Meeting the challenges of the times UAC of Nigeria Plc UAC of Nigeria Plc RC 341 UACN SHAREHOLDERS FORUM JANUARY 26, 2005
Meeting the challenges of the times UAC of Nigeria Plc UAC of Nigeria Plc RC 341 Who is the Foreign Shareholder?
4 - A Leading Emerging Markets Private Equity Firm 55 years experience investing in emerging markets companies as Actis or CDC and before that as the Commonwealth Development Corporation Management buyout from CDC Group plc in 2004: 60% owned by management, 40% UK Government 96 professionals in 19 offices in Asia, Africa and Latin America 26 partners with 6 years average experience at Actis Over US$2bn funds under management
5 is the Leading Private Equity Investor in Africa Over 55 years of investment experience 23 investment professionals in eight offices Average team private equity experience of seven years Track record of successful investment (US$75-100m per year) Cairo Nairobi Lagos Jo’burg Abidjan Casablanca Dar es Salaam Lusaka
7 How does Identifies Management when needed Attracts Further Capital El Rashidi El Mizan, Egypt Flamingo Holdings, Kenya Strengthens Corporate Governance Protea, South Africa Celtel, pan Africa Uses Network to assist Expansion DFCU, Uganda Medscheme, South Africa Platmin, South Africa TRAC, South Africa add Value
8 Recent African success stories REALISED Company Year Invested Country Business Deal size 2003 Kenya Integrated flower and vegetable business US$17m 2002 Egypt El Rashidi, a sesame seed food producer (MBO) US$9m 2001 Zimbabwe Manufacturer and retailer of glass US$2m 2000 Mozambique Aluminium smelter US$53m Company Year Invested Country Business Deal size 1999 Ghana Commercial bank US$4m 1999 South Africa and involved in 11 other countries Hotel management company US$8m 1998 13 Countries Sub-Saharan Cellular network service US$62m 1998 South Africa/ Mozambique N4 Toll Road linking Maputo to Pretoria US$24m
9 in Nigeria West Africa Region run from Nigeria Office re-established in 2000 in response to return to democracy Focused initially on understanding the market and identifying possible opportunities
10 in Nigeria – recent investments Recent Investments in the Past 12 months are: The Palms Shopping Centre – Nigeria’s first international standard retail centre – US$40million commitment Starcomms – Actis capital will provide US$20million plus to help fund growth *UAC of Nigeria Plc – Actis Capital proposes up to US$25million to help fund growth *** (Proposed)
Meeting the challenges of the times UAC of Nigeria Plc UAC of Nigeria Plc RC 341 How will Actis Investment Add Value to UACN?
12 in UACN Actis as an international company will help to reinforce the company’s reputation for good corporate governance and business principles. Actis will give us access to their network – allowing UACN to forge necessary and relevant technical alliances for our various businesses (access to technology, systems and world class processes). Additional Actis capital will allow us to actualise our growth potentials, confer critical mass, provide influence and leverage to define competitive agenda in key markets.
13 in UACN Ungear our business through substantial reduction in our borrowing thus freeing up earnings for distribution to shareholders and retention to finance further growth. Actis Board representation will help in: i. Setting out and supporting the implementation of appropriate business strategies ii. Providing international and industry best practice insights to board debates iii. Managing the risks facing the business
Meeting the challenges of the times UAC of Nigeria Plc UAC of Nigeria Plc RC 341 Why Did We Not Disclose Information on the Proposed Investment Earlier?
15 Disclosure At the time of Rights Offer via Rights Circular dated 2 nd September 2004, we had discussions but no deal. Disclosure of an unfinalised discussion had significant reputation risk for the company if a deal did not materialise.
16 Disclosure Rights Offer of 1 (one) new ordinary share for every 4 (four) existing ordinary shares held still left a wide gap in our capital requirement of N5billion to implement our 2004 – 2006 plans. The additional capital requirement was stated in the Chairman’s letter of 2 nd September, 2004 contained in the Rights Circular. At that time the conservative nature of the Offer was viewed by the Board as both realistic and appropriate given the high clutter in the IPO/Capital Market in the last six months.
17 Disclosure Clearly there was a need to mitigate the risk of high under subscription and possible outright offer cancellation given the circumstances. Confirmation of Actis firm offer was received during the offer with payment made to issuing house - FCMB CAPITAL MARKETS.
Meeting the challenges of the times UAC of Nigeria Plc UAC of Nigeria Plc RC 341 What will UACN Do With Additional Funds?
19 Use of Additional Funds As indicated earlier our estimated funding requirement for effective execution of our plans 2004 – 2006 is N5billion Estimated net proceeds from Right Offer is N2.7billion, to be used 60% for expansion and 40% for debt reduction. We are still short by N2.3billion of our funding requirement. If the proposed investment is approved, we will realise N1.7bn, still leaving a shortfall of N0.6bn, which will be generated internally from operations.
20 Use of Additional Funds Management intends to use the additional proceeds of N1.7bn as follows: Further reduction of borrowing N0.8bn Further development of Innscor Franchised Brands N0.3bn Capacity improvements in existing businesses N0.3bn IT and upgrade of financial systems and controls N0.3bn We are confident that significant opportunities exist for us to enjoy first mover advantage in our food offerings in key cities where we are not currently present and in some, where critical mass will ensure scale and scope of economies.
Meeting the challenges of the times UAC of Nigeria Plc UAC of Nigeria Plc RC 341 Going Forward
22 The Future UACN is a GOOD company but it can become a GREAT one. For the reasons stated earlier, we need this additional investment. In the 80’s and early 90’s UACN was the most capitalised stock. Today, it is not even in the top ten. Our near-term strategy is to get there. UACN needs to secure a strategic partner/investor which can engage its international network and people to add value to the business and assist in development of its management team.
23 The Future The Board and Management are driving to deliver improved shareholder returns through a combination of dividends and share price growth. Actis investment represents a laudable foreign direct investment in Nigeria. A clear vote of confidence in our business and its future. The investment is a financing window which will be instrumental in creating value for our stakeholders (customers, shareholders, employees etc.)
24 The Future We ask you to share our confidence, optimism and passion for the business as we drive to achieve our goals and deliver value. Let’s place UACN on a sound strategic and financial pedestal as it enters a new stage of its development. Let’s take UACN to the Next Level: A Great Company.
Meeting the challenges of the times UAC of Nigeria Plc UAC of Nigeria Plc RC 341 THANK YOU!!!