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Tag: UACN

  • UACN records N5.1b profit in first half

    UACN records N5.1b profit in first half

    UAC of Nigeria (UACN) Plc recorded modest increase in earnings in the first half as the conglomerate continued to harness the opportunities from its recent acquisitions.

    Interim report and accounts of UACN for the six-month period ended June 30, 2014 showed that turnover rose by 7.8 per cent while profit after tax increased by 3.3 per cent.

    The conglomerate recorded a turnover of N40.26 billion in first half of 2014 as against N37.35 billion recorded in comparable period of 2013. Profit before tax stood at N5.06 billion in 2014 as against N5.11 billion recorded in 2013. Profit after tax inched up from N3.37 billion to N3.48 billion. Earnings per share increased from 84 kobo to N1.03.

    The first-half report came on the heels of distribution of N3.36 billion to shareholders as cash dividends for the 2013 business year. This implied a dividend per share of N1.75 in 2013 as against N1.60 paid for in 2012 when it distributed N2.56 billion to shareholders.

    Audited report and accounts of UACN for the year ended December 31, 2014 had shown considerable improvements in actual profit and loss items and underlying profitability indices. Group turnover rose by 13 per cent from N69.63 billion to N78.71 billion. Profit before tax rose by 30 per cent from N10.75 billion to N14.01 billion. Profit after tax also leapt by 39 per cent from N7.10 billion to N9.90 billion.

    Beyond the surface, the intrinsic profit-making capacity of the company improved in 2013. While gross profit margin dipped from 27 per cent to 24 per cent, pre-tax profit margin rose from 15.4 per cent to 17.8 per cent. Underlying returns were also better with return on total assets of 11.2 per cent in 2013 as against 8.7 per cent in 2012. Return on equity also rose from 11.7 per cent to 13.9 per cent. On Per share basis, basic earnings per share improved by 14.4 per cent from N2.57 to N2.94.

    Chairman, UAC of Nigeria (UACN) Plc, Senator Udoma Udo Udoma, recently assured shareholders that recent acquisitions, ongoing investments and strategic alliances and initiatives have placed the conglomerate on the path of sustained growth and better returns to shareholders.

    According to him, the growth prospects of the conglomerate in the medium term is encouraging as it continues to integrate the two newly acquired businesses – Livestock Feeds Plc and Portland Paints and Products Nigeria Plc into the group. UACN had acquired majority equity stakes in Livestock Feeds and Portland Paints in 2013.

    “The future of UAC is indeed bright as we are poised to reap the benefits of the investments we are currently making as well as the capacity upgrades we are undertaking in our various businesses, “ Udoma said.

    He added that the conglomerate would continue to build on the synergies created by its various strategic alliances with other industry leaders.

    He outlined that as the group continues to align its businesses to deliver good returns to shareholders, directors of the conglomerate have taken other strategic initiatives geared towards minimizing business risk and exposure including on-going implementation of Enterprise-wide Risk Management framework and the deployment of Systems, Applications, and Products in Data Processing (SAP) as its Enterprise Resource Planning software.

    He noted that the improved performance of the conglomerate in 2013 was made possible by the innovative and proactive responses to market dynamics and competitive pressures by management while the company also built on its strategy of working with partners who bring value to its businesses.

    “We have strategic partners in Tiger Brands Limited for UAC Foods Limited, Imperial Logistics for MDS Logistics Limited and Famous Brands for our UAC Restaurants Limited businesses. These bold initiatives have repositioned our group for sustainable growth and improved performance in the years ahead,” Udoma said.

     

  • UACN: Improved returns

    UACN: Improved returns

    AC of Nigeria (UACN) Plc, Nigeria’s largest conglomerate, is on a stronger footing as it continued to reap from recent business restructuring and acquisitions. Audited report and accounts of UACN for the year ended December 31, 2013 underlined the benefit of the conglomerate’s focus on the food business, which served as a catalyst for overall performance.

    The 20 per cent growth in sales from the food and beverages business segment moderated decline in revenue from real estate and disposal of the motor vehicle business. Group sales rose by 13 per cent to create headroom for pre and post tax profits, which rose by 30.4 per cent and 39.4 per cent respectively.

    Intrinsic profit and loss items showed a generally positive outlook. With almost three percentage points increase in pre-tax profit margin, actual and underlying returns were all on the upside. The improvement in profitability reflected on actual dividends to shareholders as the company increased cash distribution from N2.56 billion in 2012 to N3.36 billion in 2013. Returns on total assets rose from 8.7 per cent to 11.2 per cent while return on equity increased from 11.7 per cent to 13.9 per cent.

    The balance sheet position of the conglomerate remained stable with increased equity funding for assets. However, the company’s liquidity and financing structure were still tepid.

     

    Financing structure

     

    UACN’s paid up share capital increased by 20 per cent from N800 million in 2012 to N960.4 million in 2013. The increase was due to a bonus issue of one for five shares distributed in 2013. Group’s shareholders’ funds rose by about 18 per cent from N60.60 billion in 2012 to N71.32 billion in 2013. Total assets increased marginally to N125.02 billion in 2013 as against N122.98 billion in 2012. Total liabilities declined by about 14 per cent from N62.38 billion to N53.70 billion in 2013.

    The financing outlook of the conglomerate was stable. The modest increase in gearing ratio was subdued by considerable improvement in equity funding. The proportion of equity funds to total assets increased from 49 per cent in 2012 to 57 per cent in 2013. Debt-to-equity ratio however rose from 25.2 per cent to 28.4 per cent. Long-term liabilities/total assets ratio stood at 43 per cent in 2013 as against 51 per cent in 2012. Current liabilities/total assets ratio was stable at 34 per cent in 2013 as against 35.7 per cent in 2012.

     

    Efficiency

     

    UACN right-sized its workforce during the year, a realignment that impacted positively on productivity.  Average number of employees decreased to 2,197 persons in 2013 as against 2,269 persons in 2012. Total staff costs meanwhile increased from N5.54 billion to N6.50 billion, implying an average cost per head of N2.96 million in 2013 as against N2.44 million in 2012. Average contribution of each employee to pre-tax profit meanwhile improved from N4.74 million to N6.38 million. Total cost of business, excluding interest expense, declined to about 88 per cent in 2013 as against 84 per cent in 2012.

     

    Profitability

     

    UACN showed considerable improvements in actual profit and loss items and underlying profitability indices. Group turnover rose by 13 per cent from N69.63 billion to N78.71 billion. The top-line performance was driven by strong growth in the main food and beverage business and modest growths across many other segments. Turnover in the food and beverages segment stood at N55.84 billion in 2013 as against N46.41 billion in 2012. The paints business recorded a turnover of N7.54 billion in 2013 compared with N5.23 billion in 2012. The other ancillary businesses altogether turned in N455.8 million in 2013 as against N446.8 million in 2012. However, the Logistics business slowed down at N3.77 billion as against N4.05 billion while the real estate business turned in N11.11 billion in 2013 compared with N12.08 billion in 2012.

