UAC of Nigeria Plc FY 2019 and Q1 2020 Results Fola Aiyesimoju - - PowerPoint PPT Presentation

UAC of Nigeria Plc

FY 2019 and Q1 2020 Results

Fola Aiyesimoju – Group Managing Director Ibikunle Oriola – Group Finance Director

This presentation contains 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 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 forward-looking

• statements. These factors or assumptions are subject to inherent risks and uncertainties surrounding future

expectations generally. UAC of Nigeria Plc cautions readers that several factors could cause actual results, performance or achievements to differ materially from the results discussed or implied in forward-looking

• statements. These factors should be considered carefully, and undue reliance should not be placed on

forward-looking statements. For additional information with respect to certain risks or factors, reference should be made to the Company’s disclosure materials filed from time to time with the Securities and Exchange Commission in Nigeria. The Company disclaims any intention or obligation to update or revise any forward- looking statements, whether because of new information, future events or otherwise.

2

Disclaimer

Operating Environment 4 Key Developments 7 Financial Review 12 Segment Performance 22 Outlook 25 Appendix 27

Contents

3

Operating Environment

UAC’s response to COVID-19

• Nigeria, along with the rest of the world continues to struggle with the impact of COVID-19 (the “Pandemic”), which is first and foremost a

healthcare and humanitarian disaster

• We at UAC of Nigeria Plc (“UAC”) have assessed the Pandemic’s impact on our people, businesses and communities, taking urgent action

to protect the health and safety of our employees and stakeholders

• We have instituted business continuity plans to ensure operations run smoothly and monitor these daily
• We expect COVID-19 to significantly impact the operating landscape in a number of ways
• Economic contraction, with Nigeria expected to enter a recession in 2020
• Collapse in oil prices expected to put pressure on the Naira, with the Central Bank of Nigeria already effecting a 15% adjustment of

the official rate from ₦307 to ₦360 in March 2020

• Consumer demand will be constrained, with the non-essential products and services disproportionately impacted
• Supply chain and operational disruptions and delayed capital investments
• Across our portfolio, we have conducted stress tests under various scenarios focusing on health and safety readiness, liquidity and cash

flow, raw material availability, production planning, demand estimates and cost optimization

• We have taken operational and strategic decisions to improve the resilience of our businesses
• We continue to play our role as good corporate citizens, contributing to efforts to combat the Pandemic and alleviate its economic

impact

• We are keeping an eye to the future, ensuring we capture opportunities as they arise

5

Macroeconomic Review

Source: EIU, CBN, NBS, EIA, IMF

GDP growth of 2.2% in 2019 from 1.9% in 2018 driven primarily by growth in the services sector. Nigeria is forecast to end 2020 in a recession

6 Real GDP growth (%) Inflation (%)

Headline inflation impacted by the border closure which commenced in October

• 2019. Recent COVID-19 impact on macros driving inflation higher in Q1 2020

FX reserves ($’bn) and Oil price ($/bbl)

20 40 60 80

• 10

20 30 40 50

Price ($) Reserves ($bn)

FX reserves Brent Crude oil price

Foreign reserves declined by 16.8%, from $43.1bn in Jan-19 to $35.9bn in Mar-20, driven by lower oil prices, reduced capital inflows and balance of payment pressures

Exchange rate ₦:$

Exchange rate remained flat in 2019 as the Central Bank of Nigeria supported the

• Naira. Upward adjustment in March 2020 on the back of oil price collapse

2.7% (1.6%) 0.8% 1.9% 2.2% (3.4%) 2.4% 2015 2016 2017 2018 2019 2020 f 2021 f

100 200 300 400 500

CBN/ Interbank Parallel

11.37% 11.31% 11.25% 11.37% 11.40% 11.22% 11.08% 11.02% 11.24% 11.61% 11.85% 11.98% 12.13% 12.20% 12.26%

