,500MW, over the next 3-5 years.
With a dedicated pipeline supplying gas to the plant and a long term off-take agreement, with the Bulk Electricity Trader, the return profile of this investment is compelling. The potential impact of the investment on Transcorp’s fortunes is significant. Equally important is the impact of secure and sustainable power generation on the living standards of all Nigerians. We are proud of the leading role that your company is able to play in the transformation of a sector critical to enabling Nigeria achieve her true potential.
The signing of an agreement with Hilton Worldwide, to commence the development of a 300 room five-star hotel in Ikoyi, Lagos, complementing our flagship Transcorp Hilton in Abuja. This project will be the first of eight internationally-branded hotels that we plan to build over the next five years. Construction will begin in Q1 2014 and will be completed within 30 months.
We have also completed the acquisition of a site in Port Harcourt for the development of another 300 room five star hotel. We expect to sign the management agreement in Q1, 2014 and commence construction by the second quarter. Nigeria is dramatically underserved in the hospitality sector, and we see many opportunities to bring world class facilities to our guests from home and abroad.
We also commenced the renovation and upgrade of the Transcorp Hilton, Abuja, Nigeria’s premier five-star hotel. As well as a dramatic transformation of our existing facilities, this project will also see the addition of a 5,000 seat capacity conference facility and 200 serviced luxury apartments to the hotel, firmly cementing our position as the destination venue in the Nation’s capital, Abuja.
The commencement of production of orange, mango and pineapple concentrates from the Teragro-Benfruit plant in Makurdi, Benue State. 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 significantly increase the size and scope of this business. Teragro is the only juice concentrate producer in Nigeria and we are creating a fully integrated agro-allied business, ensuring that value added processing occurs here in Nigeria.
We continue to develop our oil and gas strategy, with our existing oil block, OPL 281, expected to begin production before the end of 2014. 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 that directly links Nigeria’s natural resource wealth to the daily needs of our people.
These successes, which are the products of the recent transformation in your company, will begin to contribute to our bottom line from November 2013. We were delighted to announce that in the nine month period ended September 30, 2013, your company recorded profits before tax of N5.1bn, a 30% increase over the total profit for the whole of the 2012 financial year.
Looking forward, your Company will continue to create and grow value in our chosen core business areas of Oil & Gas, Power, Agriculture and Hospitality, through strategic investments, acquisitions and business turn around under pinned by our watchwords of Execution, Excellence, and Entrepreneurship. Likewise, we remain committed to identifying and transforming underperforming businesses, in other sectors, which we believe are critical to our nation's growth.
We thank our current, over 300,000 strong, indigenous shareholders, for their support and look forward to welcoming many more to join in our success. We will not relent in positioning Transcorp as a true vehicle for popular participation in Nigeria's bright future and prosperity.