There is no doubt saying that UAC of Nigeria plc has a rich and varied history of successful enterprise that pre-dates the geographical entity called Nigeria. The company has evolved through a series of mergers and acquisitions and restructuring as the various entrepreneurs sought to enthrone profitable and enduring enterprises.
Today, UAC of Nigeria (UACN) is a leading diversified company, operating in the food and beverages, real estate, paint and logistics sectors of the economy.
With a mission to grow its top-line at twice the rate of GDP growth in Nigeria at a blended Earnings Before Interest and Taxes (EBIT) profitability of 15 percent. UACN, which is listed as a conglomerate, has interests in 10 subsidiaries spanning four key verticals, plus a closed pension fund administrator.
Today, the firm has defined its holding company (HoldCo structure) as a model consisting of a corporate centre overseeing a portfolio of interests across four key verticals – Food and Beverage, Real Estate, Paints, and Logistics.
Subsidiaries under the Food and Beverages are: Grand Cereals Limited, UAC Foods Limited, UAC Restaurants Limited, Livestock Feeds plc, and Warm Spring Waters Nigeria Limited, while under the Real Estate is UPDC plc. Also, there is CAP plc (under Paints) and MDS Logistics plc (under logistics).
In an overview of the company’s business in 2013, Larry Ettah, group managing director/CEO, UACN Plc, noted that in 2013 UACN acquired controlling stake in Livestock Feeds; acquired controlling stake in Portland Paints, while MDS Logistics completed partnership arrangement with Imperial Logistics.
He further noted that in 2013, UAC Restaurants partnered Famous Brands; UPDC completed REIT; listed on the NSE; JVP put GM Nigeria into liquidation; and there was sale of 100 percent stake in UAC Registrars Limited to African Prudential Registrars.
Looking at the financial performance of UACN for the year ended December 31, 2013, the company reported revenue growth of 13 percent to N78.714 billion, from N69.632 billion in corresponding year 2012.
Gross profit dropped by 1 percent to N18.836 billion, from N19.049 billion in 2012. Operating profit rose 32 percent, to N15.267 billion, from N11.526 billion in 2012. Profit before taxation (PBT) rose 30 percent to N14.010 billion, from N10.745 billion. Profit from continuing operations rose by 41 percent to N9.948 billion from N7.041 billion in 2012.
UAC has proposed a dividend of N1.75 (representing dividend payout of N3.36bn).
According to Ettah, this represents a growth of 31 percent and a yield of 3.21 percent (based on prices as of March 31, 2014). The dividend payout shows consistent growth over the past two years. For instance, in 2011, the company paid dividend worth N2.401 billion, while in 2012, it paid N2.561 billion.
With authorised share capital of 2 billion, its issued and fully paid share capital rose from 1,600,719,580 in 2011 to 1,600,719,580 in 2012, and 1,920,864,064 in 2013.
On the financial performance of the company, Abdul Bello, chief finance officer, UACN, noted that its turnover was up 13 percent, linking the key drivers of this growth to Grand Cereals (+19%) and CAP (+18%). He said UACN’s gross margin was down 1 percent on the back of input cost pressures in certain categories. “Finance costs was up due to increased short-term borrowing (rates); profit before tax (PBT) drivers include UAC Restaurants (N292m profit versus loss of N99m in the corresponding year), CAP (+26%), UPDC (+51%), other gains,” the CFO noted.
While review the financial position of the company, Bello added that non-current assets rose “on account of capacity expansion in Snacks and Animal Feed categories as well as recognition of Goodwill on acquisitions.
“Cash was down due to investment in capacity expansion, payment for acquisition of new subsidiaries and de-recognition of UAC Registrars. Long-term borrowings were down following scheduled repayment (short-term borrowings up). Increase in share capital was attributable to scrip issue of 1 for 5 declared during 2013. Non-controlling interest was up on the back of part divestments of MDS Logistics and UAC Restaurants,” he said.
Joe Dada, executive director, corporate services, UACN, said North-East region remained a major challenge to the company due to security concerns.
“Eastern market remains highly competitive. Input costs hike in feed category persists. Volume ramp and profitable innovation are being pursued to mitigate margin squeeze. Quick Service Restaurant (QSR) business delivers steady recovery and growth prospects with Famous Brands’ partnership. Increased MGR (Mass Grocery Retail) offers new opportunities for foods segment,” Dada stated.
Accordingly, he noted projects delivered in 2013. This include: Grandville – GRA, Ikeja (18-unit townhouse estate); Metro-gardens – Lekki (55-unit estate), and Cameron Green – Ikoyi (32-unit estate). On REIT update, dividend distribution is planned for June 2014, Dada disclosed.
Iheanyi Nwachukwu
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