Key Developments

Strategic Initiatives

UPDC Corporate Actions: In September 2019, the Boards of Directors of UAC and UACN Property Development Company Plc (“UPDC”) jointly announced the following strategic initiatives relating to UPDC

• 1. A ₦15.96 billion equity capital raise for UPDC by way of a rights issue, proceeds of which were utilised to repay the bulk of UPDC’s

short-term debt; The rights issue concluded in April 2020 and UAC’s shareholding in UPDC is now 93.9%, from 64.2%

• 2. The unbundling of UPDC’s 61.5% interest in the UPDC Real Estate Investment Trust (“UPDC REIT”) to its shareholders, following the rights

issue

• 3. The unbundling of UAC’s 93.9% interest in UPDC to its shareholders
• The unbundlings remain subject to regulatory and shareholders approval

Following the announcement, UPDC has been re-classified as “held for distribution to owners” in UAC’s Statement of Financial Position and as “a discontinued operation” by the Group in the Statement of Profit or Loss in accordance with IFRS 5 Share Sale Agreement with Imperial Logistics Limited: In August 2019, UAC agreed to sell an additional 8.0% stake in MDS to Imperial Logistics Limited (“Imperial Logistics”), resulting in the transfer of control of the company to Imperial Logistics

• The sale was concluded in January 2020. It is an important milestone for MDS and one that is consistent with UAC’s strategy of working

closely with partners in empowering best-in-class management teams In FY 2019, prior to regulatory approval, MDS was reclassified as a discontinued operation in line with IFRS 5. Following transaction close in January 2020, MDS is now accounted for as an “investment in associate” and is no longer consolidated as part of the UAC Group 8

1 2

New additions to UAC and subsidiary boards

9

• Mrs. Awuneba Ajumogobia

Chairman

• Prior leadership roles at Deloitte and

Accenture

• Previously Independent Non-Executive

Director of UAC

• Mrs. Udo Okonjo

Non-Executive Director

• Chief Executive Officer/Vice Chairman of

Fine and Country West Africa

• Mr. Kunle Osilaja

Non-Executive Director

• Prior leadership roles at Ecobank

Transnational Incorporated (ETI) and Jones Lang LaSalle (JLL)

• Mr. Daniel Obaseki

Non-Executive Director

• Founder of Elevation Food Partners
• Also Non-Executive Director of Livestock

Feeds Plc

• Mr. Olabode Agusto

Non-Executive Director

• Also Non-Executive Director of Agusto &
• Co. Ltd and Guaranty Trust Bank Plc
• Mrs. Suzanne Iroche

Non-Executive Director

• Prior leadership roles at United Bank for

Africa and FinBank

• Experienced in finance and risk

management

• Mr. Karl Toriola

Non-Executive Director

• Vice President West and Central Africa for

the MTN Group

Revamped executive management at portfolio companies

10

• Experienced business executive with
• ver 30 years of experience in

FMCG

• Prior roles include MD Heineken,

Central & East Africa; Commercial Director, Nigerian Breweries

• Past Special Adviser to the Minister
• f Trade & Investment (Nigeria)
• PhD in Mechanical and Process

Engineering, University of Strathclyde

• 17 years experience working in

wealth management and property finance

• Appointed Deputy Managing

Director in December 2019

• Prior roles at Broll, Landmark Africa,

Stanbic IBTC Bank, Lloyds and HSBC

• Certified Mortgage and Financial

Adviser (CeFA, CeMAP) and BArch Architecture, University of Nottingham

• Experienced manufacturing and
• perations executive with 35 years
• f experience in the paint industry
• Highly proficient in lean

manufacturing

• Prior leadership roles at Kansai

Paints, Akzo Nobel, Blackfriar- Glixtone and Hempel

• B.Sc. in Chemical Engineering from

the University of Bradford, UK

• Seasoned business executive with

28 years experience working in FMCG

• Prior leaderships roles at PZ Cussons,

Guinness Nigeria, British American Tobacco and Procter & Gamble

• Fellow of the National Institute of

Marketing of Nigeria with a B.Sc. in Biochemistry from the University of Port-Harcourt

