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2015 Corporate Rating Report – Nigerian Breweries Plc
Nigerian Breweries Plc
Rating Assigned:
Aa
This is a company that possesses very strong financial condition
and very strong capacity to meet local currency obligations as and
when they fall due.
Outlook: Stable
Issue Date: September 2015
Expiry Date: 30 June 2016
Previous Rating: None
Industry:
Breweries
Outline Page
Rationale 1
Company Profile 3
Financial Condition 5
Ownership, Mgt & Staff 8
Outlook 10
Financial Summary 11
Analysts:
Olusegun Owadokun [email protected]
Isaac Babatunde [email protected]
Agusto & Co. Limited
UBA House (5th Floor)
57, Marina
Lagos
Nigeria
www.agusto.com
RATING RATIONALE
Nigerian Breweries Plc (“Nigerian Breweries”, “NB” or “the Company”) is
the premier and largest brewing company in Nigeria. NB’s rating is
underlined by the Company’s dominant position in the Industry; highly
experienced and stable Board of Directors; and competent management
team. The rating is also supported by NB’s strong financial condition
which is validated by good profitability, low leverage, good cash flow
and adequate working capital.
Nigerian Breweries is a subsidiary of Heineken, the third largest global
player in the Brewery Industry with international ratings of Baa1 by
Moody’s and Bbb+ by Standard and Poor’s.
During the year ended 31 December 2014, NB’s turnover decreased
slightly by 1% to ₦266 billion but its profit before tax margin remained
strong, while its three-year weighted average return on equity of 46%
and three-year average profit before tax as a percentage of sales ratio of
23% are well above our benchmarks. In the same vein, cash flow
indicators such as operating cash flow as a percentage of sales (35%)
and operating profit margin (25%) surpass our expectations. Leverage
remains low, with 86% of liabilities as non-interest bearing. The
Company’s interest cover is also very good at 17 times.
The continuous decline in global crude oil prices since the last quarter of
2014 has negatively impacted the Nigerian economy leading to a
devaluation of the Naira by the Central Bank of Nigeria (CBN) from
N168/$ to N197/$. Manufacturers and businesses which are heavily
dependent on imported raw materials have been operating under strains.
However, Agusto & Co expects this to have a minimal impact on the
Company’s profitability as about two-thirds of the Company’s inputs are
sourced locally. In addition, the conclusion of the merger with
2
Nigerian Breweries Plc
Consolidated Breweries Plc with the expanded and diversified product
offering is projected to significantly improve sales in the short to
medium term.
Based on the aforementioned, we have assigned NB a rating of ‘Aa’ with
a stable outlook.
•Strong demand for products.
•Diversified product offering
•Strong Parent Company
•Qualified and experienced management team.
•Market leadership
•Good profitability
•Strong Cash flow
•Low leverage
Strengths
•Asset-liability mismatch
Weakness
•Poor state of infrastructure in the country
•Security issues especially in the North-East
•Stiff competition
•Declining consumer disposable income
Challenges
3
Nigerian Breweries Plc
PROFILE OF NIGERIAN BREWERIES PLC Incorporated in November 1946 as a limited liability Company, Nigerian Breweries became a public limited
liability company and was listed on the Nigerian Stock Exchange (NSE) in 1973. NB is currently the second
most capitalised stock on the NSE with market capitalisation of ₦0.9 trillion as at 20 August 2015. The major
shareholders of the Company are: Heineken N.V Group of the Netherlands holding (54.29%) through its
subsidiaries (Heineken Brouwerijen B.V. (38.68%) and Distilled Trading International B.V. (15.61%). The
remaining equity of 45.71% is held by Nigerians, foreign individuals and other institutional investors. The
Heineken N.V. group is the world’s third largest beer manufacturer by volume with operations in more than
70 countries, producing notable international brands such as Heineken.
The Company built its first brewery in Lagos and recorded a landmark when the first bottle of Star lager beer
was rolled off at the brewery bottling lines in June 1949. In 1957, the second brewery was commissioned in
Aba; Kaduna brewery was established in 1963 and Ibadan in 1982. In 1993, another brewery was
commissioned in Enugu but was discontinued in 2004 as a result of the construction of Ama Brewery which
was commissioned in October 2003. The Ama brewery is currently the largest and most modern brewery in
Nigeria. In addition, an ultra-modern malting plant was acquired in Aba in 2008. Following the conclusion of
the merger between the Company and Consolidated Breweries Plc (CB plc) in 2014, three breweries (located
in Imagbon, Awo-Omamma and Makurdi) were added to the already existing eight breweries owned by NB. In
total, NB currently operates eleven breweries and two malting plants, spread across Nigeria.
Since the launch of Star lager beer in 1949, the Company’s product portfolio has expanded remarkably to
include alcoholic beverages such as Gulder (1970), Legend Extra Stout (1992) and Heineken (re-launched in
1998) as well as non-alcoholic beverages like Maltina (1976), Amstel Malta (1994), Fayrouz (2006) and
Climax (2010). Following the acquisition of Sona Systems and Life Breweries in 2011, Goldberg, Malta Gold
and Life Continental were added to the Company’s product range. In 2014, Nigerian Breweries introduced a
new line extension of the STAR brand called Star LITE, which contains 40% less calories compared to the
regular Star. In addition, Legend Extra Stout extended its market penetration with a new look - a new stanoil
and metalized label. In the same year, the Company introduced a new alcoholic beverage - ACE Passion
Apple Spark, its first sparkling alcoholic drink. In February 2015, a new product called ACE Roots was
launched as a healthy low sugar drink, being the second product to be launched under the ACE Series.