    Total cost of sales rose by 18 per cent from N50.58 billion to N59.88 billion. Consequently, gross profit slipped from N19.05 billion to N18.84 billion. Total operating expenses rose by 20 per cent from N7.7 billion to N9.24 billion. Selling and distribution expenses had increased from N1.51 billion to N1.85 billion while administrative expenses rose from N6.19 billion to N7.39 billion. The midline meanwhile was boosted by 285 per cent increase in interest and other non-core business incomes, which rose from N1.92 billion in 2012 to N7.41 billion in 2013. The large non-core business income was due to gains on restructured and disposed assets during the year.  This counterbalanced finance expenses, which rose by 18 per cent from N2.53 billion to N2.99 billion. With these, profit before tax rose by 30 per cent from N10.75 billion to N14.01 billion. Profit after tax also leapt by 39 per cent  from N7.10 billion to N9.90 billion.

    Beyond the surface, the intrinsic profit-making capacity of the company improved in 2013. While gross profit margin dipped from 27 per cent to 24 per cent, pre-tax profit margin rose from 15.4 per cent to 17.8 per cent. Underlying returns were also better with return on total assets of 11.2 per cent in 2013 as against 8.7 per cent in 2012. Return on equity also rose from 11.7 per cent to 13.9 per cent.

    On per share basis, basic earnings per share improved by 14.4 per cent from N2.57 to N2.94. The company increased cash dividends to N3.36 billion for the 2013 business year compared with N2.56 billion distributed for the 2012 business year. This implied a dividend per share of N1.75 in 2013 as against N1.60 in 2012. Against the background of 20 per cent increase in outstanding shares due to a one-for-five bonus in 2013, the adjusted earnings were higher and underlined the substantial increase in shareholders’ returns.  Notwithstanding the increase in cash payout, dividend cover increased from 1.61 times to 1.68 times. Net assets per share meanwhile stood at N37.13 in 2013 as against N37.85 in 2012.

     

    Liquidity

     

    The conglomerate continued to struggle with declining liquidity, although its average ratios remained within the acceptable range. Current ratio, which relates current assets to current liabilities, slipped from 1.22 times to 1.16 times. The proportion of working capital to total sales declined from 14 per cent to 8.7 per cent. Debtor/creditor ratio closed 2013 at 124.3 per cent compared with 117.2 per cent in 2012.

     

    Governance and

    structures

     

    Nigeria’s oldest surviving business, UACN started business in Nigeria in 1879, well ahead of the 1914 Amalgamation that created the nation. A large group of several active companies spreading through manufacturing, services, logistics and real estate sectors of the economy, the UACN Group includes four quoted subsidiaries – CAP Plc, UACN Property Development Company (UPDC) Plc, Livestock Feeds and Portland Paints and Products Nigeria Plc; in addition to the parent company, UACN. Last year, it acquired Livestock Feeds and Portland Paints.

    Other members of the group included UAC Foods Limited, MDS Logistics Limited, Warm Spring Waters Nigeria Limited, Grand Cereals Limited, and Unico CPFA Limited.

    Listed in 1974, UACN is owned by some 186,000 shareholders. The board and management of the conglomerate remained stable. Senator Udoma Udoma still chairs the Board of Director while Mr. Larry Ettah leads the Group Executive Management. UACN is a well-structured group with long-established corporate best practices in compliance with local statutes and rules and global standards.

     

    Analyst’s opinion

     

    The overall performance outlook of UACN continued to reflect the success of the conglomerate’s restructuring, including divestments, reinvestments, new acquisitions and streamlining of businesses. The group has continued to implement key initiatives of its growth activation programme, with a view to driving efficiency and improving turnover. Last year, it acquired two other quoted companies – Livestock Feeds and Portland Paints and Products Nigeria Plc – to further consolidate its market share in agriculture and building industry. The conglomerate also signed on to strategic international partnerships to drive its logistics and food and restaurant businesses.

    With a large portfolio of market-leading companies and highly competitive brands, there is reasonable basis to assume that UACN possesses the  strengths to cope with emerging challenges and sustain appreciable returns.

  • UACN: Improved returns

    UACN: Improved returns

    UAC of Nigeria (UACN) Plc, Nigeria’s largest conglomerate, is on a stronger footing as it continued to reap from recent business restructuring and acquisitions. Audited report and accounts of UACN for the year ended December 31, 2013 underlined the benefit of the conglomerate’s focus on the food business, which served as a catalyst for overall performance. The 20 per cent growth in sales from the food and beverages business segment moderated decline in revenue from real estate and disposal of the motor vehicle business. Group sales rose by 13 per cent to create headroom for pre and post tax profits, which rose by 30.4 per cent and 39.4 per cent respectively.

    Intrinsic profit and loss items showed a generally positive outlook. With almost three percentage points increase in pre-tax profit margin, actual and underlying returns were all on the upside. The improvement in profitability reflected on actual dividends to shareholders as the company increased cash distribution from N2.56 billion in 2012 to N3.36 billion in 2013. Returns on total assets rose from 8.7 per cent to 11.2 per cent while return on equity increased from 11.7 per cent to 13.9 per cent.

    The balance sheet position of the conglomerate remained stable with increased equity funding for assets. However, the company’s liquidity and financing structure were still tepid.

     

    Financing structure

     

    UACN’s paid up share capital increased by 20 per cent from N800 million in 2012 to N960.4 million in 2013. The increase was due to a bonus issue of one for five shares distributed in 2013. Group’s shareholders’ funds rose by about 18 per cent from N60.60 billion in 2012 to N71.32 billion in 2013. Total assets increased marginally to N125.02 billion in 2013 as against N122.98 billion in 2012. Total liabilities meanwhile declined by about 14 per cent from N62.38 billion to N53.70 billion in 2013.

    The financing outlook of the conglomerate was stable. The modest increase in gearing ratio was subdued by considerable improvement in equity funding. The proportion of equity funds to total assets increased from 49 per cent in 2012 to 57 per cent in 2013. Debt-to-equity ratio however rose from 25.2 per cent to 28.4 per cent. Long-term liabilities/total assets ratio stood at 43 per cent in 2013 as against 51 per cent in 2012. Current liabilities/total assets ratio was stable at 34 per cent in 2013 as against 35.7 per cent in 2012.

     

    Efficiency

     

    UACN right-sized its workforce during the year, a realignment that impacted positively on productivity.  Average number of employees decreased to 2,197 persons in 2013 as against 2,269 persons in 2012. Total staff costs meanwhile increased from N5.54 billion to N6.50 billion, implying an average cost per head of N2.96 million in 2013 as against N2.44 million in 2012. Average contribution of each employee to pre-tax profit meanwhile improved from N4.74 million to N6.38 million. Total cost of business, excluding interest expense, declined to about 88 per cent in 2013 as against 84 per cent in 2012.

     

    Profitability

     

    UACN showed considerable improvements in actual profit and loss items and underlying profitability indices. Group turnover rose by 13 per cent from N69.63 billion to N78.71 billion. The top-line performance was driven by strong growth in the main food and beverage business and modest growths across many other segments. Turnover in the food and beverages segment stood at N55.84 billion in 2013 as against N46.41 billion in 2012. The paints business recorded a turnover of N7.54 billion in 2013 compared with N5.23 billion in 2012. The other ancillary businesses altogether turned in N455.8 million in 2013 as against N446.8 million in 2012. However, the Logistics business slowed down at N3.77 billion as against N4.05 billion while the real estate business turned in N11.11 billion in 2013 compared with N12.08 billion in 2012.