Deborah Nicol-Omeruah

DMD, UPDC Plc Joined February 2019

Dele Ajayi

MD, UAC Foods Limited

David Wright

MD, CAP PLC

Alex Goma

MD, Grand Cereals Limited Joined July 2018 Joined August 2019 Joined October 2019

New talent recruited across our portfolio companies

11

• CEO (ex. Heineken International,

Nigerian Breweries)

• CFO (ex. Dangote, Diageo)
• GM Manufacturing

(ex. Nigerian Bottling Company)

• GM Sales (ex. Glo, Unilever,

Dangote)

• GM Marketing (ex. Cadbury)
• GM Supply Chain (ex. CAP)
• Innovations Manager

(ex. PZ Cussons)

• Market Insights Manager

(ex. Kantar TNS)

• DMD (ex. Broll Property Group,

Landmark, Stanbic IBTC, Lloyds, HSBC)

• CFO (ex. PwC Nigeria, Honeywell)
• Development Director (ex. Trench

Farrow Consultants, Argentil Asset Management)

• Head, Facilities Management

(ex. Union Bank, Broll Property Services)

• CEO (ex. PZ Cussons, Guinness

Nigeria, British American Tobacco)

• Finance Director (ex. Africa

Improved Foods, Guinness Nigeria, Unilever Nigeria)

• Supply Chain Director (ex. Perfetti

Van Melle, Nestle Middle East, Nigerian Breweries)

• HR Director (ex. GE Energy,

GlaxoSmithKline, British American Tobacco)

• Commercial Director (ex. Pandagric

Novum, Guinness Nigeria,

• Senior Advisor (ex. Proterra, Black

River)

• CEO (ex. Kansai Paints, Hempel,

AkzoNobel)

• HR Director

(ex. Promasidor, Coca-Cola, TGI)

• Head Legal (ex. United Capital,

Banwo & Ighodalo)

• Senior Finance Advisor (ex.

LeapFrog Investments, AFC)

Financial Review

FY 2019 Overview

Note: Results for UPDC and MDS, which have been classified as a discontinued operation, are accounted for separately in UAC’s FY 2019 financial statements (in accordance with the provisions of IFRS 5). All figures for FY 2018 have been restated for comparison purposes in line with IFRS 5

• EPS from continuing operations of 132 kobo, up 37.7% YoY from 96 kobo for FY 2018
• Full year loss per share of -183 kobo vs -209 kobo for FY 2018 on account of loss from discontinued operations per share of -315

kobo primarily due to fair value impairment of UPDC’s investment in UPDC REIT

• ROIC of 4.7%, up 156 bps YoY
• FY 2019 revenue of ₦79.2bn, up 12.4% YoY, with growth recorded across all segments except logistics
• Gross profit increased 25.6% from ₦13.2bn in FY 2018 to ₦1.6bn, with gross margin improving 220bps from 18.8% to 21%
• Investments to drive future growth resulted in elevated cost levels, with operating expenses increasing 26.9% YoY and
• pex/sales increasing from 14.9% in FY 2018 to 16.8% for FY 2019
• Cost drivers include investments in people, sales and distribution
• We have adopted a deliberate strategy to invest for growth and are encouraged by early results from this strategy. We are

confident that growth will “catch up” with the fixed cost base, driving margin improvement

• FY 2019 operating profit of ₦5.6bn, up 44.5% YoY, with operating margin increasing 159bps to 7.2% (includes ₦1.1bn in one-off

profit on sale of non-core asset)

• Free cash flow of -₦5.2bn for FY 2019 compared with -₦1.7bn for FY 2018; largely on account of participation in recapitalization
• f UPDC

