UAC of Nigeria PLC Group Results Presentation Full Year 2015
Important Notice This presentation contains or will contain forward-looking statements which reflect management's expectations regarding the Company's future growth, results of operations, performance, business prospects and opportunities. Wherever possible, words such as "anticipate", "believe", "expects", "intend" "estimate", "project", "target", "risks", "goals" and similar terms and phrases have been used to identify the forward-looking statements. These statements reflect management's current beliefs and are based on information currently available to management. Certain material factors or assumptions have been applied in drawing the conclusions contained in the forward-looking statements. These factors or assumptions are subject to inherent risks and uncertainties surrounding future expectations generally. UAC of Nigeria cautions readers that a number of factors could cause actual results, performance or achievements to differ materially from the results discussed or implied in the forward-looking statements. These factors should be considered carefully and undue reliance should not be placed on the forward-looking statements. For additional information with respect to certain of these risks or factors, reference should be made to the Company s disclosure materials filed from time to time with Securities & Exchange Commission in Nigeria. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. 2
Contents 1 Overview of the business in FY 2015 Larry Ettah GMD/CEO 2 2 Financial Performance review Abdul Bello CFO 3 3 Summary & outlook Larry Ettah GMD/CEO 3
Contents 1 Overview of the business in FY 2015 Larry Ettah GMD/CEO 2 2 FINANCIAL Performance review Abdul Bello CFO 3 3 Summary & outlook Larry Ettah GMD/CEO 4
Presentation Overview Tough operating environment in 2015 but we held our market positions 6
Operating Environment of 2015 GDP growth down to 3% in 2015 (6.2% 2014) Parallel Market FX Rates - N191/1$ (2014), N266/1$ (2015) Inflation at 9.6% (7.9% 2014) Political uncertainty, delayed transition and stability of new Government/ Cabinet Insecurity in the North; national petroleum product shortages Macro-economic challenges; Government revenue falls and build-up of arrears of public servants wages All led to reduced consumer purchasing power Outbreak of Avian Influenza across two-thirds of the States of Nigeria led to significant reduction in bird population & weak poultry feeds demand Turmoil in the Oil & Gas Industry, volatility in Capital market and decline in general commercial activities led to a soft Real Estate and Paints markets 7
VISION To be number one in our chosen markets, providing exceptional value to our customers MISSION To grow our top-line at twice the rate of GDP growth in Nigeria at a blended EBIT profitability of 15% OUR VALUES 1. Our Customers are our Focus 2. We act with Respect for the Individual 3. We act with Integrity in everything we do 4. Team spirit will give us good success 5. Innovation for business sustenance and value creation 6. We are Open and Communicate with our people DESIRED OUTCOME Adding value to the lives of our stakeholders 8
Group Structure Snacks/Beverages QSR Animal Feed/Edible Oil/Maize Meal Animal Feed UAC Foods LTD (51%) UAC Restaurants LTD (51%) Grand Cereals LTD (64.9%) Livestock Feeds PLC (51%) Foods Paints Real Estate Logistics Pension Administrator CAP PLC (50.18%) Portland Paints and Products Nigeria PLC (64.7%) UPDC PLC (46%) MDS Logistics LTD (51%) UNICO CPFA (87%) 9
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Operations Review Turnover down 14% Bird flu and egg glut impacted poultry volumes Launched Vital Gold, Aqua Boom & Farmers fish feed Fish feed volume growth Insecurity in the North continued to impact sales as well as oilseeds and grains availability Forex shortages and elevated input costs impacted margins Turnover down 4% due reduced consumer spend Increased input prices impacted margins Northern operations hindered by security challenges Turnover down 12% Insecurity impacting operations in the North Cold chain logistics and Power shortages are key challenges Macro-economic challenges impacting footfall 11