    Total cost of sales rose by 18 per cent from N50.58 billion to N59.88 billion. Consequently, gross profit slipped from N19.05 billion to N18.84 billion. Total operating expenses rose by 20 per cent from N7.7 billion to N9.24 billion. Selling and distribution expenses had increased from N1.51 billion to N1.85 billion while administrative expenses rose from N6.19 billion to N7.39 billion. The midline meanwhile was boosted by 285 per cent increase in interest and other non-core business incomes, which rose from N1.92 billion in 2012 to N7.41 billion in 2013. The large non-core business income was due to gains on restructured and disposed assets during the year.  This counterbalanced finance expenses, which rose by 18 per cent from N2.53 billion to N2.99 billion. With these, profit before tax rose by 30 per cent from N10.75 billion to N14.01 billion. Profit after tax also leapt by 39 per cent from N7.10 billion to N9.90 billion.

    Beyond the surface, the intrinsic profit-making capacity of the company improved in 2013. While gross profit margin dipped from 27 per cent to 24 per cent, pre-tax profit margin rose from 15.4 per cent to 17.8 per cent. Underlying returns were also better with return on total assets of 11.2 per cent in 2013 as against 8.7 per cent in 2012. Return on equity also rose from 11.7 per cent to 13.9 per cent.

    On Per share basis, basic earnings per share improved by 14.4 per cent from N2.57 to N2.94. The company increased cash dividends to N3.36 billion for the 2013 business year compared with N2.56 billion distributed for the 2012 business year. This implied a dividend per share of N1.75 in 2013 as against N1.60 in 2012. Against the background of 20 per cent increase in outstanding shares due to a one-for-five bonus in 2013, the adjusted earnings were higher and underlined the substantial increase in shareholders’ returns.  Notwithstanding the increase in cash payout, dividend cover increased from 1.61 times to 1.68 times. Net assets per share meanwhile stood at N37.13 in 2013 as against N37.85 in 2012.

     

    Liquidity

     

    The conglomerate continued to struggle with declining liquidity, although its average ratios remained within the acceptable range. Current ratio, which relates current assets to current liabilities, slipped from 1.22 times to 1.16 times. The proportion of working capital to total sales declined from 14 per cent to 8.7 per cent. Debtor/creditor ratio closed 2013 at 124.3 per cent compared with 117.2 per cent in 2012.

     

    Governance and

    structures

     

    Nigeria’s oldest surviving business, UACN started business in Nigeria in 1879, well ahead of the 1914 amalgamation that created the current Nigerian nation. A large group of several active companies spreading through manufacturing, services, logistics and real estate sectors of the Nigerian economy, the UACN Group includes four quoted subsidiaries-CAP Plc, UACN Property Development Company (UPDC) Plc, Livestock Feeds and Portland Paints and Products Nigeria Plc; in addition to the parent company, UACN. It acquired Livestock Feeds and Portland Paints in 2013. Other members of the group included UAC Foods Limited, MDS Logistics Limited, Warm Spring Waters Nigeria Limited, Grand Cereals Limited, and Unico CPFA Limited.

    Listed in 1974, UACN is owned by some 186,000 shareholders. The board and management of the conglomerate remained stable. Senator Udoma Udoma still chairs the board of director while Mr. Larry Ettah leads the group executive management. UACN is a well-structured group with long-established corporate best practices in compliance with local statutes and rules and global standards.

     

    Analyst’s opinion

     

    The overall performance outlook of UACN continued to reflect the success of the conglomerate’s restructuring, including divestments, reinvestments, new acquisitions and streamlining of businesses. The group has continued to implement key initiatives of its growth activation programme, with a view to driving efficiency and improving turnover. In 2013, it acquired two other quoted companies- Livestock Feeds and Portland Paints and Products Nigeria Plc, to further consolidate its market share in agriculture and building industry. The conglomerate also signed on to strategic international partnerships to drive its logistics and food and restaurant businesses.

    With a large portfolio of market-leading companies and highly competitive brands, there is reasonable basis to assume that UACN possesses the inherent strengths to cope with emerging challenges and sustain appreciable returns.

  • UACN: From restructuring to consolidation

    UACN: From restructuring to consolidation

    UAC of Nigeria (UACN) Plc, Nigeria’s largest conglomerate, has history on its side and the future in its sight. Striving to sustain its ambitious vision of being number one in every chosen market and its performance goal of growing at twice the national Gross Domestic Products (GDP) growth rate, UACN had undertaken comprehensive restructuring of its businesses- selling some and buying some. In the first year after the divestments and acquisitions, Capital Market Editor, Taofik Salako, provides insights into the performance of the conglomerate

    In the past two years, UACN had been the toast in the investment banking industry, especially in the areas of acquisitions and divestments. With several high-profile transactions, the conglomerate was virtually moving from one transaction to another. It sold its iconic share registration business-UACN Registrars, undertook partial divestments in its fast food and logistics businesses to bring in foreign investors while still tactically retaining 51 per cent slight majority equity stake and unbundled some of the real estate assets of its publicly quoted real estate and property business-UACN Property Development Company (UPDC) Plc, into a Real Estate Investment Trust (REIT), which is also quoted on the Nigerian Stock Exchange (NSE). In the same breath, the conglomerate acquired the majority shareholdings in Portland Paints and Products Plc, a paint and chemical company and Livestock Feeds Plc, which produces agricultural feeds.

    The deals appeared to be interlocked and seamless. The complete sale of the share registration business was a shrewd business decision. While the UACN Registrars represented a class on its own in terms of ethics and services, it held less market share in the highly fragmented industry; attending mainly to UACN and companies within the group. As new banking regulation forced changes in the share registration business, UACN took advantage of the opportunity to sell UACN Registrars, raking in a gain of more than N424 million. It sold 49 per cent equity stake in its wholly-owned quick-service restaurant – UAC Restaurants Limited (UACR), to Famous Brands Limited, a leading quick service and casual dining restaurant operator in Africa, which is listed on the Johannesburg Stock Exchange (JSE). The strategic partnership enables UACN to retain 51 per cent majority shareholding while providing opportunity for Famous Brands to expand its operations in Nigeria. Famous Brands Limited is an integrated food and beverage company whose primary activities include franchising of trademarks, either company owned or licensed, to Quick Service Restaurant franchisees and the manufacture and supply of products to these franchisees and the retail trade. Some of Famous Brands’ well known operations already in Nigeria include Debonairs Pizza and Steers. This, according to the rationales, will provide UAC Restaurants with the expertise and resources to redefine the landscape of the shrinking fast moving foods business.

    In another deal, UACN sold 49 per cent equity stake in its wholly-owned subsidiary- MDS Logistics Plc, to Imperial Logistics, the international logistics and supply chain arm of the South Africa-based Imperial Holdings Limited. UACN retains 51 per cent majority equity stake. MDS, previously a Division of UACN, is reputed to be Nigeria’s leading provider of integrated supply chain solutions including warehousing, haulage, distribution and redistribution in over 600 cities and villages connected by a network of 50 distribution centres across Nigeria. This fitted perfectly into Imperial Logistics’ market-entry strategy. A division of the Imperial Group, Imperial Logistics was established in 1946 and has grown to become an international logistics and supply chain leader delivering excellence in end-to-end logistics and supply chain management with operations in several African countries and in Europe.