13

Q1 2020 Overview

Note: (1) Following regulatory approval of the MDS transaction, MDS is reclassified as Investment in Associates in Q1 2020 results (in line with IFRS 9); MDS results were consolidated in Q1 2019 as it was accounted for as a subsidiary in that period. (2) Results for UPDC have been classified as discontinued operations and are accounted for separately in the Q1 2020 financial statements. All figures for Q1 2019 have been restated for comparison purposes in line with IFRS 5

• EPS from continuing operations of 27 Kobo down 39% YoY from 44 kobo for Q1 2019
• EPS for the quarter of 85 kobo vs 23 kobo in Q1 2019 on account of profit from discontinued operation per share of 58 kobo

driven by a ₦3.1bn fair value gain on the recognition of MDS as an associate. This was partially offset by further impairments on UPDC’s investment in UPDC REIT, resulting in UPDC declaring a loss of ₦2.6bn

• Annualized ROIC of 4.0%, down 72 bps
• Key accounting change for Q1 2020 is the reclassification of MDS which was accounted for as a subsidiary in Q1 2019 and is

currently accounted for as an associate

• Reported revenues for Q1 2020 of ₦19.5bn, down 2.9% from ₦20.1bn for Q1 2019 (which includes MDS). Comparing like for like,

revenues grew 4.7% YoY, with growth recorded in all segments except paints

• Gross profit declined 4.4% from ₦4.4bn in Q1 2019 (which includes MDS) to ₦4.2bn, with gross margin declining 33 bps from

22.0% to 21.7%. Adjusting for MDS, gross profit grew 5.5% YoY, with gross margin improving 15 bps

• Investments for growth continued with operating expenses up 14.0% vs. Q1 2019 (24.1% comparing like for like); we are focused
• n completing key recruitments and making necessary investments in process and technology in the next 12 months
• Q1 2020 operating profit of ₦1.1bn, down 34.5% vs Q1 2019, with operating margin compression of 278bps to 5.8%. Comparing

like for like, operating profit declined by 22.9%, with margin compression of 207 bps

• Free cash flow of -₦5.6bn for Q1 2020 largely on account of increased inventory purchases in the Animal Feeds & Other Edibles

segment as well as capital investments in the Packaged Food & Beverages segment 14

(38.6%) 9.2% (18.6%) (175.5%) 44.5% (22.9%) FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 Q1 2020 EBIT growth EBIT margin (13.6%) 3.3% (5.8%) (12.0%) 25.6% 5.5% FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 Q1 2020 Gross profit growth Gross margin (14.6%) 14.7% 8.0% (11.7%) 12.4% 4.7% FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 Q1 2020 0.2% 0.5% 18.9% 1.8% 31.7% 24.1% FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 Q1 2020 Opex growth Opex/ sales

Focus on driving above historical trend growth

Note: Growth for each period is compared to the reference period shown in the published financial statements for that period

Revenue growth (%) Opex Growth (%) and Opex/Sales (%) Gross profit growth (%) and Gross margin (%) EBIT growth (%) and EBIT margin (%) 15

Average: 2.2%

13.9% 12.7% 12.9% 15.1% 16.4% 16.3% 22.6% 20.5% 17.9% 17.8% 21.0% 21.7% 10.4% 9.5% 7.9% (6.7%) 7.2% 5.8%

Income Statement

16

1. Q1 2020 figures classify MDS as an Investment in Associate and UPDC as a discontinued operation 2. Q1 2019 figures consolidate MDS as a subsidiary. Q1 2019 is however restated with UPDC classified as a discontinued operation 3. UPDC and MDS classified as a discontinued operations in FY 2019; FY 2018 restated in line with FY 2019 4. Return on Invested Capital annualised for Q1 2020 5. Q1 2020 vs FY 2019

