Uac Of Nigeria Plc · NSENG:UACN
Uac Of Nigeria — EFG Hermes Conference 2021
46 slides from Uac Of Nigeria's conference presentation, March 2022
Slide 1: UAC of Nigeria PLC Investor Presentation
UAC of Nigeria PLC Investor Presentation March 2022
Slide 2: Disclaimer
Disclaimer 2 This presentation contains forward-looking statements which reflect management's expectations regarding UAC of Nigeria PLC, its subsidiaries and associate businesses (“UAC”, the “Company” or “Group”) future growth, results of operations, performance, business prospects, operating market
Slide 3: Contents
Contents 3 Overview 4 People 8 Structure 12 Growth 15 UAC Foods: New Factory Development 27 UACN 2021 financial snapshot 30 Outlook 35 Appendix 37
Slide 4: Overview
Overview
Slide 5: Introduction
Introduction 5 • UAC of Nigeria PLC (“UACN”) is a holding company organized around four verticals ― Packaged Food and Beverages ― Paints ― Quick Service Restaurants ― Animal Feed and Edible Oils • We also have minority interests in a real estate development business and a logistics business • Our ob
Slide 6: Overview of UACN's structure
Overview of UACN’s structure 6 HoldCo* • N4.3 billion in Cash2 • N2.3 billion in Eurobonds2 • N3.9 billion in Investment Property Assets2 Agro Allied Packaged Food Paints Quick Service and Beverages Restaurants Operating Core * * ▪ Non-controlling interests in two companies − MDS Logistics Limited,
Slide 7: Core to UACN's strength are its leading brands and distribution
Core to UACN’s strength are its leading brands and distribution 7 Brands Reach/ Monthly Sales ▪ 5 production facilities providing national coverage Agro-Allied ▪ 30 thousand metric tonnes output Packaged ▪ National distribution coverage Food and Beverages ▪ 35 million units of snacks, water and dair
Slide 8: People
People
Slide 9: HoldCo management focused on value creation
HoldCo management focused on value creation 9 Fola Aiyesimoju Funke Ijaiya-Oladipo Vitus Ezinwa Group Managing Director Group Finance Director Chief Operating Officer • Experienced finance professional and investor • Experienced finance professional • Experienced executive and HR professional • Prio
Slide 10: Leadership of key operating segments
Leadership of key operating segments 10 Alex Goma Gboye Adedeji Dele Ajayi Bolarin Okunowo Debola Badejo MD, Grand Cereals Limited MD, Livestock Feeds PLC MD, UAC Foods Limited MD, Chemical & Allied Products PLC MD, UAC Restaurants Limited Appointed: October 2019 Appointed: October 2019 Appointed: J
Slide 11: Focus on aligning management and shareholder interests
Focus on aligning management and shareholder interests 11 ▪ Our long-term growth and sustainable success hinges on our ability to attract and retain talent 1 ▪ In 2021, we changed our remuneration structure to link employee reward to long-term value creation HoldCo ▪ Key elements of the plan include
Slide 12: Structure
Structure
Slide 13: We have simplified UACN's structure
We have simplified UACN’s structure 13 • Our initial efforts to simplify our structure entailed the following ― Selling control of MDS Logistics Limited to Imperial Logistics ― Selling control of UPDC PLC, the real estate development company, to Custodian Investment PLC • We completed the following
Slide 14: We have also invested N2.3 billion in technology infrastructure
We have also invested N2.3 billion in technology infrastructure 14 ▪ Invested in our core information technology infrastructure and productivity tools and completed transition from on- premise, Office 2016 application, to Microsoft 365, an enterprise productivity tool ▪ Objective was to improve oper
Slide 15: Growth
Growth Enjoy Lip Smacking
Slide 16: Our primary focus is on trending above historical revenue growth
Our primary focus is on trending above historical revenue growth 16 Consolidated Group revenue in N billions (2016 – 2021) 101 CAGR: 2.72% 81 81 79 73 70 2016 2017 2018 2019 2020 2021 * * Unaudited result CAGR – Compound annual growth rate
Slide 17: Focusing on our core platforms and investing for the future
Focusing on our core platforms and investing for the future 17 Core operating Digital platform Subsidiaries in the Packaged Food and Recent investments in Beverages, Paints, Quick Service − A venture capital fund Restaurants, and Animal Feeds and − Kandua Edible Oils sectors − Touch and Pay Technolo
