UAC of Nigeria Plc (NSE – UACN) recorded a 27.8% decline in profit after taxation from continuing operations despite a 3.0% rise in revenue according to the Unaudited Financial Statements for the year ended 31 December 2020 released by the company.
The decline in profit was due to increases in the cost of sales and administrative expenses, coupled with a decline in other operating income and net finance income.
However, in Q4 2020, the company recorded a 6.3% growth in revenue and a massive 152.3% rise in the profit after taxation compared to Q4 2019.
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Q4 2020 (October to December)
Revenue grew by 6.3% to N23.8 billion from N22.4 billion in Q4 2019.
The gross profit declined by 13.1% to N4.3 billion from N5 billion in Q4 2019 due to an 11.9% rise in the cost of sales to N19.5 billion. Thus, a gross margin of 18.1% down from 22.2% in Q4 2019.
However, the profit after taxation in Q4 2020 rose by 152.3% to N2.4 billion from N954.2 million in Q4 2019 due to declines in both ‘selling and distribution expenses’ and ‘administrative expenses’ coupled with N1.05 billion recorded as a “share of profit of associates and joint venture using the equity method” in Q4 2020.
The full Year 2020
UAC of Nigeria Plc grew its revenue by 3.0% to N81.6 billion from N79.2 billion in 2019. However, the cost of sales rose disproportionately with the revenue thus, resulting in a 5.5% decline in the gross profit.
The cost of sales accounted for 80.7% (N65.9 billion) of the total revenue with the gross profit declining to N15.7 billion from N16.6 billion in 2019.
The gross profit margin declined to 19.3% from 21% in 2019.
Components of revenue
- Animal Feeds & Other Edibles – N54.2 billion (gross profit – N6.5 billion)
- Paints – N10.4 billion (gross profit – N4.2 billion)
- Packaged Food & Beverages – N17.9 billion (gross profit – N4.4 billion)
- QSR – N1.5 billion (gross profit – N344 million)
The operating profit declined by 35.7% to N3.6 billion from N5.7 billion in 2019 due to increases in operating costs and a decline in other operating income to N1.1 billion from N2.4 billion in 2019.
UAC of Nigeria Plc earned N1.2 billion in 2020 from “share of profit of associates and joint venture using the equity method.” There was no earning in this category in 2019.
The profit after taxation from continuing operations settled at N3.9 billion, a 27.8% decline from N5.3 billion in 2019.
N469.7 million profit was recorded from discontinued operations compared to a loss of N14.6 billion registered in 2019.
Thus, UAC of Nigeria Plc reported a profit of N4.3 billion for the period in 2020 up from a loss of N9.3 billion in 2019.
The EPS from continuing operations stood at 85 kobo. The EPS from discontinued operations stood at 21 kobo. The EPS from profit for the period settled at 106 kobo.
Balance sheet
The total assets declined by 15.1% to N91.3 billion from N107.6 billion in 2019.
Major changes in the assets column
N13.1 billion was registered as an investment in associates in 2020 (zero in 2019).
Assets of a disposal group classified as held for sale/distribution to owners declined to just N3.9 million from N36.4 billion recorded in 2019.
Similarly, the total liabilities dropped by 37% to N29.6 billion from N47.1 billion in 2019.
Total equity rose slightly by 1.9% to N61.7 billion from N60.5 billion in 2019. Retained earning made up 53.7% of the total equity.
The retained earnings rose by 10.4% to N33.1 billion in 2020 from N30 billion in 2019.
The cash & cash equivalents at the end of the period after adjusting for bank overdraft stood at N24.2 billion (N23.9 billion in 2019).
- Net cash generated from operating activities – N1.1 billion (N2.7 billion was used in 2019).
- Net cash generated from investing activities – N1.3 billion (N494 million was used in 2019).
- Net cash used in financing activities – N2.2 billion (N3.2 billion was used in 2019).
- The company held N23.9 billion cash & cash equivalents at the beginning of 2020.
Equity price of UAC of Nigeria Plc rose by 2.45% at the close of trading on Friday to N8.35 per share. YTD it is up by 15.17% while in 3 years and 5 years it is down by 50.88% and 60.03% respectively.
The 52 week high and low prices are N9.5 and N5.4 respectively.
Activities during the year
UACN entered into a binding agreement to sell 51% of its shareholding in UPDC to Custodian Investment Plc. The first and second tranche of the transaction resulting in a disposal of 51% have been carried out. Consequent to the sale, UACN owns 42.85% of UPDC. Hence, UPDC has been reclassified as an Investment in associate.
On July 2019, UACN entered into an agreement to sell 8% of its shareholding in MDS to Imperial Capital Limited (ICL). Consequent to the sale, UACN owns 43% of MDS having ceded control. The transaction was concluded in the 2020 financial year.
UPDC provided a Revenue Guarantee of $2million (Two Million Dollars) for a loan taken by First Festival Mall Ltd, a Joint Venture. The loan has fallen due and First Festival Mall Ltd. was not able to repay.
As a result of this, the lender called on the guarantee in May 2020. A provision has been made for this guarantee to the tune of $2million (Two Million Dollars) at the exchange rate of N1 – $387.96.
About UAC of Nigeria Plc
UAC of Nigeria Plc (‘the Company’) and its subsidiaries (together ‘the Group’) is a company incorporated in Nigeria.
The Group is a diversified business with activities in the following principal sectors: Animal Feeds and Other Edibles, Paints, Packaged Foods and Beverages, Quick Service Restaurants, Logistics and Real Estate.
The address of the registered office is 1-5, Odunlami Street, Lagos. The company is a public limited company, domiciled in Nigeria and listed on The Nigerian Stock Exchange domiciled in Nigeria.
Ifunanya Ikueze is an Engineer, Safety Professional, Writer, Investor, Entrepreneur and Educator.