Summary Income Statement ₦ mn, unless otherwise stated Q1 20201 Q1 20192 D% FY 20193 FY 20183 D% Revenue 19,549 20,141 (2.9%) 79,202 70,474 12.4% Gross Profit 4,234 4,429 (4.4%) 16,627 13,243 25.6% Gross Profit Margin (%) 21.7% 22.0% (33 bps) 21.0% 18.8% 220 bps Operating Profit 1,128 1,723 (34.5%) 5,666 3,920 44.5% Operating Profit Margin (%) 5.8% 8.6% (278 bps) 7.2% 5.6% 159 bps Net Finance Income 470 678 (30.7%) 1,790 2,155 (17.0%) Share of Profit/(Loss) of Associates and JVs 71

• n/m
• n/m

Profit Before Tax 1,669 2,400 (30.5%) 7,456 6,076 22.7% Tax expense (522) (435) (19.9%) (2,111) (1,838) (14.8%) Profit After Tax from Continuing Operations 1,147 1,965 (41.6%) 5,345 4,237 26.2% Profit/ (Loss) After Tax from Discontinued Operations 717 (969) n/m (14,602) (13,767) (6.1%) Profit/ (Loss) for the period 1,864 996 87.1% (9,256) (9,530) 2.9% Basic Earnings Per Share From Continuing Operations (Kobo) 27 44 (38.7%) 132 96 37.7% Basic Earnings Per Share From Discontinued Operations (Kobo) 58 (21) n/m (315) (304) (3.5%) Basic Earnings Per Share For the Period 85 23 268.7% (183) (209) 12.2% ROIC4 4.0%

• (72 bps)5

4.7% 3.2% 156 bps

Cash Flow

1. Q1 2020 figures classify MDS as an Investment in Associate and UPDC as a discontinued operation 2. UPDC and MDS classified as a discontinued operations in FY 2019; 3. FY 2018 restated with UPDC and MDS classified as discontinued operations

17 ₦ mn, unless otherwise stated Q1 20201 FY 20192 FY 20183 Profit Before Tax from continuing operations 1,669 7,456 6,076 Profit/ (Loss) before tax from discontinued operations 717 (14,696) (11,638) Non-Cash charges & other (2,982) (1,153) 1,590 Changes in working capital (4,816) 6,980 3,440

• f which receivables

(810) (2,177) 5,002

• f which inventory

(2,997) 5,895 (274)

• f which payables

(1,168) 2,784 (1,342)

• f which other working capital items

159 479 53 Net cash from operations - continuing operations (5,411) (1,413) (533) Net cash from operations - discontinued operations 1,842 313 4,085 Cash taxes (31) (1,551) (2,374) Net cash flow generated from operating activities (3,601) (2,651) 1,179 Net CAPEX (2,017) (2,568) (2,861) Free Cash Flow (5,618) (5,219) (1,682) PBT to Free Cash Flow

Financial Position – 31 Dec 2019

1. Includes ₦16bn bridge finance loan from HoldCo 2. Proceeds from disposal of PPE exceed capital investments in the year * Leverage ratio calculated as Net debt / EBITDA; where EBITDA is Operating Profit plus depreciation and amortisation

18 Summary Balance Sheet Cash/Leverage Working Capital Capital Expenditure

N mn Dec 2019 Dec 2018 D% Non current Assets 26,019 50,656 (48.6%) Current Assets 45,204 71,046 (36.4%) Other Assets 36,372 130,972 292,4% Total Assets 107,595 130,972 (17.8%) Long term debt 1,851 4,501 (58.9%) Short term debt 4,596 19,672 (76.6%) Other Liabilities 40,607 32,726 24.1% Total Liabilities 47,054 56,899 (17.3%) Net Asset Value 60,541 74,073 (18.3%) N mn Dec 2019 Dec 2018 D% Inventory 16,290 30,526 (46.6%) Receivables 5,015 10,234 (51.0%) Trade Payables 9,960 14,949 (33.4%) Net Working Capital 11,345 25,810 (56.0%) Inventory Days 95 195 (51.2%) Receivables Days 23 53 (56.4%) Trade Payables Days 58 95 (39.1%) Net Working Capital Days 60 152 (60.6%) N mn Cash Debt Net Debt/ (Cash)