    Looking to unlock further value in its real estate assets, UPDC floated a N30 billion Reits, under the management of FSDH Asset Management Limited (FAML), a leading capital market operator. The UPDC REIT will invest a maximum of 75 per cent in real estate, 25 per cent in real estate related assets and 10 per cent in liquid assets and cash. It would optimize returns to investors by exploiting emerging opportunities in the buoyant real estate industry and while taking advantage of the prime locations of the assets under the Reits. The UPDC Reit has since been listed on the NSE after a successful initial public offering (IPO).

    Simultaneously, UACN was busy ravenously buying up aligned businesses and assets. It acquired the majority equity stake in Portland Paints and Products Nigeria Plc, thus adding another quoted paints and allied products company into its portfolio. UACN already holds the controlling equity stake in CAP Plc, paints and allied products’ sectoral leader. Portland Paints and Products, which manufactures and markets an impressive array of decorative paints, industrial and marine coatings under the Sandtex, and Hempel brand names, brought new products into the group, especially its Armitage and Ideal Standard sanitary ware dealerships in Nigeria. The acquisition was premised on the potential synergies within the group, especially between CAP and Portland Paints on one hand and UPDC on the other hand.

    It had earlier acquired 51 per cent majority stake in Livestock Feeds Plc, a quoted agro-allied company. UACN acquired the 51 per cent equity stake at N1.3 billion; through acquisition of 11 per cent shareholdings valued at N400 million through the secondary market and 40 per cent equity stake through a private placement valued at N904 million. UACN, with its existing portfolio of agricultural businesses, planned to use Livestock Feeds as a catalyst to reach new market. The plan was to leverage on Livestock Feeds’ manufacturing platform to penetrate new market geographies as well as deepening presence in existing markets, enhance and consolidate market power, achieve scope and scale economies in procurement, production and optimise manufacturing configuration that mitigates concentration risks. UACN’s Grand Cereals Limited produces some similar products to Livestock Feeds.

    At the end of the restructuring, UACN has transformed into a holding group with nine subsidiaries spread across four vertical business segments. Besides UACN, the group consists of four other quoted companies spread across manufacturing, services, logistics, real estate and agricultural sectors. These include CAP Plc, UPDC, Livestock Feeds and Portland Paints and Products Plc. Besides, other members of the group include UAC Foods Limited, MDS Logistics Limited, Warm Spring Waters Nigeria Limited, Grand Cereals Limited and Unico CPFA Limited, a closed pension fund administrator.

     

    Facts of the matter

    While it used 2013 to wrap up the final deals; and it may be early to expect the full impact of the restructuring, the latest audited report and accounts of UACN indicated a headstart. Group audited report and accounts for the year ended December 31, 2013 showed that the group was on target, growing turnover by 13 per cent and net profit by 41 per cent. Group turnover rose from N69.0 billion in 2013 to N78.71 billion. However, with higher input costs, gross profit dipped slightly from N19.04 billion to N18.84 billion. With gains from the restructured businesses, operating profit rose by 32 per cent from N11.53 billion to N15.27 billion. Profit before tax also increased by 30 per cent from N10.75 billion to N14.01 billion. After taxes, net profit stood at N9.95 billion, 41 per cent above N7.04 billion recorded in 2012. The underlying indices also showed similar outlook. While gross profit margin dipped from 27.6 per cent to 23.94 per cent, pre-tax profit margin improved from 15.6 per cent to 17.8 per cent. The board of the conglomerate has recommended payment of a dividend per share of N1.75 to shareholders, totaling N3.36 billion. This sustained a progressive trend in its payout having paid N1.50 kobo in 2011 to N1.60 in 2012. The report represents a good performance; while turnover missed the projected target of N82 billion, pre-tax profit surpassed the previous estimate of N12 million.

     

    Tidying the loose ends

    The management of the conglomerate said it has started addressing key challenges, including rising financing charges, while optimising emerging opportunities. Chief Financial Officer, UAC of Nigeria (UACN) Plc, Abdul Bello, noted that financing charges, which rose by 61 per cent, was a major drawback as the group had to increase its short-term borrowing. He, however, noted the improving overall financing structure of the group, with lower debt-to-equity ratio due to reduction in debt as against increased equity funds as well as improved interest cover. Also, the group has decided to outsource its internal audit function to an international accounting firm with effect from this month. This will ensure enhanced independence and objectivity as well as provide the group access to leading internal audit methodologies and practices that will significantly improve the controls environment. The group had already completed risk assessment, diagnostic review and design of risk management framework for its enterprise risk management, with implementation expected as from this month.

    Group Managing Director, UAC of Nigeria (UACN) Plc, Mr Larry Ettah, said the group’s restructuring was driven by potential synergies and opportunities and was in line with overall strategy of building a portfolio of brands and businesses with exposure to the growth segments of the Nigerian economy, and partnerships that deliver long-term value to the company and its stakeholders.

    According to him, the group success factors included its increasingly efficient supply chain, large capacity, relatively huge access to capital, talented human resources and proactive engagement of the industry’s needs.

    He noted that while insecurity in the northern part of the country and the tough operating environment remained drawbacks, the group is focused on value creation through completion of some projects in the real estate segment, innovative joint ventures with land owners, launch of Gala Tinkies, launch of Cattle feed and launch of fish feed in Livestock Feeds. The group also undertook a general review of its internal synergies, including increased internal collaborations in procurement and distribution.

    Ettah outlined that the group’s focus in 2014 will be to simultaneously grow volumes and tackle margin challenges across key subsidiaries in order to deliver better profit. He added that the group will invest in enhancing its human and technological capacities while instituting best practices in enterprise risks management.

    According to him, the group will conclude the integration process for the new acquisitions while leveraging on its enhanced human and technological capacity to further innovation in products and service delivery.

    Many analysts agreed the variables appear to favour UACN going forward. With its ability to even out sectoral shocks, the conglomerate enlarged growth base seems to hold strong potential. Several incontrovertible macro variables support the optimistic view. Agriculture, Nigeria’s largest sector, hold strong potential under government’s pro-farm fiscal policy, and UACN has the national spread to play leading role in the sector. The building and construction industry, with its allied sectors such as paints sector, is a buoyant sector with significant headroom for growth. Nigeria is not only below average housing target, its national infrastructure is inadequate. Growing as emerging economy will imply substantial growth in these areas. Besides, expected growth in mortgage finance, domestic cement production and availability, per capita income and other related variables are expected to positively impact the demand for paints and accessories. As UACN consolidates the early gains, most stakeholders expect improved performance in the year.

  • UACN takes prime properties to Oyo

    •Olive Court Estate rises in Ibadan

    UACN Property Development Company Plc (UPDC) has over the years built a reputation for vintage properties in Lagos, Abuja and Port Harcourt but the company is now expanding to Ibadan and some other big cities, writes Okwy Iroegbu-Chikezie

    For real estate developers, Lagos, Abuja and Port Harcourt have always been first choice because of the high demand for upscale and exotic properties by the wealthy but this is about to change as UACN Property Development Company Plc (UPDC) is moving into previously untapped markets in Oyo State in a joint venture agreement with the government by building Olive Court estate in Ibadan, the state capital.

    Located on 2.04 hectares of land in the Agodi Government Reservation Area (GRA) opposite the Government House, Olive Court is where the very best of sub-urban living comes to life with beautifully designed, generously spacious houses, coupled with excellent leisure facilities.

