guinness nigeria plc - nairametrics · gearing +71 ppt gearing 16 increase in gross borrowings from...

ConfidentialConfidential

GUINNESS NIGERIA PLCF17 HALF YEAR RESULTS

26th January 2017

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F17 HALF YEAR RESULTS BRIEFING

Commercial Performance HighlightsPeter Ndegwa, MD/CEO

Financial Performance ReviewRonald C. Plumridge, Finance & Strategy Director

Performance PrioritiesPeter Ndegwa, MD/CEO

Questions & AnswersSesan Sobowale, Corporate Relations Director

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Financial Performance ReviewRonald C. Plumridge, Finance &Strategy Director


Questions & Answers – ALLSesan Sobowale, Corporate Relations Director

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OUR AMBITIONTo be the best performing, most trusted and respected Consumer

Products Company in Nigeria

OUR VALUES OUR MUST DOs

Winning with a total beverage portfolio

Strengthen and accelerate our premium core brands

Win in value and mainstream

Innovate at scale to meet new customer need

Build and constantly extend our advantage in route to consumer

Drive out cost to constantly invest in growth

Guarantee our plan with the right people and capabilities 4

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Inflation RatesGDP Growth

GDP Decline has impacted disposable income Consumers under pressure Scarcity of FX High inflation – Input inflation above market

Official FX Exchange Rate

Source: National Bureau of Statistics, FDC

Operating Environment

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Market performance and relative segment growth

Accessible beer now the largest segment of the market Mid to premium segments under pressure Trend in beer starting to reflect in malt

18.6 16.8 17.6 17.2 17.1 17.1 16.7 16.3 16.5 16.8 16.4 16.6 16.3 16.1

49.3

38.144.4 42.7 41.4 40.2 38.8 37.4 36.4 36.2 35 34.4 33.7 32.8

32.1

45.238.1 40.1 41.5 42.7 44.5 46.3 47.1 47 48.6 49 49.9 51

MAT LY

MAT TY

DEC 2015

JAN 2016

FEB 2016

MAR 2016

APR 2016

MAY 2016

JUN 2016

JUL 2016

AUG 2016

SEP 2016

OCT 2016

NOV 2016

Beer Segment Volume Share Growth

PREMIUM MAINSTREAM ACCESSIBLE

80.5 78.6 79.6 78.5 78.7 79.6 79.6 78.6 78.8 78.9 78.3 78 77.6 77

5.8 7.1 6.3 6.9 6.8 6.6 7 7.1 7.7 7.3 7.4 7.4 7 7.3

13.7 14.3 14.1 14.7 14.5 13.8 13.3 14.3 13.5 13.8 14.4 14.6 15.3 15.5

MAT LY

MAT TY

DEC 2015

JAN 2016

FEB 2016

MAR 2016

APR 2016

MAY 2016

JUN 2016

JUL 2016

AUG 2016

SEP 2016

OCT 2016

NOV 2016

Malt Segment Volume Share Growth

PREMIUM MAINSTREAM ACCESSIBLE

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Naira ‘b’ vs LY

Net Sales 59.5 +19%Cost of Sales (43.9) +55%

Operating (Loss)/profit (0.1) -103%

(Loss)/profit after tax (4.7) -498%

F17 HY – Portfolio expansion and cost pressure

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Increase in sales from exports, spirits expansion and growth in accessible beerSignificant cost pressure relating to FX movementIlliquid FX market resulted in FX loss

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…HOWEVER WE CONTINUE TO MAKE PROGRESS WITH

• Investment in our brands to intensify our footprint expansion.

• Increased participation in accessible beer

• Expansion of our portfolio with International Premium Spirits (IPS) and USL brand local production and distribution

• Significant focus on driving out costs

• An improving Route to Consumer

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F17 HYNaira ‘b’

F16 HYNaira ‘b’

vs LY

Net Sales 59.5 49.8 +19%

Cost of Sales (43.9) (28.4) +55%

Operating (Loss)/profit (0.1) 3.4 -103%

(Loss)/profit after tax (4.7) 1.2 -498%

F17 HALF YEAR INCOME STATEMENT

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F17 HYNaira ‘b’

F16 HYNaira ‘b’

Net Sales 59.5 49.8NSV +19%

REVENUE (NSV)

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Increasing participation in accessible beer

Increase in revenue from spirits and exports

Favourable mix from international spirits

Pricing changes

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F17 HYNaira ‘b’

F16 HYNaira ‘b’

Cost of Sales (43.9) (28.4)Gross Profit 15.5 21.4

FX and local inflation adversely impacted COGS

Productivity - Focus on efficiencies and waste management

LRM used to mitigate FX impact

GP impacted by currency devaluation

COGS +55%GP -27%

COST OF SALES (COGS) & GROSS PROFIT (GP)

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F17 HYNaira ‘b’

F16 HYNaira ‘b’

Marketing & Distribution (9.9) (13.1)

Admin Expenses (4.9) (5.2)One-off Cost (1.1) (0.0)

Marketing & DistributionAdmin ExpensesOne-off Cost

-24%-4%

MARKETING, DISTRIBUTION, ADMIN & ONE-OFF COSTS

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Underlying brand activities remain strong

Productivity – Focus on distribution and logistics costs

Productivity - One-off costs in F17 largely from organizational review

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Finance Cost +166%

Taxation -99%

FINANCE COST, TAXATION & PAT

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F17 HY F16 HYNaira ‘b’ Naira ‘b’

