Nigeria’s oldest surviving company and largest conglomerate, UAC of Nigeria (UACN) Plc is willing to acquire more companies as part of organic and inorganic growth strategies aimed at accelerating the growth of the widely diversified group.
Group Managing Director, UAC of Nigeria (UACN) Fola Aiyesimoju said the conglomerate will explore acquisitions to hasten its growth and deliver better long-term returns to shareholders.
Speaking against the background of the release of the audited report and accounts of the group for the year ended December 31, 2020, Aiyesimoju said UACN was still interested in strategic acquisitions in line with the growth objectives of the group.
“Going forward, our focus remains on creating shareholder value and we continue to prioritise growth, scale, and simplicity to achieve this. We will explore acquisitions as an avenue to accelerate growth,” Aiyesimoju said.
Meanwhile, the board of directors of UACN has approved the distribution of N7.1 billion in capital returns to shareholders as the conglomerate’s bottom-line recovered to net profit.
The N7.1 billion capital returns include total cash dividend of N3.5 billion and distribution of unbundled shares of UPDC Real Estate Investment Trust (UPDC REIT) valued at N3.6 billion. Shareholders will receive ordinary cash dividend of 65 kobo per share and a special dividend of 55 kobo per share, bringing total cash dividend for the 2020 business year to N1.20 per share.
The stock market appeared excited with the dividend yield of about 13.8 per cent as increased demand for shares of the conglomerate placed it within the top highest gainers at the weekend, with a capital gain equivalent to the dividend yield.
Aiyesimoju reiterated that UACN remains committed to its objective of generating attractive long-term, risk-adjusted returns for its shareholders.
He noted that while over the last 12 months, the country and the larger world have faced a recession, civil unrest, and significant changes to the ways of life due to the COVID-19 pandemic, UACN has continued to execute its key priorities as shown by implementation of initiatives relating to its erstwhile real estate subsidiary, UACN Property Development Company (UPDC).
He added that the group has further strengthened its management while strategic initiatives taken led to the return of the group to profitability.
According to him, as part of the partial exit from UPDC, the group received N6.6 billion net cash proceeds and 649 million UPDC REIT units valued at N3.6 billion.
“I am excited that we are unlocking value for our shareholders via a special dividend, as well as, the unbundling of UPDC REIT units which, if approved by regulators, shareholders and sanctioned by the court, will see UAC’s shareholders become direct holders of units in UPDC REIT.
Key extracts of the audited report and accounts showed that turnover rose to N81.36 billion in 2020 as against N79.20 billion in 2019. Gross profit stood at N15.99 billion in 2020 as against N16.63 billion in 2019. Profit before tax closed 2020 at N5.12 billion compared with N7.46 billion in 2019. Total comprehensive profit for the period reversed from a loss of N9.26 billion in 2019 to a net profit of N3.93 billion in 2020. Thus, earnings per share recovered from loss of N1.83 in 2019 to positive of 92 kobo in 2020. Return on equity stood at positive of five per cent as against loss of 11 per cent in 2019.
The review of the period showed that the group completed partial exit from UPDC and received N6.6 billion cash proceeds and 649.393 million units of UPDC REIT valued at N3.6 billion. UPDC and UPDC REIT have now been classified as investments in associates.
The group also divested eight per cent stake in MDS Logistics Limited to its joint venture partner, Imperial Logistics, this reduced UACN’s ownership from 51 per cent to 43 per cent and MDS Logistics is now classified as an investment in associate.
Two members of the group-Chemical and Allied Products (CAP) Plc and Portland Paints and Products Nigeria (PPPN) Plc also commenced merger process.
UACN will unbundle its24.34 per cent interest in UPDC REIT, some 649 million units valued at N3.6 billion, to UACN shareholders. Following the unbundling, UACN will no longer own any UPDC REIT units, and UACN’s shareholders will become direct holders of UPDC REIT units. The allocation ratio of 0.2254 will see UACN shareholders receive 226 UPDC REIT units for every 1,000 UACN shares owned, providing UACN shareholders with a capital return of N1.27 per share or 14.5 per cent based on the respective market prices of UACN and UPDC REIT as at March 29, 2021.
“The proposed initiative will provide shareholders with direct exposure to UPDC REIT and its diverse portfolio of income generating assets, ensuring that shareholders directly benefit from future potential dividend distributions from the UPDC REIT,” UACN stated.
The transfer of UPDC REIT units to UACN’s shareholders will be implemented through a Scheme of Arrangement under Section 715 of the Companies and Allied Matters Act (CAMA) 2020, incorporating a reduction in share capital under Section 131 of CAMA. The effect of the scheme will be that UPDC REIT units owned by UACN will be transferred to UAC’s shareholders, pro-rata to their shareholding in UACN. If the Scheme is approved and implemented, UACN’s shareholders will hold UPDC REIT units in addition to their existing shares in UACN. UACN will cease to be a unitholder in UPDC REIT.
The announced plan is however subject to the review and approval of regulators, UACN shareholders at a court-ordered meeting, as well as the sanction of the court.
UACN Group includes subsidiary and associate companies operating in the animal feeds and other edibles; paints; packaged food and beverages; quick service restaurants; logistics and real estate segments. Members of the group include Grand Cereals Limited, 71.4 per cent ownership; Livestock Feeds Plc, 73 per cent ownership; CAP, 51.5 per cent ownership, PPPN, 85.98 per cent ownership; UAC Foods Limited, 51 per cent ownership; UAC Restaurants Limited, 51 per cent ownership; MDS Logistics Limited, 43 per cent ownership; UPDC, 42.9 per cent ownership and UPDC REIT, 24.3 per cent ownership.