• Lev. Ratio *

HoldCo 8,126

• (8,126)

n/a Animal Feeds & Other Edible 5,010 6,447 1,436 0.5 Paints 4,603

• (4,603)

n/a Packaged Food & Beverages 4,215

• (4,215)

n/a QSR 58

• (58)

n/a Disposal Group: Logistics 427

• (427)

n/a Disposal Group: Real Estate1 1,262 20,807 19,546 (16,1) Total 23,701 27,254 3,553 0.5 N mn CAPEX Depreciation CAPEX / Depreciation HoldCo 124 158 0.78 Animal Feeds & Other Edible 627 886 0.71 Paints 321 226 1.42 Packaged Food & Beverages 1,285 1,086 1.18 QSR 191 142 1.35 Disposal Group: Logistics 1,509 464 3.25 Disposal Group: Real Estate nil2 34 n/a Total 4,057 2,997 1.35

Financial Position – 31 Mar 2020

1. Includes ₦16bn bridge finance loan from HoldCo 2. Proceeds from disposal of PPE exceed capital investments in the period * Leverage ratio calculated as Net debt / EBITDA; where EBITDA is Operating Profit plus depreciation and amortisation

19 Summary Balance Sheet Cash/Leverage Working Capital Capital Expenditure

N mn Mar-20 Dec-19 D% Non current Assets 32,102 26,019 (23.4%) Current Assets 44,605 45,204 (1.3%) Other Assets 26,107 36,372 (28.2%) Total Assets 102,815 107,595 (4.4%) Long term debt 1,496 1,851 (19.2%) Short term debt 5,302 4,596 15.4% Other Liabilities 35,824 40,607 (11.8%) Total Liabilities 42,623 47,054 (9.4%) Net Asset Value 60,193 60,541 (0.6%) N mn Mar-20 Dec-19 D% Inventory 19,287 16,290 18.4% Receivables 5,857 5,015 16.8% Trade Payables 8,792 9,960 (11.7%) Net Working Capital 16,351 11,345 44.1% Inventory Days 115 95 20.9% Receivables Days 27 23 18.3% Trade Payables Days 52 58 (9.8%) Net Working Capital Days 90 60 49.7% N mn Cash Debt Net Debt/ (Cash)

• Lev. Ratio *

HoldCo 8,780

• (8,780)

n/a Animal Feeds & Other Edible 1,268 6,798 5,530 13.1 Paints 4,634

• (4,634)

n/a Packaged Food & Beverages 3,314

• (3,314)

n/a QSR 50

• (50)

n/a Disposal Group: Real Estate1 1,213 21,375 20,161 (606.2) Disposal Group: UNICO 191

• (191)

n/a Total 19,449 28,173 8,724 4.0 N mn CAPEX Depreciation CAPEX / Depreciation HoldCo 52 32 1.61 Animal Feeds & Other Edible 22 227 0.10 Paints 12 50 0.24 Packaged Food & Beverages 1,930 296 6.52 QSR 1 36 0.03 Disposal Group nil2 6 n/a Total 2,017 642 3.14

UPDC Impairment and Debt Obligations

Notes: (1) Weighted average (2) Higher amounts due to capitalised interest on the bridge loan from UAC (3) UAC’s shareholder loan to UPDC is at an initial rate of 5%, escalating to 15% after 180 days

• FY 2019 impairments are largely mark-to-market adjustments. Impairments in FY 2018 were based on third party asset valuations and

management judgement.

• As at December 2019, third-party exposure is limited to the corporate bond (c.21% of direct obligations, down from c.89% as at

December 2018).

• Key priority remains implementing our announced solution to UPDC’s capital structure challenges.