Slide 18: We have recorded growth in our core platforms
We have recorded growth in our core platforms 18 Animal Feeds & Other Edibles Packaged Food & Beverages 33.03% 21.95% 21.04% 16.26% 15.69% 4.64% FY16-21 Average 9% 12.68% 8.29% 8.29% FY16-21 1.76% Average 9% -23.72% -8.74% FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2016 FY 2017 FY 2018 FY 20
Slide 19: Packaged food and beverages segment
Packaged food and beverages segment 19 Overview FY 2021 financial highlights (in N million) • UAC Foods is a leading packaged food and beverages company Revenue Gross Profit • UAC Foods manages a family of brands across several product Water categories 21% Water 28% • Snacks: Gala and Funtime • Dair
Slide 20: Packaged food and beverages: Growth strategy
Packaged food and beverages: Growth strategy 20 Historical revenue (N billion) ▪ Approaching capacity, current factory cannot support future growth 24.4 ▪ Biggest strategic question relates to profitability at N50 Snacks price point ▪ The new variant launched at N100 to drive price point migration 1
Slide 21: Paints segment
Paints segment 21 Overview Value creation Chemical and Allied Products PLC • Expand mid-tier offering • #1 player by market share • Grow industrial category • Public company listed on the NGX; 56.5% UACN ownership Expand Range • Expand in-store tinting thus increasing the • Produces decorative and i
Slide 22: Paints segment: Colour centre evolution
Paints segment: Colour centre evolution 22 Old colour centre New colour centre Number of colour centres (2016 – 2021) 39 30 26 21 21 22 2016 2017 2018 2019 2020 2021
Slide 23: Quick services restaurants segment
Quick services restaurants segment 23 Overview Value creation • UAC Restaurants (UACR) pioneered QSR in Nigeria with the launch of Mr Bigg’s in 1986 • Piloted 5 company-owned stores earning annualised ROI of 39% (ahead of plan) • In addition to the Mr Bigg’s chain, UACR also operates the Debonairs •
Slide 24: Quick services restaurants segment
Quick services restaurants segment 24 Growth strategy Company owned stores • Ramp up store footprint (Traditional and Express) for Mr. Biggs and Debonairs Pizza. 50 • Develop digital and omni-channel capabilities through online delivery • Develop additional retail channels for bread, pastries and ma
Slide 25: Animal feeds and edible oils segment
Animal feeds and edible oils segment 25 Overview Value creation Grand Cereals Limited • Proactive pricing strategies to protect margin • Private company; 71% ownership • Expansion of oil capacity (higher margin product) • Produces animal feed, cereals, oils and dogfood Margins • Core brands: Vital F
Slide 26: Digital investments
Digital investments 26 UAC invested in technology and technology enabled businesses in 2021 ▪ Fund targeting US$30m to invest in 40-45 new investments (pre-seed and seed). Aim to invest in the best founders of Tech companies with potential to generate US$1m to US$3m in annual run rate revenue within
Slide 27: UAC Foods Limited New Factory Development
UAC Foods Limited New Factory Development
Slide 28: New snacks factory development overview
New snacks factory development overview 28 ▪ UAC Foods Limited currently produces its brands from three different factories − Snacks currently at 83% capacity utilization in FY2021, located in Ojota (Lagos State) − Water at capacity, located in Kerrang (Plateau State) − Dairy at 62% capacity utiliza
Slide 29: Benefits of moving to new factory site
Benefits of moving to new factory site 29 ▪ Ability to invest in new sausage roll brands to consolidate Gala’s leading market New Product position Development ▪ Opportunity to explore new product development in future ▪ Increased opportunity for future Gala growth due to eliminated space constraints
Slide 30: 2021 financial snapshot
PN sh 2021 financial snapshot \ Ww
Slide 31: 2021 Full year and Q4 results (unaudited)
2021 Full year and Q4 results (unaudited) 31 Operating Free Cash Return on Revenue EPS1 Profit Flow Invested Capital1 FY FY FY FY FY ₦101bn ₦5.8bn 83 kobo (₦18.9bn) 9.1% +24.3% +59.9% +18.1% (₦15.9bn) +311 bps vs FY 2020 vs FY 2020 vs FY 2020 vs FY 2020 vs FY 2020 Q4 Q4 Q4 Q4 Q4 ₦29.7bn ₦3.6bn 86 ko
