2020 Annual Report

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2020 Annual Report 1 2020 ANNUAL REPORT BUILDING VALUABLE AND SUSTAINABLE BUSINESSES We are a holding company focused on delivering superior returns through disciplined capital allocation and operational improvement across our businesses. Our businesses are in attractive growth sectors and benefit from strong market positions, established brands and wide distribution. 9 companies 6 sectors 4 strategic partnerships 2 uacnplc.com TABLE OF CONTENTS • UACN Today 5 • Corporate Profile 8 • Results at a Glance 11 • Chairman’s Statement 12 • Group Managing Director’s Report 19 • Segmental Performance Report 24 • Notice of Annual General Meeting 28 • Directors, Officers and Professional Advisers 37 • Profile of Directors 38 • Leadership Profiles: Subsidiary and Associate Companies 44 • Directors’ Report 46 • Human Resources Report 57 • Sustainability Report 60 • Risk Management 64 • Financial Statements 67 • Unclaimed Dividends 178 • Share Capital History 179 • List of Distributors and Key Locations 181 • Proxy Form 191 • Registrar’s Forms 193 3 2020 ANNUAL REPORT 4 uacnplc.com UACN IS A HOLDING COMPANY WITH SOME OF NIGERIA’S MOST ADMIRED BRANDS AND WIDEST DISTRIBUTION Brands Agro-Allied Packaged Food and Beverages Paints Quick Service Restaurants 5 2020 ANNUAL REPORT 6 uacnplc.com FIVE PILLARS FOR VALUE CREATION People – We believe that people are our greatest asset and invest in attracting, retaining, developing, managing, and rewarding talented individuals across our businesses. Capital – We work with our subsidiaries and associate companies to allocate capital in a manner that maximises risk-adjusted returns. We have set an expected return threshold of 25%. Technology – We believe that technology is a powerful tool for improving productivity and seek to drive continuous improvement across our most important processes. Sustainability – We are conscious that our businesses operate in the context of the broader environment and are committed to improving ESG practices across the UACN Group. Governance and Controls – We believe that good governance is at the core of enduring businesses. At UACN, we are committed to exercising proper oversight over our subsidiary and associate companies. Key focus areas include well-constituted boards of directors and fully implemented enterprise resource planning systems. 7 2020 ANNUAL REPORT CORPORATE PROFILE UAC of Nigeria PLC (UACN) is one of Nigeria’s oldest institutions with history dating back to 1879. Today, UACN is a holding company with interests organised around four key verticals - Animal Feeds and Edible Oils, Packaged Food and Beverages, Paints and Quick Service Restaurants. We also own interests in a leading logistics services provider, a real estate development company, and a real estate investment trust. 51.49% 51% 71.43% 51% 43% 42.85% REAL ESTATE INVESTMENT TRUST 85.98% 24.34% 73.29% Animal Feeds Packaged Food & Chemicals & Quick Service Logistics Real Estate & Other Edibles Beverages Paints Restaurants Non-controlling interests Our businesses are in attractive growth sectors and benefit from strong market positions, established brands and wide distribution. Our aim is to generate attractive long-term, risk-adjusted returns for our shareholders by growing our businesses into market leaders in their respective segments. We take a long-term view which enables us add meaningful and sustainable value to each of our businesses. Through our various businesses, UACN has meaningful domestic manufacturing presence with eleven (11) manufacturing facilities and several logistics and distribution hubs across the country. We employ over two thousand individuals across our businesses. UACN has six subsidiaries and three associate companies operating in six sectors. Animal Feeds and Other Edibles Grand Cereals Limited (71.43% ownership) is a leading producer of cereals, edible oils, poultry feed, fish feed, We have two subsidiaries in the animal feeds and ruminant feed and dog food. The company has production other edibles segment with production and distribution and distribution facilities in Northern and South Eastern capabilities across Nigeria. We view our participation in Nigeria. It owns a portfolio of strong brands including this sector as an opportunity to invest in and contribute to Grand, Vital, and BestMate. Nigeria’s growing agricultural sector in a value accretive manner. Our long-term strategy is focused on a disciplined Livestock Feeds PLC (73.29% ownership) produces approach to drive return on invested capital. and distributes animal feeds, feed concentrates and full fat soya. The company recently expanded its offering to Our subsidiaries are Grand Cereals Limited (“GCL”) and include veterinary drugs. Livestock Feeds’ geographic Livestock Feeds PLC (“LSF”) strength is in South West Nigeria. Brands include Livestock Feeds and Aquamax. The company is listed on The Nigerian Exchange Limited (“NGX”). 