Net Finance

Cost(4.6) (1.7)

Taxation (0.0) (0.5) PAT (4.7) 1.2

Increase in finance costs attributable to net unrealized FX loss of N1.8bn

Increase in financing cost and level of borrowings

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BALANCE SHEET HY F17

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30-Dec-2016 30-Dec-2015 Change

N'bn N'bn N'bn

Non-Current Assets 89.5 86.2 3.3

Inventories 22.8 13.0 9.8

Receivables + Prepayments 32.2 27.8 4.4

Cash 12.1 7.0 5.2

Total Assets 156.7 134.0 22.7

Equity 36.2 44.7 (8.5)

Non-current liabilities 42.2 23.4 18.8

Current liabilities 78.2 65.9 12.4

Total Equity and Liabilities 156.7 134.0 22.7

Inventories increased due to inflation and currency devaluation

Tough liquidity conditions affecting vendor payment terms

Increase in debtors due to volume growth

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F17 HY%

F16 HY%

Gearing 137 66

Gearing +71 ppt

GEARING

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Increase in gross borrowings from N29.6bn to N49.8bn

GN shareholders’ approval to proceed with rights issue

Proposed Capitalization - Subject to approval

Issue Size

Issue Price

Structure

Use of proceeds

Issue Period

Issuing House

Stanbic IBTC Capital Limited

Rights will be offered to those shareholders whose names appear on theRegister of Members and transfer books of the Company as at a futurequalification date

The proceeds of the Rights Issue will be used to repay the Company’s various outstandingloan obligations, immediately after conclusion of the Rights Issue. The loans were obtainedto fund the Company’s working capital needs and to expand its operations

Yet to be determined

Up to ₦40billion through Rights Issue Guinness Nigeria would only proceed after receipt of relevant regulatory

approvals

2017 Subject to receipt of relevant regulatory approvals

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Winning with a total beverage portfolio

Strengthen and accelerate our premium core

brands

Win in value and

mainstream

Innovate at scale to meet new

customer need

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Brand Guinness

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Guinness Africa Special Sampling

Every Minute Made of Black 2

New Guinness

Brand Purpose TVC

Malta Guinness

Malta Guinness Herbs Low

Sugar Launch

Sustained media Presence

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J W

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JOHNNIE WALKER & RESERVE

• Invest in above and below the line to build the brands

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Mainstream Spirit portfolio has expanded

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Satzenbrau is helping

drive growth in

accessible beer

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Performance priorities

Delivering results while adding value to our communities

Valuing our people

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• Commissioning of Water and Sanitation facilities in Tyowanye, Benue state (in partnership with OXFAM)

• ‘Ember Months’ ‘Don’t Drink and Drive’ roadshows in partnership with the Federal Road Safety Commission.

• Drink IQ Responsible Drinking Partnership with the National Youth Service Corps

• Donation of Eye care equipment to Guinness Eye Centre, LUTH and Guinness Eye Centre Onitsha

• Mainstream Spirits commissioning at the Benin brewery

• Annual General Meeting held in Benin

• GN Board visits newly crowned Oba of Benin – Oba Ewuare II

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ADDING VALUE TO OUR COMMUNITIES & STAKEHOLDERS

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VALUING OUR PEOPLE

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LOOKING TO F17 H2 AND BEYOND…

• Challenging economic environment

• We believe in our strategy and will continue to focus on it

• Continue to focus on our core brands

• Exciting innovations pipeline

• Driving Spirits expansion

• Driving out costs

• Capital restructuring

• Building the business for the future

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Questions & AnswersSesan Sobowale, Corporate Relations Director

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IMPORTANT NOTICE

• This presentation is based on Guinness Nigeria Plc’s unaudited financial results for the half year period ending30th December 2016. Guinness Nigeria Plc (“GN” or the “Company”) has obtained some information in thispresentation from sources it believes to be reliable. Although GN has taken all reasonable care to ensure that theinformation herein is accurate and correct, the Company makes no representation or warranty, express orimplied, as to the accuracy, correctness or completeness of such information.

• Furthermore, GN makes no representation or warranty, express or implied, that its future operating, financial orother results will be consistent with results implied, directly or indirectly, by information contained herein or withGN’s past operating, financial or other results. Any information herein is as of the date of this presentation andmay change without notice. Guinness Nigeria undertakes no obligation to update the information in thispresentation. In addition, some of the information in this presentation may be condensed or incomplete, and thispresentation may not contain all material information in respect of GN.

• This presentation also contains “forward-looking statements” that relate to, among other things, GN’s plans,objectives, goals, strategies, future operations and performance. Such forward-looking statements may becharacterised by words such as “estimates,” “aims,” “expects,” “projects,” “believes,” “intends,” “plans,” “may,”“will” and “should” and similar expressions but are not the exclusive means of identifying such statements. Suchforward-looking statements involve known and unknown risks, uncertainties and other important factors thatcould cause GN’s operating, financial or other results to be materially different from the operating, financial orother results expressed or implied by such statements. Although GN believes the basis for such forward-lookingstatements to be fair and reasonable, the Company makes no representation or warranty, express or implied, asto the fairness or reasonableness of such forward-looking statements. Furthermore, GN makes no representationor warranty, express or implied, that the operating, financial or other results anticipated by such forward lookingstatements will be achieved. Such forward-looking statements represent, in each case, only one of many possiblescenarios and should not be viewed as the most likely or standard scenario. GN undertakes no obligation toupdate the forward-looking statements in this presentation.

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