    According to UPDC Managing Director, Hakeem Ogunniran, the ancient city of Ibadan has never had anything close to what his real estate company is currently building in the political capital of Southwest, Nigeria.

    Giving a breakdown of the housing units on offer, Ogunniran said, there are 9 units of 5-bedroom detached houses, 22 units of 4-bedroom semi-detached houses and 19 units of 4-bedroom terraces.

    Facilities include swimming pool, gymnasium and children’s play ground. Others are borehole and sewage treatment plant, fire and burglar systems, PHCN and standby generator including ample parking space for residents and visitors.

    The real estate company has also expanded to Calabar, the Cross River capital in a bid to compliment the world acclaimed tourist destination. Tinapa, in yet another joint venture arrangement  with the state government  to develop the Golf Estate, a 178 unit estate very close to the Summit Hill estate that epitomise luxury and pleasurable living that has become the toast of tourists across the world.

    On Pineville estate in Asaba, the UPDC chief said, though it didn’t work out as a joint venture project with the government, the exclusive estate located on one hectare of land in Asaba, the Delta State capital features contemporary design which exudes grace and style, adding to the magnificence of the capital city.

    He said: “Built to instill pride and pleasure in its residents, Pineville adds a touch of exclusivity by offering just 20 housing units which consists of 4 units of 5-bedroom detached houses and 16 units of 4-bedroom semi-detached houses. The units also come with full compliments of UPDC standards and even more”.

    On the reason behind the change in strategy and choice of cities, the UPDC MD said, his firm researched and came into a conclusion which led to the critical decision as a result of some business fundamental factors such as massive infrastructure and urban renewal programmes in the chosen states, the ease of doing business, land reforms and ease of obtaining land tiles etc.

    On plans to make inroads into other states, Ogunniran said that will be a sound business decision based on the efforts of the state government’s concerned to revive their infrastructure and create an enabling environment.

    According to him, real estate development has ceased to be a 100 metre dash but a marathon as investors demand good returns “so our move will only be determined by sound business decisions”.

    Ogunniran said the company’s presence is still very strong in Lagos as it had redeveloped the former FESTAC 77 Hotel into what is today known as Golden Tulip Hotel with all modern trappings. Currently, the company is delivering a mixed development in the hotel known as The Residences, adding that the apartments will be an ideal location for both business and pleasure. “Whether you chose a short let apartment, an office space or decide to make a home of the building, rest assured you will always be in the thick of all the activities and goings-on which its prestigious neigbours have to offer,” he enthused.

    In his words: “The Residences divided into wings will comprise of  88 units of one-bedroom apartments in the Wing 1, while the Wing 2 will accommodate 8 floors of commercial offices and Wing 3 will consists of 18 units of one-bedroom apartments and 46 units of 2-bedroom apartments”.

    In a related development, UPDC has also unveiled James Pinnock Place (Phase 111) Lekki in Lagos on about 3 hectares of land with the waterfront portion of the estate directly facing the Lagoon, ensuring a cool and airy atmosphere for residents. The 83 housing units offer an exceptional lifestyle, and doubles as an excellent investment opportunity as the Lekki axis continues in its phenomenal development. It consists of 11 units of 5-bedroom detached houses, 28 units of 4-bedroom semi-detached houses, 42 units of 3-bedroom apartments and 2 units of 4-bedroom maisonette all with boys’ quarters.

     

  • UACN Group makes N8.6b profit in Q3

    UACN Group makes N8.6b profit in Q3

    •Targets N20bn sales in Q4

    Nigeria’s largest conglomerate, UAC of Nigeria (UACN) Plc, witnessed considerable growths in turnover and profit in the third quarter after it consolidated earnings from two new acquisitions this year.

    Nine-month earnings report of UACN Group for the period ended September 30, 2013 showed double-digit growths from the top-line to the bottom-line, raising expectations that the conglomerate may at least sustain its payout rate in spite of bonus shares of 20 per cent declared recently.

    The third quarter report included earnings from Livestock Feeds and Portland Paints and Products Plc, two publicly quoted companies which acquisitions were completed recently. UACN Group also included two other quoted subsidiaries-CAP Plc and UACN Property Development Company (UPDC) Plc. Other members of the group included UAC Foods Limited, MDS Logistics Limited, Warm Spring Waters Nigeria Limited, Grand Cereals Limited, and Unico CPFA Limited.

    Group turnover rose by 27 per cent to N60.47 billion in the third quarter of 2013 compared with N47.53 billion recorded in comparable period of 2012. Gross profit increased by 13 per cent from N12.60 billion to N14.23 billion. Operating profit fared better with an increase of 46 per cent to N10.09 billion as against N6.89 billion in comparable period of 2012. Profit before tax grew by 47 per cent from N5.83 billion to ZN8.60 billion while profit after tax increased by 49 per cent to N5.85 billion in 2013 as against N3.91 billion recorded in comparable period of 2012. Nine-month’s basic earnings per share stood at N2.29 in 2013 as against N1.76 in 2012.

    UACN Group had translated such high profit margins into improved returns to shareholders in 2012, with increase in cash dividend to N1.60 per share and additional scrip issue of 20 per cent.

    Audited report for the year ended December 31, 2012 had shown that group’s total sales increased by 16.8 per cent from N59.64 billion in 2011 to N69.63 billion in 2012. Cost of sales rose by 15.5 per cent to N50.58 billion as against N43.78 billion. Gross profit thus increased by 20 per cent from N15.86 billion to N19.05 billion. Total operating expenses dropped to N7.70 billion as against N9.42 billion in previous year. Profit before tax leapt by 54 per cent from N6.99 billion to N10.75 billion. After taxes, net profit for the year doubled from N3.41 billion to N7.10 billion.

    Group managing director, UACN Plc, Mr. Larry Ettah, at the weekend said the group could add N20 billion in additional turnover in the fourth quarter to push total turnover by the end of the 2013 business year to N80 billion.

    He said the conglomerate would further consolidate its performance in 2014 with the aim of achieving turnover of N100 billion by the end of the year.

    “By the end of 2014, my mandate is to build a company that has a minimum turnover of N100 billion. Already, we have been able to grow our business to the tune of N60 billion in nine months and we project that at the close of business this year, we should be able to close the year at over N80 billion,” Ettah said.

    According to him, if the conglomerate keeps to its target of growing its business twice at the rate of the national GDP growth, then it can boast of average growth of 10 per cent over the next two years, which will bring its top-line to more than N100 billion.

    He outlined that the conglomerate had taken several steps to reposition itself for significant growth noting that strategic partnerships such as the sale of 49 per cent stake in UAC Restaurants to Famous Brands of South Africa and the acquisition of 51 per cent stake in Livestock Feeds Plc were aimed at repositioning towards attaining stable growth over the years.

    “We got all these acquisitions done to improve on what we see as exposures to areas with future growth potential in our economy,” Ettah said.

  • What group advantage for UACN?

    What group advantage for UACN?

