UAC of Nigeria: Topline growth and improved margins drive underlying earnings growth in Q3

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UAC of Nigeria PLC announced its unaudited results for the third quarter and nine months ended 30 September 2020.

Group Performance and Financial Review: Q3 2020

Revenue in Q3 2020 increased 10.5% to ₦21.2 billion from ₦19.2 billion in Q3 2019 as a result of revenue growth across all operating segments (Animal Feeds & Other Edibles +10%, Paints +18%, Packaged Food and Beverages +8%, and Quick Service Restaurants +16%).

Volume growth in the fish feed and cereals categories, as well as, price increases across major categories to offset rising raw material costs contributed to topline growth in the Animal Feeds & Other Edibles segment. Paints sales rebounded strongly following the easing of COVID-19 related restrictions, growing 18% compared to the same quarter last year as a result of strong volume growth across the portfolio.

UAC of Nigeria: Topline growth and improved margins drive underlying earnings growth in Q3

The Packaged Food and Beverages segment achieved growth in key categories i.e snacks, dairy, and water. Quick Service Restaurants revenue growth was primarily driven by sales from recently launched company-owned restaurants.

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Gross profit increased 20.1% YoY to ₦4.4 billion in Q3 2020, with gross margin increasing 167 bps to 20.8%. Margin expansion was largely on account of price increases and increased sales of higher-margin categories in the Animal Feeds & Other Edibles segment.

EBIT declined 23.7% to ₦1.2 billion in Q3 2020, however, adjusting for non-recurring and non-operating income in Q3 2019 (profit from the sale of non-core real estate +₦631.3 million and writeback of statute-barred unclaimed dividend +₦206.3 million), underlying EBIT increased 65.1% YoY and EBIT margin increased 186bps to 5.6%. A key contributor to the improvement in underlying EBIT was the 642.5% YoY increase in Animal Feeds & Other Edibles operating profit in Q3 2020.

Underlying Profit Before Tax in Q3 2020 increased 34.0% YoY to ₦1.4 billion. Profit after Tax from continuing operations rose to ₦1.2 billion, up 8.1% YoY against ₦1.1 billion in Q3 2019. A ₦493 million loss from discontinued operations was recognised in Q3 2020 attributable to UPDC versus the ₦14.0 billion loss recorded in Q3 2019.

As a result, UAC’s Total profit for the period was ₦743 million in Q3 2020, a reversal from the ₦12.9 billion loss reported in Q3 2019. Earnings per share for the period was 15 kobo, up from negative 274 kobo in Q3 2019.

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Free Cash Flow for the period was ₦1.1 billion in Q3 2020, compared with negative ₦15.8 billion in Q3 2019.Cash flow improvement in the quarter was primarily attributable to efforts to optimise working capital.

Commenting on the performance, Group Managing Director, Folasope Aiyesimoju, stated:

“Our strategy to invest for growth yielded encouraging results in the third quarter with consolidated revenues, gross profit and operating profit (excluding non-recurring items) growing 11%, 20% and 65% respectively. We recorded topline growth across all our continued operations in the quarter.

We are focused on strategies to mitigate the impact of a challenging foreign exchange environment and managing the recent trend of cost escalation. We expect to complete the sale of a controlling interest in UACN Property Development Company PLC to Custodian Investment PLC and are supportive of the recently announced merger between Chemical and Allied Products PLC and Portland Paints and Products Nigeria PLC.”

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Group Performance and Financial Review: 9M 2020

Revenue in 9M 2020 increased 1.7% YoY to ₦57.8 billion supported by sales growth in the Animal Feeds & Other Edibles segment (+3.6% YoY) which was considered an essential service during restrictions to the movement of people and goods to curtail the spread of COVID-19.

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Gross profit in 9M 2020 declined 2.3% YoY to ₦11.4 billion as a result of limited sales during the strictest phase of the lockdown (April and May), higher input costs, and distribution expenses. Adjusting for MDS, which has been re-classified as an associate, gross profit increased by 2.5% YoY. The adjusted gross profit margin was 14 bps higher in 9M 2020 at 19.7%.

EBIT was ₦2.0 billion in 9M 2020 compared to ₦4.5 billion in the previous year. Adjusting for non-recurring income from the sale of non-core real estate assets (₦631 million) and the writeback of statute-barred unclaimed dividend (₦206 million), underlying 9M 2020 EBIT declined 45.5% YoY, impacted by reduced sales in April and May, input cost escalation partly attributable to foreign exchange devaluation, supply chain disruptions, and rising employee costs on account of initiatives to strengthen management teams across the Group.

Underlying Profit before Tax was 52.1% lower YoY at ₦2.5 billion in 9M 2020 on account of lower operating profit and the steep decline in net finance income (-76.7% YoY) because of lower investment income yields compared to the prior year.