8 uacnplc.com CORPORATE PROFILE Paints Quick Service Restaurants We operate through two companies in the paints segment, UAC Restaurants Limited (“UACR”) is a quick service Chemical and Allied Products PLC (“CAP”) and Portland restaurant (“QSR”) business in Nigeria with a national Paints and Products Nigeria PLC (“Portland Paints”). Our footprint. UACR manages a network of Quick Service investment in the paints sector is aimed at harnessing growth Restaurants across Nigeria under the Mr Bigg’s and opportunities. Key growth drivers include rising urbanisation, Debonairs Pizza brands. The business is positioned to which will drive growth in the decorative paints sub-sector; benefit from rising urbanisation and “on-the-go” living. and increased industrialization, supporting growth in the Capturing value in this sector will entail dedicated long- industrial paints and coating sub-sector. term investments. CAP (51.49% ownership) is the leading player in the Famous Brands, Africa’s largest QSR operator acquired a premium paints segment, is the sole technology licensee 49% stake in UACR in 2013. for AkzoNobel’s decorative range in Nigeria. Brand portfolio includes Dulux and Caplux. The company benefits from a UACR owns the Mr Bigg’s brand and is a Master Franchisee unique distribution model - franchised retail outlets, which it for Debonairs Pizza which is owned by Famous Brands. pioneered in Nigeria’s paint industry. CAP is listed on NGX. Logistics Portland Paints (85.98% ownership) is a distributor for Hempel’s industrial products in Nigeria. It also Logistics management underpins economic activity and manufactures and markets decorative and industrial is a key component of success across industries. As the paints under its own brand Sandtex. Portland Paints is industry continues to rapidly adopt technology and evolve listed on NGX. operating models, our focus is on ensuring we continue to add value to our customers. CAP and Portland Paints are in the process of a business combination via a merger. Completion is subject to receipt MDS Logistics Limited (43% ownership) is a leading of final regulatory approvals. logistics services provider in Nigeria. The company offers the complete suite of outbound logistics and supply chain Packaged Food and Beverages services including Warehousing, Haulage and Distribution. Imperial Logistics, a global logistics player owns a 57% UACN’s presence in the packaged food and beverage equity stake in MDS Logistics. industry is through UAC Foods Limited (“UFL”) which focuses on capturing the opportunity presented by a Real Estate young, growing and increasingly urban population. UACN has a non-controlling interest in a real estate UFL (51% ownership) UFL is a leader in the snacks, dairy development company, UACN Property Development and spring water segments in Nigeria. It owns iconic Company PLC (“UPDC”) (42.85% ownership). UPDC has a brands including Gala, Funtime, Supreme and SWAN. deep development track record across multiple segments It has production facilities in the South West and North including retail, commercial, residential and hospitality. Central regions of Nigeria and a broad distribution network The company is listed on NGX. that ensures a strong market presence nationwide. UPDC Real Estate Investment Trust (24.34% ownership) is Our investment in UFL is a joint venture with Tiger Brands a close-ended property fund listed on NGX, with a market Limited, South Africa’s largest food company. Tiger Brands capitalisation of N14.7 billion as at 31 December 2020. owns a 49% equity stake in UFL. For more information visit www.uacnplc.com 9 2020 ANNUAL REPORT 10 uacnplc.com RESULTS AT A GLANCE Group Company 2020 2019 % 2020 2019 % N’000 N’000 change N’000 N’000 change Revenue 81,357,960 79,202,140 3 758,447 758,761 (0) Operating profit/(loss) 3,597,309 5,666,413 (37) (3,497,470) (667,349) 424 Net finance income 550,220 1,789,846 (69) 1,435,793 2,641,095 (46) Profit/(loss) before tax 5,120,845 7,456,259 (31) (2,061,677) 1,973,746 n/m Income tax expense (1,662,581) (2,110,943) 21 (413,909) (489,599) 15 Profit/(loss) after tax for the year from continued operations 3,458,264 5,345,316 (35) (2,475,586) 1,484,147 n/m Profit/(loss) after tax for the year from discontinued operations 469,662 (14,601,729) n/m - - - Profit/(loss) for the year 3,927,926 (9,256,413) n/m (2,475,586) 1,484,147 n/m Other comprehensive income/(loss) for the year net of tax 230,814 (1,229) n/m 159,354 (1,229) n/m Total comprehensive income/(loss) for the year net of tax 4,158,740 (9,257,642) n/m (2,316,232) 1,482,918 n/m Total equity 61,371,865 60,541,412 1 37,167,070 39,771,431 (7) Total equity and liabilities
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