20 UPDC Impairment breakdown Debt Profile

₦ mn Interest Mar 2020 Dec 2019 Dec 2018 Intra-group Working Capital c.15.5%

• 2,205

Commercial Papers 14.98% (w.ave)1

• 14,294

Bonds 16.00% 4,272 4,272 4,264 Bridge Loan from UAC2 5%/15%3 17,103 16,535

• Total

21,375 20,807 20,763 ₦ mn Q1 2020 FY 2019 FY 2018 Associates (UPDC REIT) (1,814) (12,638)

• Inventory
• (1,300)

(1,318) Receivables

• (239)

(3,140) Joint Ventures

• (261)
• Investment Property
• (1,274)

Assets Held for Sale (UHL)

• (4,029)

Loss on sale of inv. prop & PPE

• (92)

(450) Total (1,814) (14,530) (10,211)

Group Treasury Position

• 1. Includes UNICO and UPDC

21

Cash & Cash Equivalents Short-Term Debt Long-Term Debt Net Cash (excl. Intra- Group) Intra-Group Receivable / (Payable) Net Cash (incl. Intra- Group) UAC Company 8,780

• 8,780

17,103 25,883 Other Operating Segments 9,265 (5,302) (1,496) 2,467

• 2,467

Continuing Operations 18.046 (5,302) (1,496) 11,247 17,103 28,541 Discontinued Operations1 1,404 (8) (4,263) (2,868) (17,103) (19,971) Total 19.449 (5,311) (5,759) 8,380

• 8,380

Group Net Cash Position as at 31 March 2020 (in ₦ mn)

Segment Performance

Segment Performance Highlights – FY 2019

23

• Delivered encouraging top line growth driven by market share recovery and price increase
• Gross margin improvement driven by lower raw material costs
• Focus on rationalising excess capacity to free up capital for higher ROIC projects

Animal Feeds & Other Edibles

61.8% of Group revenue

• Delivered growth in tough market conditions
• Operational improvements to procurement, conversion and route-to-market
• Investment in plant required to drive efficiency, quality and consistency

Packaged Food & Beverages

22.1% of Group revenue

• Operating income down due to investments in people and brand
• Focus on deepening retail penetration, expanding product range and simplifying structure

Paints

13.9% of Group revenue

• Decline in performance driven by changes in clients’ distribution models
• Focus on expanding transportation offering by acquiring fleets dedicated to large corporates

Logistics

Discontinued Operations

• Top line growth driven by opening of new corporate store
• Evaluating business model and ability to scale

QSR

1.9% of Group revenue

• UPDC took mark-to-market losses on its investment in UPDC REIT and investment portfolio leading to ₦14.5bn in

non-cash expenses

• Rights issue completed with proceeds used to significantly reduce leverage

Real Estate

Discontinued Operations

Performance Snapshot – FY 2019

Note: Figures are unadjusted for intragroup transactions and discontinued operations

Revenue Operating Margins Profit before Tax Return on Invested Capital 24

N mn FY 2019 FY 2018

D%

Animal Feeds & Other Edibles 51,818 44,575 16% Packaged Food & Beverages 17,545 16,202 8% Paints 11,021 10,500 5% QSR 1,501 1,278 17% Disposal Group: Logistics 5,680 5,971 (5%) Disposal Group: Real Estate 2,158 2,303 (6%)

N mn FY 2019 FY 2018 D Animal Feeds & Other Edibles 3.4% 2.6% 79 bps Packaged Food & Beverages 6.8% 5.5% 134 bps Paints 20.3% 24.7% (436 bps) QSR (2.4%) 4.2% (668 bps)

Disposal Group: Logistics

13.3% 17.5% (416 bps)

Disposal Group: Real Estate

(58.0%) (271.7%) 21,373 bps N mn FY 2019 FY 2018 D% Animal Feeds & Other Edibles 990 42 2,277% Packaged Food & Beverages 1,561 1,362 15% Paints 2,673 2,905 (8%) QSR (75) 59 n/m

Disposal Group: Logistics

703 1,220 (42%)