Profit after Tax from continuing operations was ₦1.5 billion, down 67.0% YoY against ₦4.4 billion in 9M 2019. Total profit for the period was ₦1.9 billion in 9M 2020, a reversal from the ₦10.3 billion loss reported in 9M 2019. Earnings per share for 9M 2020 was 47 kobo, up from negative 213 kobo in 9M 2019.

Free Cash Flow for the period was ₦1.3 billion in 9M 2020, compared with negative ₦5.2 billion in FY 2019. Free cash flow in 9M 2020 improved significantly on +₦4.7 billion net cash flow generated from operations driven by increased sales and improved working capital management. Free cash flow was also impacted by higher net capital expenditure YoY (+107% increase to ₦3.4 billion in 9M 2019) from investments in production capacity and cold chain distribution for the Packaged Food and Beverages segment.

Annualised Return on Equity (ROE) from continuing operations at the end of September 2020 was 3.5%, up from negative 17.2% as at the same period last year. Annualised Return on Invested Capital (ROIC) was 192bps lower at 2.4% (4.3% in 9M 2019).

On 3 August 2020, UAC entered into a binding agreement with Custodian Investment PLC regarding the acquisition of a 51% stake in UPDC. Custodian completed the acquisition of an initial 5.1% stake in UPDC in September 2020 reducing UAC’s stake in UPDC to 88.8%. Upon completion of the second tranche (45.9%), UAC will own a 43% stake in UPDC.

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UAC of Nigeria: Topline growth and improved margins drive underlying earnings growth in Q3 - Brand SpurUAC of Nigeria: Topline growth and improved margins drive underlying earnings growth in Q3 - Brand Spur

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UAC of Nigeria: Topline growth and improved margins drive underlying earnings growth in Q3 - Brand SpurUAC of Nigeria: Topline growth and improved margins drive underlying earnings growth in Q3 - Brand Spur

Latest News

Spackman Entertainment Group’s Upcoming Musical Film THE BOX, Starring EXO’s Chanyeol, Scheduled To Be Released In The Spring Of 2021

  • Following the art film STONE SKIPPING, THE BOX is the next film production of the Company's wholly‐owned indirect subsidiary, Studio Take, founded by veteran movie producer, Mr. Song Dae‐chan
  • THE BOX will be EXO's Chanyeol's first lead acting role in a film
  • Directed by Yang Jung Woong, the Executive Producer of the 2018 PyeongChang Winter Olympics opening and closing ceremonies, THE BOX is set to be screened in Korea in the spring of 2021

SINGAPORE - Media OutReach - 3 March 2021 - Spackman Entertainment Group Limited ("Spackman Entertainment Group" or the "Company" and together with its subsidiaries, the "Group"), one of Korea's leading entertainment production groups, wishes to announce that its upcoming musical film THE BOX, produced by the Company's indirect wholly-owned subsidiary, Studio Take Co., Ltd. ("Studio Take"), is set to be released in Korea in the spring of 2021.

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Following the art film STONE SKIPPING, THE BOX is the next film production of Studio Take, which was founded by veteran movie producer, Mr. Song Dae‐chan.

THE BOX is about the musical journey of an aspiring singer and a once popular producer.

Directed by Yang Jung Woong, the Executive Producer of the 2018 PyeongChang Winter Olympics opening and closing ceremonies, THE BOX stars EXO's Chanyeol who plays the aspiring singer and Jo Dal Hwan who acts as the once popular producer. This is Chanyeol's first lead role for a Korean commercial film. Jo Dal Hwan is known for his role in SECRET HEALER (2016), TRAFFICKERS (2012) and THE CON ARTISTS (2014).


About Spackman Entertainment Group Limited

Spackman Entertainment Group Limited ("SEGL" or the "Company"), and together with its subsidiaries, (the "Group"), founded in 2011 by Charles Spackman, is one of Korea's leading entertainment production groups. SEGL is primarily engaged in the independent development, production, presentation, and financing of theatrical motion pictures in Korea. According to Variety, Korea was the world's fourth largest box office market in 2019, behind only North America, China and Japan.


The Group also invests into and produces Korean television dramas. In addition to our content business, we also own equity stakes in entertainment-related companies and film funds that can financially and strategically complement our existing core operations. SEGL is listed on the Catalist of the Singapore Exchange Securities Trading Limited under the ticker 40E.

Production Labels

SEGL's wholly-owned Zip Cinema Co., Ltd. ("Zip Cinema") is one of the most recognised film production labels in Korea and has originated and produced some of Korea's most commercially successful theatrical films, consecutively producing 10 profitable movies since 2009 representing an industry leading track record. Recent theatrical releases of Zip Cinema's motion pictures include some of Korea's highest grossing and award-winning films such as CRAZY ROMANCE (2019), DEFAULT (2018), MASTER (2016), THE PRIESTS (2015), COLD EYES (2013), and ALL ABOUT MY WIFE (2012). For more information on Zip Cinema, do visit http://zipcine.com


SEGL also owns Novus Mediacorp Co., Ltd. ("Novus Mediacorp"), an investor, presenter, and/or post-theatrical distributor for a total of 79 films (58 Korean and 21 foreign) including ROSE OF BETRAYAL, THE OUTLAWS and SECRETLY, GREATLY, which was one of the biggest box office hits of 2013 starring Kim Soo-hyun of MY LOVE FROM THE STARS, as well as FRIEND 2: THE GREAT LEGACY. In 2012, Novus Mediacorp was also the post-theatrical rights distributor of ALL ABOUT MY WIFE, a top-grossing romantic comedy produced by Zip Cinema. In 2018, THE OUTLAWS, co-presented by Novus Mediacorp broke the all-time highest Video On Demand ("VOD") sales records in Korea. For more information on Novus Mediacorp, do visit http://novusmediacorp.com.