Operations Review Turnover up 13% on the back of new Ikeja mill & introduction of Aquamax Fish feed Rationalised Benin-City factory; toll milling from Grand Cereals Onitsha plant Rising input costs and grains and oilseeds shortages Egg glut & later Bird Flu outbreak impacted volumes Turnover up 1% Launched Dulux TV Commercial High cost of input materials impacted margins Decline in consumer spend impacted volumes Delayed forex allocations Turnover down 23% Restructured Sales model & impaired debts and inventory associated with old model and exit from Sanitary wares Operating environment Oil & Gas, Construction impacted volumes 12
Operations Review Turnover down 56% Property market remains soft Rising interest rates impacting margins Festival Mall opened for business Turnover up 1% Increased client base but overall client volume decline Major fire at Abuja Pharmaceutical warehouse; quickly rebuilt and trading Warehouse expansion/modernization at Abuja, Sokoto and Acme locations Portfolio optimisation of service offerings to clients 13
Performance of Key Subsidiaries UAC Foods (N Million) UAC Restaurants (N Million) 15,143 14,550 2014 2015 1,221 1,078 2014 2015 1,463 1,434 108 Turnover PBT Turnover PBT -134 Grand Cereals (N Million) Livestock Feeds (N Million) 35,813 30,620 2014 2015 7,914 8,963 2014 2015 2,925 2,041 361 280 Turnover PBT Turnover PBT 14
Performance of Key Subsidiaries CAP (N Million) Portland Paints (N Million) 6,988 7,057 2014 2015 2,798 2,168 2014 2015 2,442 2,572 105 Turnover PBT Turnover PBT -332 UPDC (N Million) MDS (N Million) 11,701 2014 2015 4,836 4,860 2014 2015 5,121 3,541 1,501 1,026 56 Turnover PBT Turnover PBT 15
Update on Capital Raise UAC Group UPDC Proposal for Private Placement of Preference Shares was not approved by the Shareholders Approved Rights Issue of 1 for 12 aborted due to weak equity market Rights Issue of 2 for 3 in process. To raise approximately N5.6 billion Commercial Paper Program of N24 billion in process Livestock Feeds Rights Issue of 1 for 2 in process. To raise approximately N1.1 billion Portland Paints Rights Issue of 3 for 2 in process. To raise approximately N2 billion UAC will subscribe to the subsidiary Rights Issues using internally generated funds 16
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Outline 1 Overview of the business in 1h 2015 Larry Ettah GMD/CEO 2 2 FINANCIAL Performance review Abdul Bello CFO 3 3 Summary & outlook Larry Ettah GMD/CEO 18
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Key Performance Highlights Financial Performance Group Company 2015 2014 2015 2014 Turnover 73,145 85,654 821 929 Gross Profit 16,565 19,183 821 929 EBIT 7,607 12,394 2,684 3,941 PBT 7,944 14,097 4,162 5,341 2015 2014 2015 2014 Financial Position Cash (N'm) 9,183 7,957 3,431 2,855 Borrowings (N'm) 25,649 28,295 - - Total Assets (N'm) 128,655 130,361 27,572 26,474 Total Liabilities (N'm) 54,513 55,283 5,987 5,031 Net Assets (N'm) 74,142 75,078 21,585 21,443 2015 2014 2015 2014 Performance Ratios Gross Margin 23% 22% 100% 100% EBIT Margin 10% 14% 327% 424% PBT Margin 11% 16% 507% 575% ROE 7% 15% 16% 20% Gearing 0.35x 0.38x - - 20
Statement of Profit or Loss Continuing Operations Group Company 2015 2014 2015 2014 N'M N'M N'M N'M Revenue 73,145 85,654 821 929 Cost of sales (56,580) - (66,472) - - - Gross profit 16,565 19,183 821 929 Dividend income - - 3,216 3,534 Selling and distribution expenses (3,319) (3,629) - - Administrative expenses (6,882) (6,551) (1,515) (1,479) Other gains 1,959 3,464 343 1,028 Other losses (716) (73) (181) (71) Operating profit 7,607-12,394-2,684 3,941 Net finance (cost) / income (1,451) (1,276) 1,478 1,400 Share of profit of equity accounted associate 1,787-2,979 - - - Profit before taxation 7,943 14,097 4,162 5,341 Taxation (2,797) (3,366) (659) (1,028) Profit from continuing operations 5,147 10,730 3,503 4,313 Profit from discontinued Operations 38 214 - - Profit for the year 5,185-10,944-3,503 4,313 Profit attributable to Parent 2,997 6,536 3,503 4,313 Profit attributable to NCI 2,188 4,409 - - Comments Revenue decline largely on account of drop in sales in UPDC (N6.2 billion) and Grand Cereals (N5.7 billion) Other gains Reduction in gains on fair valuation of UPDC properties Other losses Impairment of Assets in UPDC Hotels and decline in property valuation at Holdco Share of Profit in Associate REIT measurement period; 19 months in 2014 vs 12 months in 2015 Taxation relatively up on account of back duty taxes post-restructuring 21