    Three companies within the UAC of Nigeria (UACN) Group released their first-half reports at the weekend. With strong growths by two larger companies-UACN, UPDC; the results showed a robust outlook for the conglomerate. Taofik Salako reports that results by other companies within the group may further shape the conglomerate’s outlook

    There is hardly any stock as influential as UAC of Nigeria (UACN) Plc and its subsidiaries. Obviously Nigeria’s largest and most active conglomerate, UACN Group comprises of five quoted companies spread across manufacturing, services, logistics, real estate and agricultural sectors of the Nigerian economy. The UACN Group includes- UACN, CAP Plc, UACN Property Development Company (UPDC) Plc, Livestock Feeds and Portland Paints and Products Plc. Besides the five quoted companies, other members of the group include UAC Foods Limited, MDS Logistics Limited, Warm Spring Waters Nigeria Limited, Grand Cereals Limited and Unico CPFA Limited.

    With a year-to-date return of 50 per cent, the market value of UACN has grown considerably this year. UACN opens today with nearly some 18 percentage points ahead of the average return at the stock market. The main index at the Nigerian Stock Exchange (NSE), the All Share Index (ASI), opens trading today with a year-to-date return of 32.29 per cent.

    UACN opens today at N63 per share, 50 per cent on its year’s opening value of N42. With a high of N71.10, the conglomerate has shown the strongest resilience this year. It had reached a high of N43.99 per share in 2012. UACN’s share price had traded between a range of N58.48 and N36.16 to close 2010 at N37.51. In 2011, the conglomerate pricing trend ranged between N42.50 and N28.70 before it closed at N31.18. But these recent periods have seen an increasingly resilient performance by the conglomerate and its major constituents. Viewed against full-year return of -16.9 per cent in 2011 and 34.7 per cent in 2012, the current year-to-date return signals major recovery for the stock.

     

    Stronger earnings

    The three quoted companies that formed the nucleus of the UACN Group-UACN, UPDC and CAP, at the weekend released their six-month reports for the first half ended June 30, 2013. The three companies sustained growths in turnover and profit, with remarkable improvements in the operations of UACN and UPDC, the two largest members of the group.

    UACN grew sales by about 24 per cent and further optimized costs to deliver higher growths of 50.5 per cent and 33.9 per cent in profits before and after tax respectively. UPDC followed the same pattern, turning 22 per cent growth in turnover into 138 per cent and 137 per cent increase in profit before tax and profit after tax respectively.

    UACN’s turnover rose to N37.71 billion in first half of 2013 as against N30.50 recorded in comparable period of 2012. Profit before tax jumped from N3.47 billion to N5.22 billion. Profit after tax also increased from N2.14 billion in 2012 to N3.44 billion in 2013. With these, earnings per share increased to N1.69 in first half 2013 compared with N1.24 recorded in corresponding period of 2012.

    UPDC grew earnings per share by 137 per cent from 44.5 kobo in first half of 2012 to N1.07 in first half 2013. Turnover rose from N5.19 billion to N6.32 billion. Profit before tax more than doubled to N1.62 billion as against N683 million in comparable period of previous year. Profit after tax also rose from N616.88 million to N1.46 billion.

    On the other hand, CAP showed modest but steady performance. Turnover of the paints and allied company increased by 14 per cent from N2.53 billion to N2.88 billion. Profit before tax inched up by 7.0 per cent to N909.6 million compared with N849.3 million. Profit after tax followed the same trend at N618.5 million in 2013 compared with N577.5 million in 2012.

     

    Consolidating the growth

    The first-half reports showed continuing improvements in the market share and profitability of the conglomerate. Audited report and accounts of UACN for the year ended December 31, 2012 had shown that sales rose by about 17 per cent, but increasingly efficient top-down cost management leapfrogged net profit by 108 per cent. The improvement in profitability reflected on actual dividends to shareholders with modest increase in cash dividend to N1.60 per share in addition to a scrip issue of 20 per cent. Actual profit and loss figures showed impressive top-down growths while underlying fundamental indices affirmed improvement in intrinsic profit-making capacity of the group. Gross profit margin improved from 26.6 per cent in 2011 to 27.4 per cent. Average profit before tax margin scaled up to 15.4 per cent compared with 11.7 per cent. Return on total assets improved from 5.8 per cent to 8.7 per cent while return on equity nearly doubled from 6.0 per cent to 11.7 per cent. Group’s total sales increased by 16.8 per cent from N59.64 billion in 2011 to N69.63 billion in 2012. Gross profit thus increased by 20 per cent from N15.86 billion to N19.05 billion. Profit before tax leapt by 54 per cent from N6.99 billion to N10.75 billion. After taxes, net profit for the year doubled from N3.41 billion to N7.10 billion. Group’s earnings analysis indicated earnings per share of N4.44 in 2012, more than double of N2.13 recorded in 2011. Net assets per share also improved from N35.64 to N37.85.

    Audited report and accounts of UPDC for the year ended December 31, 2012 had shown that turnover rose by 78 per cent to N12.04 billion as against N6.78 billion in 2011. Profit before tax stood at N2.45 billion as against N2.40 billion in previous year. Profit after tax rose by 30.5 per cent from N1.67 billion to N2.18 billion. Shareholders of the company received dividend of N962.5 million, representing a dividend per share of 70 kobo.

    In the same vein, audited report and accounts of CAP for the year ended December 31, 2012 had shown turnover of N5.23 billion in 2012 as against N4.31 billion in 2011. Profit before tax rose from N1.36 billion to N1.66 billion while profit after tax increased to N1.12 billion as against N1.05 billion in previous year. Earnings per share closed 2012 at N1.99 compared with N1.87 in 2011. CAP paid final dividend of N392 million, representing 70 kobo per share. The company had paid interim dividend of 125 kobo per share earlier in November 2012, bringing total dividend for 2012 business year to N1.092 billion or N1.95 per share. In addition, it distributed bonus issue of one ordinary share of 50k each for every four ordinary shares of 50k each.

     

    Strengthening the group

    UACN had recently concluded acquisition of two other quoted companies-Livestock Feeds and Portland Paints and Products Plc (Portland Paints). The acquisitions represented major market consolidations for the conglomerate, which already has significant interests in related businesses. The acquisitions are expected to deepen the conglomerate’s control in existing markets and create synergies for growth through larger scope and scale economies in procurement, production and distribution.

    The acquisition of Portland Paints will not only enhance the existing decorative paints portfolio of the UACN Group, but it also holds possibilities for new businesses. Besides its flagship brand-Sandtex, Portland Paints’ products include marine and protective coatings for oil and gas sector, sanitary ware, instant road repair material for repairs in all weather for cracks and potholes in asphalt, concrete and landing runway areas in airports as well as its traditional decorative and industrial paints. UACN, with its market-leading UPDC in the real estate sector, will find cost-saving synergies from other non-paint businesses of Portland Paints.

    Besides, the acquisition of Livestock Feeds is expected to substantially impact on the group’s market share and control in the agriculture sector, where it already has substantial investment. It is envisaged that the business combination with Livestock Feeds would lead to significant development of the agro-allied business industry, a key pivot of Nigeria’s drive for enhanced agricultural sector contribution to the national economy. The value propositions of the acquisition included the ability to create a new catalyst that would allow Livestock Feeds to penetrate new markets as well as deepen its presence in existing markets.

    Group managing director, UAC of Nigeria, Mr. Larry Ettah, believed recent initiatives would strengthen individual company and cumulate into better returns for the group. According to him, UPDC has been positioned to take advantage of the huge opportunities in the real estate sector with a view to enhance returns to shareholders. He outlined that the company has taken strategic initiatives to grow its business and ensure the benefits thereon get to the shareholders. He said the real estate company would continue to seek means of deleveraging its balance sheet with a view to secure improved returns for shareholders in the future.

