H1 2019/20 Analyst Presentation October 2019 Agenda FMN in H12020 - PowerPoint PPT Presentation

Flour Mills of Nigeria Plc H1 2019/20 Analyst Presentation October 2019

Agenda FMN in H1’2020 1 Financial Results 2 Business Outlook 3 2

FMN in H1‘2020 1 3

H1’19/20 Overall Highlights H1 19/20 Key Highlights Overall volume and profit growth behind strong Agro-Allied and Sugar performance in an overall flat market Golden Penny – An Iconic food brand in Nigeria • 1.9% overall GDP growth in Q2 2019 with manufacturing sector declining by -0.1% Diverse portfolio - over 28 products • 6% overall year to date volume growth vs last year for the FMN Group serving businesses and consumers • Agro-Allied turn around continues with strong improvements in Animal Feed and Fertilizer • Sugar continues to deliver solid results • Bread flour and Ball foods continues to be under pressure whereas Pasta and Noodles showed double digit volume growth in Q2 • Stable currency around N362/$1 and availability of USDs 4

Product Mix Providing high-quality and affordable products which meet the needs and preferences of our consumers every day remains our priority Products introduced in H1 2020 5

Financial Results 2 6

H1’19/20 Financial Highlights H1 19/20 Key Highlights Improvement in PBT due to strong performance in the Sugar and Agro- Allied segments plus reduced financing costs Golden Penny – An Iconic food brand in Nigeria • PBT grows to N8.6bn in H1 ’ 19/20 Diverse portfolio • H1 ’ 19/20 revenue remains flat vs last year at N270.8bn with Sugar, Agro- - over 28 products serving businesses allied and Pasta offsetting a challenging Bread flour market and consumers ➢ 6% volume growth vs last year ➢ Gross margin of 11.7%, broadly in line with last year • Lower interest rates result in 21% drop in finance costs compared to H1 ’ 18/19 • Improvements in the Agro-Allied Division continues with PBT at break-even (compared to N2.9bn loss last year) 7

Financial Performance snapshot H1 19/20 Key Highlights 16% improvement in after tax results Golden Penny – An Iconic food Statement of Profit or Loss (₦ Billions) brand in Nigeria H1'19/20 H1'18/19 % Change Diverse portfolio - over 28 products Revenue 270.8 269.7 0 serving businesses Cost of sales (239.0) (237.6) 1 and consumers Gross profit 31.8 32.1 (1) Operating expenses (15.0) (14.0) 7 Net operating gains / (losses) 0.0 1.1 (96) Operating profit 16.8 19.2 (13) Investment income 0.7 0.3 126 Finance cost (8.8) (11.2) (21) Profit before tax 8.6 8.3 4 Income tax expense (2.7) (3.2) (16) Profit for the period 5.9 5.1 16 8

Segment Financials H1 19/20 Key Highlights Agro-Allied restructuring and continued growth in Sugar drives overall profit growth Golden Penny – An Iconic food Segment Revenue (₦ Billions) Segment Profit before Tax (₦ Billions) brand in Nigeria H1'19/20 H1'18/19 % Change H1'19/20 H1'18/19 % Change Diverse portfolio Food 170.0 173.5 (2) 4.7 - over 28 products 8.8 (47) serving businesses Agro Allied 49.4 47.0 5 (0.1) (2.9) 95 and consumers Sugar Value chain 44.9 39.0 15 3.5 2.4 48 Support services 6.4 10.2 (37) 0.6 0.0 Total 270.8 269.7 8.6 8.3 • Food revenues impacted by lower volumes in Bread flour and Ball foods; whereas Pasta and Noodles are growing in base products and behind value brands • Agro-Allied segment driven by strong performance in Animal feed and Fertilizer plus stabilization of the Farms behind the new strategy • Sugar business continues to show strong results behind volume growth • Support Services (primarily packaging business) shows resilient margins with lower material costs 9

Financial Performance H1 19/20 Key Highlights Reduced finance costs and strengthened earnings per share Earnings per share (Kobo) Returns to shareholders Interest coverage 153K 3.9% 3.9% 11.2 8.8 125K 1.5% 1.2% 1.9x 1.7x H1'18/19 H1'19/20 H1'18/19 H1'19/20 H1'18/19 H1'19/20 Finance cost Interest coverage ratio ROA ROE • Group PAT grows to N5.9bn from N5.1bn in previous year. • Stable return on equity coupled with improved return on assets in H1’19/20. • Balance sheet optimization results in a 21% decrease in finance costs, relative to H1’18/19. 10

Leverage position H1 19/20 Key Highlights More efficient capital structure resulting in improved leverage ratios Borrowing mix (%) Leverage Ratios (x) 2.7 2.6 32% 49% 68% 0.8 0.7 51% H1'18/19 H1'19/20 H1'18/19 H1'19/20 Short term debt Long term debt Net debt to Equity Total Assets to Equity 11

Cash Flow H1 19/20 Key Highlights 13bn of cash generated in the year with a closing cash balance of 20bn Golden Penny – An Iconic food brand in Nigeria Statement of Cash Flow (₦ Billions) H1'19/20 H1'18/19 Change - ₦ bn Net cash from operating activities 29.0 39.7 (10.8) Capex (8.7) (8.9) 0.2 Other investing activities 1.4 0.4 0.9 Net cash from investing activities (7.3) (8.5) 1.2 Net borrowings 5.2 7.1 (1.9) Other financing activities (13.8) (15.3) 1.6 Net cash from financing activities (8.5) (8.2) (0.3) Net cash flow for the period 13.1 23.1 (9.9) Cash at beginning of the period 7.6 2.3 5.2 Cash at end of the period 20.7 25.4 (4.7) 12

Business Outlook 3 13

Outlook H1 19/20 Key Highlights Golden Penny – An Iconic food • Food segment will continue to focus on quality, the B2C channels and brand in Nigeria product offerings at the right price points. Moderation in material costs is expected to continue until the end of the year. • Growth in the key Agro-Allied segments (animal feed, fertilizer and cassava) is foreseen to continue • Overall focus on operational efficiencies and cost optimization across the Group will continue throughout the year and beyond • Active balance sheet management will continue, with the objective of reducing financing costs during the year 14

Disclaimer H1 19/20 Key Highlights Golden Penny – An Iconic food This presentation contains forward-looking statements with regard to the financial position and results of brand in Nigeria the activities of Flour Mills of Nigeria Plc (“FMN Plc”) . These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements. Many of these risks and uncertainties relate to factors that are beyond FMN Plc’s ability to control or estimate precisely, such as future market and economic conditions, the behaviour of other market participants, changes in consumer preferences, costs of raw materials, interest rate and foreign exchange fluctuations, change in tax rates, changes in law, changes in pension costs, the actions of government regulators and weather conditions. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this presentation. FMN Plc does not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of these materials. Market share estimates contained in this presentation are based on outside sources in combination with management estimates. 15

H1 19/20 Key Highlights Golden Penny – An Iconic food brand in Nigeria 16

Appendix Golden Penny – An Iconic food H1'19/20 FY'18/19 brand in Nigeria ASSETS Non-current assets 234.4 236.6 Current assets 154.2 180.3 Total assets 388.5 416.8 LIABILITIES Non-current liabilities 95.2 81.2 Current liabilities 141.4 184.6 Total liabilies 236.6 265.8 Total equity 151.9 151.0 Total liabilities and equity 388.5 416.8 Long-term borrowing 60.0 46.2 Short-term borrowing 62.6 71.1 Bank overdraft 0.0 9.7 Other non-current liabilties 35.3 35.0 Other current liabilties 78.8 103.9 17