Slide 32: Balance sheet and liquidity (unaudited)
Balance sheet and liquidity (unaudited) 32 Net Assets Net Cash Net Capex Cash Cycle ₦51.6bn (₦8.4bn) ₦3.0bn 138 days (₦9.3bn) (₦28.4bn) (₦1.4bn) +36 days vs Dec 2020 vs Dec 2020 vs Dec 2020 vs Dec 2020
Slide 33: Escalation of key production input costs
Escalation of key production input costs 33 Animal Feed Paints Maize Soya Bean Resin Titanium Dioxide Food 208 216 151 151 100 100 100 100 2020 2021 2020 2021 2020 2021 2020 2021 Flour Vegetable Oil Skimmed Milk Sugar 161 261 105 210 100 100 100 100 2020 2021 2020 2021 2020 2021 2020 2021
Slide 34: Impact on gross margin partially offset by operational efficiency
…impact on gross margin partially offset by operational efficiency 34 Gross Profit Margin (%) for Operating Segments FY 2020 vs FY 2021 FY 2020 39.9% 39.4% FY 2021 32.8% 24.6% 21.1% 12.1% 13.0% 11.3% Animal feeds & Paints Packaged food & beverages QSR other edibles Operating Expenses Trend for Opera
Slide 35: Outlook
Outlook
Slide 36: Outlook
Outlook 36 • Continued focus on simplicity • Complete implementation of SAP S/4 Hana • Drive profitable growth • Learn from digital investments • Execute new snacks factory
Slide 37: Appendix: Recent changes to simplify UACN's structure
Appendix 1 Recent changes to simplify UACN’s structure
Slide 38: Structure: Processed Merger of CAP and Portland Paints
Structure: Processed Merger of CAP and Portland Paints 38 ▪ On 26 October 2020, Chemical and Allied Products PLC (“CAP PLC”) and Portland Paints and Products Nigeria PLC 1 (“Portland Paints”) announced their intention to merge their respective businesses ▪ Merger was completed and became effective o
Slide 39: Structure: Distributed UPDC REIT units to UAC shareholders
Structure: Distributed UPDC REIT units to UAC shareholders 39 ▪ In March 2021, UACN announced the decision to unbundle the Company’s 24.34% interest comprised of 649 million units in 1 UPDC Real Estate Investment Trust (UPDC REIT) to UACN’s shareholders via a Scheme of Arrangement ▪ The allocation r
Slide 40: Structure: Acquired UAC Foods' minority interest from Tiger Brands
Structure: Acquired UAC Foods’ minority interest from Tiger Brands 40 ▪ In August 2021, UACN signed a binding agreement to acquire Tiger Brands Limited’s minority shareholding (49%) 1 in UAC Foods Limited ▪ The transaction was completed in September 2021 in line with UACN’s strategic objectives Expe
Slide 41: Appendix: Additional financial information
Appendix 2 Additional financial information
Slide 42: Income statement
Income statement 42 ₦ mn, unless otherwise stated Q4 2021 Q4 2020 D% FY 2021 FY 2020 D% Revenue 29,739 23,560 26.2% 101,107 81,358 24.3% Gross Profit 5,176 4,595 12.6% 17,534 15,990 9.7% Gross Profit Margin (%) 17.4% 19.5% (210 bps) 17.3% 19.7% (231 bps) Operating Profit 3,614 1,580 128.7% 5,751 3,5
Slide 43: Performance Snapshot – FY 2021
Performance Snapshot – FY 2021 43 Revenue Profit Before Tax N mn FY 2021 FY 2020 D% N mn FY 2021 FY 2020 D% Animal Feeds & Other Edibles 62,731 54,224 15.7% Animal Feeds & Other Edibles 1,220 1,747 (30.2%) Paints 15,052 10,425 44.4% Paints 1,530 1,470 4.1% Packaged Food & Beverages 23,751 17,853 33.
Slide 44: Financial Position – December 2021
Financial Position – 31 December 2021 44 Summary Balance Sheet Working Capital N mn Dec-21 Dec-20 D% N mn Dec-21 Dec-20 D% Non current Assets 39,341 40,986 (4.0%) Inventory 36,370 20,123 80.7% Current Assets 59,449 50,443 17.9% Trade Receivables 1,129 2,701 (58.2%) Other Assets 246 269 (8.6%) Trade
Slide 45: Net Debt Position
Net Debt Position 45 Net (Debt)/Cash Position as at 31 Dec 2021 (in ₦ mn) Net Intra-Group (Debt)/Cash Cash & Cash Short-Term Long-Term Net Debt (excl. Receivable / (incl. Intra- Equivalents Debt Debt Intra-Group) (Payable) Group) UAC Company 4,290 - - 4,290 2,278 6,568 Other Operating Segments 6,710
Slide 46: Cash Flow
Cash Flow 46 PBT to Free Cash Flow ₦ mn, unless otherwise stated Q4 2021 Q4 2020 FY 2021 FY 2020 Profit Before Tax from continuing operations 3,216 2,647 4,594 5,121 Profit/ (Loss) before tax from discontinued operations - 30 (2) 544 Non-Cash charges & other (1,089) 37 1,562 (1,730) Changes in worki