    “The real estate sector continues to be attractive with the huge housing deficit of about 17 million units, the growing population and the emerging middle class. Partnership opportunities are also emerging across different segments of the market and your company is poised to take advantage of them,’’ Ettah said.

    He said CAP will combine plant efficiency with new innovations aimed at simultaneously improving customer’s satisfaction while enhancing profitability. According to him, with the support of its technical partners, CAP would continue to grow and reinforce its brand equity and its distribution channels will be geared towards reaching the under-served retail end by opening more Dulux Colour Shops to make the brand more accessible to the aspiring consumers across the country.

    “We will focus on, and invest in, plant efficiency to improve customer service delivery and reduce operational costs,’’ Ettah said.

    With its ability to even out sectoral shocks, UACN’s enlarged growth base holds strong potential. While it may be too early to pinpoint the actual synergistic values of its expansionary drives and the headwinds of costs also still remain threats, there are several incontrovertible macro variables that suggest some potential. First, agricultural businesses hold strong potential under government’s pro-farm fiscal policy. With several sector-specific intervention funds and fiscal concessions, UACN can leverage on government’s incentives to strengthen its internal productivity. The building and construction industry, with its allied sectors such as paints sector, is a buoyant sector with significant headroom for growth. Nigeria is not only below average housing target, its national infrastructure is inadequate. Growing as emerging economy will imply substantial growth in these areas. Besides, expected growth in mortgage finance, domestic cement production and availability, per capita income and other related variables would positively impact the demand for paints and accessories. These are the considerations that may weigh in on the market value of the group in the period ahead.

     

     

     

  • UACN closes on Portland Paints’ acquisition deal

    The Boards of Directors of UAC of Nigeria (UACN) Plc and Portland Paints and Products Plc have executed definitive agreements in technical finalisation of the bid by UACN to acquire majority equity stake in the latter.

    The Nation gathered that the execution of definitive agreements has transited the scheme of acquisition to the regulatory authorities for their final approvals. The Securities and Exchange Commission (SEC), the apex capital market regulator that oversees mergers and acquisitions, was said to be considering the scheme.

    The definitive agreements set out the specific details of the business combination including the size, price, payment structure, changes in shareholding structure, and share exchange ratio if any.

    Market sources indicated that the final approval for the acquisition might come in June, in line with the second quarter expectation of the parties for the completion of the business combination.

    SEC is statutorily empowered to enforce full disclosures and transparency but it does not decide transactional details for parties to an issue. Its functions also do not include that of any anti-trust investigation, which usually could take longer review. As such, well-defined definitive agreements only require considerations of terms and agreements of the parties in the light of disclosures and regulatory filings and procedures.

    While UACN had concluded final phase of a similar deal for acquisition of majority equity stake in Livestock Feeds Plc last February, it received regulatory approval in March.

    Although the details of the definitive agreements with Portland Paints are yet to be made public, a source said UACN would go for at least 51 per cent and the deal could be around N1billion.

    UACN had acquired 51 per cent equity stake in Livestock Feeds at N1.3 billion. The deal was consummated through acquisition of 11 per cent shareholdings valued at N400 million through the secondary market and 40 per cent equity stake through a private placement valued at N904 million.

    UACN had in July last year announced that it had signed memorandum of understanding (MoU) with Portland Paints with a view to acquiring substantial equity stake in the company.

    UACN, which holds the controlling equity stake in CAP Plc, the largest quoted paints and chemical company, is seeking to leverage on potential synergies between CAP and Portland Paints, an equally profitable niche player with strong brands.

    The transaction will allow Portland Paints to leverage the relative strengths of UACN and yield considerable benefit to stakeholders in both companies.

    UACN has said its acquisitions were in furtherance of its strategy of building a portfolio of brands and businesses geared to the growth segments of the Nigerian economy, and partnerships that deliver long-term value to the company and its stakeholders.

    With their established presence in the paint industry, both UACN and Portland Paints are positioned to partner on deepening their presence in existing markets, achieve scope and scale economies in procurement, production and distribution.

    Portland Paints’ products include marine and protective coatings for oil and gas sector, sanitary ware, instant road repair material for repairs in all weather for cracks and potholes in asphalt, concrete and landing runway areas in airports as well as its traditional decorative and industrial paints.

    UACN is a large group of several active companies spreading through manufacturing, services, logistics and real estate sectors of the economy, the addition of Portland Paints would further enlarge the UACN Group.

    The UACN Group includes three quoted subsidiaries – CAP Plc, Livestock Feeds and UACN Property Development Company (UPDC) Plc; UAC Foods Limited, MDS Logistics Limited, Warm Spring Waters Nigeria Limited, Grand Cereals Limited, and Unico CPFA Limited.

    It has been divesting from some businesses as it refocuses on good-margin businesses. UACN is owned by more than 187,000 shareholders.

  • UACN closes on Portland Paints’ acquisition deal

    The Boards of Directors of UAC of Nigeria (UACN) Plc and Portland Paints and Products Plc have executed definitive agreements in technical finalisation of the bid by UACN to acquire majority equity stake in the latter.

    The Nation gathered that the execution of definitive agreements has transited the scheme of acquisition to the regulatory authorities for their final approvals. The Securities and Exchange Commission (SEC), the apex capital market regulator that oversees mergers and acquisitions, was said to be considering the scheme.

    The definitive agreements set out the specific details of the business combination including the size, price, payment structure, changes in shareholding structure, and share exchange ratio if any.

    Market sources indicated that the final approval for the acquisition might come in June, in line with the second quarter expectation of the parties for the completion of the business combination.

    SEC is statutorily empowered to enforce full disclosures and transparency but it does not decide transactional details for parties to an issue. Its functions also do not include that of any anti-trust investigation, which usually could take longer review. As such, well-defined definitive agreements only require considerations of terms and agreements of the parties in the light of disclosures and regulatory filings and procedures.

    While UACN had concluded final phase of a similar deal for acquisition of majority equity stake in Livestock Feeds Plc last February, it received regulatory approval in March.

    Although the details of the definitive agreements with Portland Paints are yet to be made public, a source said UACN would go for at least 51 per cent and the deal could be around N1billion.

    UACN had acquired 51 per cent equity stake in Livestock Feeds at N1.3 billion. The deal was consummated through acquisition of 11 per cent shareholdings valued at N400 million through the secondary market and 40 per cent equity stake through a private placement valued at N904 million.

    UACN had in July last year announced that it had signed memorandum of understanding (MoU) with Portland Paints with a view to acquiring substantial equity stake in the company.

    UACN, which holds the controlling equity stake in CAP Plc, the largest quoted paints and chemical company, is seeking to leverage on potential synergies between CAP and Portland Paints, an equally profitable niche player with strong brands.

    The transaction will allow Portland Paints to leverage the relative strengths of UACN and yield considerable benefit to stakeholders in both companies.

    UACN has said its acquisitions were in furtherance of its strategy of building a portfolio of brands and businesses geared to the growth segments of the Nigerian economy, and partnerships that deliver long-term value to the company and its stakeholders.

    With their established presence in the paint industry, both UACN and Portland Paints are positioned to partner on deepening their presence in existing markets, achieve scope and scale economies in procurement, production and distribution.