Disposal Group: Real Estate

(16,177) (13,244) 22% % FY 2019 FY 2018 D Animal Feeds & Other Edibles 5.5% 3.4% 211 bps Packaged Food & Beverages 11.4% 9.1% 229 bps Paints 35.5% 39.3% (379 bps) QSR (6.5%) 9.5% (1,601 bps)

Disposal Group: Logistics

8.0% 12.6% (460 bps)

Disposal Group: Real Estate

(11.6%) (18.4%) 674 bps

Outlook

Outlook

• COVID-19 outbreak and its impact on the Nigerian economy likely to have negative effects on 2020 performance
• Remain focused on implementing operational improvements to drive earnings growth
• Key priorities
• UPDC: Exit our real estate business
• Structure: Explore strategic options to ensure adequate scale across the portfolio
• People:
• Attract and retain the strongest possible management teams;
• Implement long-term reward and retention schemes aligned to shareholder value creation
• Efficiency:
• Invest in technology and rationalize excess capacity;
• Tackle duplicated/ non-value added costs

26

Appendix

Q1 2019 Pro Forma

• 1. Q1 2019 results have been adjusted to exclude MDS for better comparison to Q1 2020

28 ₦ mn, unless otherwise stated Q1 2020 Q1 20191 D% Revenue 19,549 18,665 4.7% Gross Profit 4,234 4,014 5.5% Gross Profit Margin (%) 21.7% 21.5% 15 bps Selling & Distribution Expenses (1,615) (1,374) 17.5% Administrative Expenses (1,562) (1,187) 31.6% Operating Expenses (3,177) (2,561) 24.1% Operating Expenses (% of revenue) 16.3% 13.7% 253 bps Other Operating Income 85 81 5.1% Other Operating Losses (13) (70) (81.0%) Operating Profit 1,128 1,464 (22.9%) Operating Profit Margin (%) 5.8% 7.8% (207 bps) Summary Income Statement (in ₦ mn)

Group Overview

29 Animal Feeds & Other Edibles Paints Packaged Foods

Real Estate

• 71.4% held in Grand Cereals Ltd
• 73.3% held in Livestock Feeds Plc
• 51.6% held in CAP Plc in a technical partnership with

AkzoNobel

• 85.9% held in Portland Paints Plc
• 51.0% held in UAC Foods Ltd in a partnership with Tiger Brands

(49.0%)

Quick Service Restaurants

• 51.0% held in UAC Restaurants Ltd in a partnership with

Famous Brands (49.0%)

Logistics

• 43.0% held in MDS logistics in a technical partnership with

Imperial Logistics (57.0%)

• 93.9% held in UPDC Plc

Definition of Terms

• Earnings Per Share (annualised) is Profit After Tax from Continuing operations reported to Weighted average number of Shares.
• EBIT refers to Gross Profit minus Operating Expenses plus Other operating income.
• EBIT Margin corresponds to EBIT as a % of Revenue.
• EBITDA refers to Earnings before Interest, Tax, Depreciation and Amortisation
• EBITDA margin corresponds to EBITDA as a % of Revenue.
• Free Cash Flow corresponds to Net cash flow generated from/ (used in) operating activities minus Purchase of property, plant and

equipment plus Proceeds from sale of property, plant and equipment.

• Gross Profit refers to Revenue minus Cost of sales.
• Gross Profit Margin corresponds to Gross Profit as a % of Revenue.
• Leverage ratio refers to Net Debt as a % of EBITDA.
• Net Working Capital refers to Inventory plus Receivables minus Trade Payables
• Operating Expenses correspond to Selling and distribution expenses, Administrative expenses and Other operating expenses.
• Profit before Tax corresponds to EBIT plus Net finance (cost)/income plus share of profit of associates and joint venture using the equity

method.

• Profit before Tax Margin corresponds to Profit before Tax as a % of Revenue.
• Return on Invested Capital (annualised) is defined as NOPAT margin multiplied by Invested Capital Turnover.
• Working capital is defined as Current Assets minus Current Liabilities.

30