Confidential Confidential GUINNESS NIGERIA PLC F17 HALF YEAR RESULTS 26th January 2017 1
ConfidentialConfidential
GUINNESS NIGERIA PLCF17 HALF YEAR RESULTS
26th January 2017
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Confidential
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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Confidential
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 & Answers – ALLSesan Sobowale, Corporate Relations Director
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Confidential
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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Confidential
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 & Answers – ALLSesan Sobowale, Corporate Relations Director
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Confidential
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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Confidential
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 & Answers – ALLSesan Sobowale, Corporate Relations Director
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Confidential
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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Confidential
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
Confidential
J W
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JOHNNIE WALKER & RESERVE
• Invest in above and below the line to build the brands
Confidential
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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Confidential
• 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
Confidential
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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Confidential
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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Confidential
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Confidential
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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