    Portland Paints’ products include marine and protective coatings for oil and gas sector, sanitary ware, instant road repair material for repairs in all weather for cracks and potholes in asphalt, concrete and landing runway areas in airports as well as its traditional decorative and industrial paints.

    UACN is a large group of several active companies spreading through manufacturing, services, logistics and real estate sectors of the economy, the addition of Portland Paints would further enlarge the UACN Group.

    The UACN Group includes three quoted subsidiaries – CAP Plc, Livestock Feeds and UACN Property Development Company (UPDC) Plc; UAC Foods Limited, MDS Logistics Limited, Warm Spring Waters Nigeria Limited, Grand Cereals Limited, and Unico CPFA Limited.

    It has been divesting from some businesses as it refocuses on good-margin businesses. UACN is owned by more than 187,000 shareholders.

  • How Dangote, UACN, others are reviving stock market

    How Dangote, UACN, others are reviving stock market

    On Friday, the stock market hit a level not seen since its crash in 2008. It rose by almost two per cent. Dangote Cement, UACN,banks,  and offshore investors are playing key roles in the market’s rebirth, writes OLUKOREDE YISHAU

    Friday was a good day for the stock market, which crumbled in 2008. The market peaked at a capitalisation of N12.62 trillion in March 2008. But by October 2008, it fell drastically from its peak of 65,213 points.

    No thanks to the global financial and local banking crises, the market’s value was reduced to N6.27 trillion in November 2011. This led to a crisis, which almost wrecked nine banks, until the Central Bank of Nigeria (CBN) intervened, with the Asset Management Corporation of Nigeria (AMCON), which bought up the non-performing loans from the banks.

    Between 2005 and March 2008, total issues by corporate organisations rose from N412.7 billion in 2005 to N1.34 trillion in 2007. Market capitalisation of all quoted companies rose from N2.5 trillion in 2005 to N12.1 trillion in March 2008.

    It was a boom later discovered to have been fuelled by malpractices. Issuers and operators were found to have manipulated share prices to sell overvalued stocks to investors.

    A lot of banks were discovered to have used depositors’ funds to pump up shares.

    It was not surprising when market capitalisation plummeted to N4.99 trillion in 2009.

    In 2011, investors lost N1.4 trillion. Aggregate market capitalisation of all quoted companies dwindled from N7.914 trillion to N6.533 trillion. Almost all indices at the (Nigerian Stock Exchange (NSE) were in the red. Total trading value dropped by 20 per cent to N634.92 billion. Average daily transactions also declined by 19 per cent to N2.68 billion.

    Many individuals have lost almost their entire investments. They are yet to recover, but if the almost two percent rise of the market on Friday is anything to go by, observers believe the pre-November 28, 2008 boom may soon return.

    The rise was attributed to the conglomerate UACN Plc, the banking sector and Dangote Cement Plc.

    The index closed 1.76 percent higher at 35,109 points.

    UACN’s shares hit N64.68 per share, representing the maximum 10 per cent up for the taking; Union Bank gained 10 percent to have a value of N9.78 per share and Dangote Cement recorded 3.82 percent to a record high of N185 per share.

    These are indeed good times for UACN, which last Thursday released a data showing that its 2012 pre-tax profit rose by 53.6 percent to N10.74 billion, from N6.99 billion the previous year.

    The company said its turnover rose by 16.8 percent to N69.63 billion, compared with N59.64 billion in 2011.

    The company, which has interest in food business with South Africa’s Tiger Brand, offered its shareholders a dividend of N1.60, compared with N1.5 paid the previous year and a bonus issue of one share for every five held.

    It is not surprising that Dangote Cement is helping the stock market. The first quarter of the year was good for the leading cement producer, with three plants in the country and plans to expand in 13 other African countries. Last week, it announced its impressive unaudited results for the first quarter of 2013.

    The highlights of the unaudited report include a consolidated group revenue of N95.4 billion (up 39.5 per cent), and gross profits of N66.0 billion ( up 64.7 per cent).

    Within the first quarter, sales volumes rose to 3.33 million tonnes, representing about 40 per cent growth.

    Chief Executive of Dangote Cement, Devakumar Edwin, said the company’s business in the first quarter started on a good note.

    He said: “The year has begun well for Dangote Cement and our 38 per cent increase in volumes far outpaced the Nigerian market’s strong growth of 16 per cent. Our gas supply has been better this year and that has driven margins upwards from the first quarter of 2012, when our new capacity at Ibese and Obajana was just coming on-stream.

    “We are increasing our focus on delivering directly to our customers and have made it easier for them to order and pay for our cement. This has allowed us to improve our position in the market and we remain confident of a good year.”

    The company’s audited report for 2012 shows that the group’s operations in Nigeria recorded N285.6 billion as gains.

    The CEO said: “In the first half of the year (2012), we launched 11 million tonnes of new capacity that brought Nigeria to self-sufficiency in cement production. Because of our investments there is no more need for Nigerians to buy foreign cement.

    “By the end of 2012, we were preparing to make Nigeria an exporter of cement to neighbouring countries and in the first quarter of 2013 we realised that goal, to the benefit of the Nigerian economy. Soon, we hope to be manufacturing cement in Senegal as we expand into other African countries to supply a basic but profitable commodity that is vital to Africa’s growth.

    “Current trading is strong. We estimate that demand for cement in Nigeria increased by almost 16 per cent in the first quarter of 2013,” he said; adding that the firm’s volumes rose by substantially more than the market’s growth rate in the same period, boosting the firm’s optimism for a very positive business year.”

    Dangote controls about 70 per cent of the cement market, with the three other main producers of cement – Lafarge WAPCO, UNICEM, and Ashaka Cement, scrambling for the rest.

    Speaking on Friday, the President of Dangote Group, who also doubles as NSE president, Aliko Dangote, said Nigeria was on the way to becoming the gateway to African capital markets.

    Dangote, Africa’s richest man, spoke at the 52nd Annual General Meeting (AGM) of the NSE in Lagos. He said the NSE had invested N40 million in the Nigerian Association of Securities Dealers Ltd (NASD) to boost the market. He said the investment was made last year.

    NASD is a platform for the trading of unlisted equities, bonds and money market instruments.

    As a way of further boosting the stock market, he said N50 million was invested in FMDQ OTC Plc, a firm registered to carry out the business of securities dealings.

    Dangote said: “We made a strategic decision to invest in FMDQ to broaden our market reach, diversify revenue stream and to remain at the forefront of an evolving globally competitive financial market.”

    Apart from the contributions of the NSE’s management, Dangote Cement, UACN and the banks, offshore investors have also shown more interest in the market. So, the price surge has been attributed to them.

    So, is the market on the way to full recovery? Many dealers believe so. They said operators were capitalising on the growth in the economy, expanding consumer base and the opportunities created by the privatisation of the power sector.

    “The market is being driven largely by investors’ reactions to the positive financials posted by the banking and consumer sectors, and the sustained growth in the economy.

    “If you look at the American stock index, it has surpassed its pre-2008 level and Nigerian stock is still below half of its peak in 2008, so we have room to grow further,” Rasheed Yussuf, a stock broker, told Reuters.

    The chairman, Securities and Exchange Commission (SEC), Suleiman Ndanusa, said the stock market now had global competitive edge. He said the dividends of the reforms in the market in the last three years are now being felt.