Statement of Financial Position Group Company 2015 2014 2015 2014 N'M N'M N'M N'M PPE 35,439 36,613 858 852 Investment property 20,035 19,924 2,985 3,199 Investments in associates 21,208 19,101 - - Investments in subsidiaries - - 11,641 11,641 Trade and other receivables 14,594 15,950 8,572 7,815 Cash and short-term deposits 9,183 7,957 3,431 2,855 Other Assets 28,195 30,816 85 113 Total Assets 128,655 130,361 27,572 26,474 Long-term borrowings 8,126 7,737 - - Short-term borrowings 17,523 20,558 - - Trade and other payables 14,941 13,961 629 908 Other liabilities 13,923 13,026 5,358 4,123 Total Liabilities 54,513 55,283 5,987 5,031 Equity - Parent 44,588 44,968 21,585 21,443 NCI 29,554 30,110 - - Total Equity 74,142 75,078 21,585 21,443 Total Equity & Liabilities 128,655 130,361 27,572 26,474 22
Group Trend Analysis Turnover (N M) Operating Profit (N M) 15,192 78,714 85,654 73,145 59,638 69,632 11,526 12,394 7,715 7,607 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 Turnover trend in 2015 reflects the challenge of the environment and the consumer 23
Group Trend Analysis EPS (Kobo) DPS (Kobo) 257 291 340 160 175 175 100 156 2012 2013 2014 2015 2012 2013 2014 2015 Dividend cut bolsters our capital position 24
Group Trend Analysis Gearing/Current Ratio ROE 1.22 1.16 1.25 1.19 14% 15% 12% 0.50 0.36 0.38 0.35 7% 2012 2013 2014 2015 Current Ratio Gearing 2012 2013 2014 2015 25
Turnover by Segment FY 2015 FY 2014 Logistics 6% Real Estate 9% Logistics 6% Real Estate 14% Paints 13% Food & Bev 71% Paints 10% Food & Bev 70% Turnover contribution for Real Estate segment down 5%; Paints is up 3% 26
PBT by Segment FY 2015 FY 2014 Logistics 14% Others 2% Food & Bev 50% Real Estate 28% Others 1% Food & Bev 39% Paints 34% Logistics 12% Paints 20% Paints contribution to PBT was 34%; Foods is up 11%, both on account of decline in UPDC 27
Segment Analysis Turnover (N M) Gross Margins 60,091 55,212 50% 49% 36% 36% 29% 11,701 5,121 4,836 4,860 9,786 9,225 17% 16% 16% Foods Real Estate Logistics Paints Foods Real Estate Logistics Paints 28
Segment Analysis PBT Margins 30% 31% 21% 28% 25% 8% 6% 1% Foods Real Estate Logistics Paints 29
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Outline 1 Overview of the business in FY 2015 Larry Ettah GMD/CEO 2 2 FINANCIAL Performance review Abdul Bello CFO 3 3 Summary & outlook Larry Ettah GMD/CEO 31
Outlook FY 2016 Planned Government spend will be inflationary but same should improve purchasing power of consumers Forex shortages and Government focus on Agriculture should be supportive of our animal feed businesses Government focus on Housing development should be supportive of our Real estate and Paints businesses Planned reintroduction and passage of Petroleum Industry Bill should be supportive of our marine coatings segment of the Paints business Forex shortages and exchange rate volatility will persist leading to input material shortages and rising input prices We will achieve growth through strong execution of our strategic thrusts 32
Our 2016 Priorities 1 Innovation Fast-track innovation in manufacturing units Introduce new products in key categories 2 Talent Management Resourcing & Human Capacity building 3 Resource Optimisation Asset and yield optimisation Drive for greater efficiency especially in supply chain Cost optimisation SAP ERP Benefit Realisation 4 Strategic Restructure financing of UPDC, Livestock Feeds & Portland Paints Pursue greater integration of Livestock & Portland Route to market redefinition 33