The Company owns a 100% equity interest in Simplex Films Limited ("Simplex Films") which is an early stage film production firm. The maiden film of Simplex Films, JESTERS: THE GAME CHANGERS (2019), was released in Korea on 21 August 2019. Simplex Films has several line-up of films including A BOLT FROM THE BLUE (working title).


The Company owns a 100% equity interest in Take Pictures Pte. Ltd. ("Take Pictures") which produced STONE SKIPPING (2020) and shall release THE BOX and GUARDIAN (working title) in 2021 tentatively.


The Company owns a 100% equity interest in Greenlight Content Limited ("Greenlight Content") which is mainly involved in the business of investing into dramas and movies, as well as providing consulting services for the production of Korean content. Through the acquisition of Greenlight Content, the Group's first co-produced drama, MY SECRET TERRIUS, starring top Korean star, So Ji Sub, achieved #1 in drama viewership ratings for its time slot and recorded double digits for its highest viewership ratings. Greenlight Content was one of the main investors of MY SECRET TERRIUS.


The Company owns a 20% equity interest in The Makers Studio Co. Ltd., which plans to produce and release four upcoming films, the first of which will be THE ISLAND OF THE GHOST'S WAIL, a comedy horror film.


Our films are theatrically distributed and released in Korea and overseas markets, as well as for subsequent post-theatrical worldwide release in other forms of media, including online streaming, cable TV, broadcast TV, IPTV, video-on-demand, and home video/DVD, etc. We release all of our motion pictures into wide-theatrical exhibition initially in Korea, and then in overseas and ancillary markets.

Talent Representation

The Company holds an effective shareholding interest of 43.88% in Spackman Media Group Limited ("SMGL"). SMGL, a company incorporated in Hong Kong, together with its subsidiaries, is collectively one of the largest entertainment talent agencies in Korea in terms of the number of artists under management, including some of the top names in the Korean entertainment industry. SMGL operates its talent management business through renowned agencies such as MSteam Entertainment Co., Ltd. (Son Ye-jin, Lee Min-jung, Ko Sung-hee), UAA&CO Inc. (Song Hye-kyo, Yoo Ah-in, Park Hyung-sik), Fiftyone K Inc. (So Ji Sub, Ok Taec-yeon), SBD Entertainment Inc. (Son Suk-ku), and Kook Entertainment Co., Ltd. (Kim Sang-kyung, Kim Ji-young). Through these full-service talent agencies in Korea, SMGL represents and guides the professional careers of a leading roster of award-winning actors/actresses in the practice areas of motion pictures, television, commercial endorsements, and branded entertainment. SMGL leverages its unparalleled portfolio of artists as a platform to develop, produce, finance and own the highest quality of entertainment content projects, including theatrical motion pictures, variety shows and TV dramas. This platform also creates and derives opportunities for SMGL to make strategic investments in development stage businesses that can collaborate with SMGL artists. SMGL is an associated company of the Company.


The Company owns a 100% equity interest in Constellation Agency Pte. Ltd. ("Constellation Agency"). Constellation Agency, which owns The P Factory Co., Ltd. ("The P Factory") and Platform Media Group Co., Ltd. ("PMG"), is primarily involved in the business of overseas agency for Korean artists venturing into the overseas market. The P Factory is an innovative marketing solutions provider specializing in event and branded content production. PMG is a talent management agency which represents and manages the careers of major artists in film, television, commercial endorsements and branded entertainment.

Strategic Businesses

The Company owns a 100% equity interest in Frame Pictures Co., Ltd. ("Frame Pictures"). Frame Pictures is a leader in the movie/drama equipment leasing business in Korea. Established in 2014, Frame Pictures has worked with over 25 top directors and provided the camera and lighting equipment for some of Korea's most notable drama and movie projects including ITAEWON CLASS (2020), HOW TO BUY A FRIEND (2020), KIM JI-YOUNG, BORN 1982 (2019), FOUR MEN (2019) and ASADAL CHRONICLES (2019).

We also operate a café-lounge called Upper West, in the Gangnam district of Seoul and own a professional photography studio, noon pictures Co., Ltd.

For more details, do visit http://www.spackmanentertainmentgroup.com/

UAC of Nigeria: Topline growth and improved margins drive underlying earnings growth in Q3 - Brand Spur
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