On account of the merger with CB Plc, the following products were added to the Company’s product
offerings: “33” Export lager beer, Williams dark ale, Turbo Kings dark ale, More lager beer, Maltex, Hi Malt
and Breezer, which is a blend of rum and fruits (in three variants). By 2015, NB had 19 brands in the Nigerian
market cutting across larger, stout, malt, ready-to-drink, carbonated soft drink and energy drinks.
Nigerian Breweries is the market leader, controlling about two thirds of the lager market in Nigeria. The
Company’s major competitor and key player in the stout market is Guinness Nigeria Plc (“Guinness”). NB’s
4
Nigerian Breweries Plc
products are distributed across the country through seven major cities: Lagos, Abuja, Enugu, Ibadan, Kaduna,
Aba and Benin. Dating back to 1986, the Company exports Gulder and Star to Europe and the West African
sub-region.
Nigerian Breweries’ Head Office is located at Iganmu House, 1 Abebe Village Road, Iganmu, Lagos. NB’s
fifteen-member Board of Directors comprises six executive and nine non-executive directors. The Board is
led by the Chairman - Chief Kolawole B. Jamodu (CFR), while the management team is led by Mr. Nicolaas A.
Vervelde as Managing Director/CEO. In the year under review, Messrs Jasper C. Hamaker and Frank N. Nweke,
Jr resigned from the Board, while Mr. Mark P. Rutten, Chief Samuel O. Bolarinde, Dr. Obadiah Mailafia and Mrs
Ndidi O. Nwuneli were appointed as Directors.
Table 1: Current Directors
Chief Kolawole B. Jamodu (CFR) Chairman
Mr. Nicolaas A. Vervelde Managing Director/CEO
Mr. Mark P. Rutten Finance Director
Mr. Franco Maggi Marketing Director (effective 1st September 2015)
Mr. Hurbert I. Eze Sales Director
Mr. Victor Famuyibo Human Resources Director
Mr. Hendrik A. Wymenga Technical Director
Mr. Roland Pirmez Non-Executive Director (effective 1st September 2015)
Chief Samuel O. Bolarinde Non-Executive Director
Dr. Obadiah Mailafia Non-Executive Director
Mrs. Ndidi O. Nwuneli, MFR Non-Executive Director
Mr. Olusegun S. Adebanji Non-Executive Director
Mr. Atedo N. Peterside Non-Executive Director
Mr. Sijbe Hiemstra Non-Executive Director
Mrs. Ifueko M Omoigui-Okauru Non-Executive Director
Source: Nigerian Breweries Plc 2014 Annual Report
During the financial year ended 31 December 2014, the Company employed an average of 3,048 persons
(2013: 3,193). Subsequent to the year end, the Company’s staff number increased to 3,981 largely due to the
merger with Consolidated Breweries Plc. As at 31 December 2014, NB’s total assets stood at ₦349.7 billion.
NB’s shareholders’ funds stood at ₦171.9 billion as at 31 December 2014. The Company generated a
turnover of ₦266 billion and recorded a profit after tax of ₦42.5 billion in the year under review.
The auditors, KPMG were replaced by Akintola Williams Deloitte in 2015 following the completion of 10
years required for rotation in accordance with the Corporate Governance rules.
5
Nigerian Breweries Plc
FINANCIAL CONDITION ANALYSTS’ COMMENTS
PROFITABILITY Nigerian Breweries Plc generates revenues from the
manufacture and sale of alcoholic and non-alcoholic beverages.
During the year ended 31 December 2014, NB’s turnover
declined slightly to ₦266.4 billion from ₦268.6 billion recorded
in previous year. The marginal drop in revenue was attributed to
the challenging business environment that adversely impacted
the average consumers’ disposable income. However, there is no
evidence to suggest that this will be a sustained threat going
forward, as the 2015 half-year results have shown an increase of
7.2% in revenue to ₦151.7 billion over the corresponding period
in 2014. The Company’s revenue is principally derivable from
Nigeria (99%), while the balance represented exports.
Nigerian Breweries Plc.’s cost of sales as a percentage of turnover
ratio of 49% remained at par with previous year, leading to a
gross profit margin of 51%. The Company’s operating expenses as
a percentage of turnover of 26% was also at par with the
previous year. Thus, NB recorded an operating profit margin of
25%, which is in line with our benchmark. In comparison, NB’s
major competitor – Guinness – posted 14% operating profit
margin, while the Industry’s average was 21% during the same period.
The sum of ₦2.4 billion from other income comprised contract brewing services (51%), interest earned from
bank deposits (29%) and scrap sales (20%). This was however impacted by net loss on foreign exchange
transactions (₦1.1 billion) and unwinding of discount on employee benefits (₦1.3 billion). Thus, profit before
tax amounted to ₦61.5 billion in the period under review. The Company’s PBT margin, which remained at par
with prior year at 23%, exceeded our expectation as well as the Industry’s average of 19%.
Nigerian Breweries achieved a return on assets (ROA) and a return on equity (ROE) of 19% and 36%
compared to Guinness Nigeria Plc.’s ROA and ROE of 12% and 26% respectively in 2014. NB’s ROE is
significantly above the average yield on treasury bills of 11% during the same period.
In our opinion, the Company’s profitability is good and we expect this to improve in the medium to long term
on account of the enlarged product offerings from the merger with Consolidated Breweries Plc.
0%
5%
10%
15%
20%
25%
2014 2013 2012NB Guinness
Figure 1: Operating Profit Margin
Figure 2: Return on Equity
0%
20%
40%
60%
2014 2013 2012
NB Guinness
6
Nigerian Breweries Plc
CASH FLOW
During the financial year ended 31 December 2014, Nigerian
Breweries generated Operating Cash Flow (OCF) of ₦101.5
billion, which represented an increase of 5.2% over prior year.
The growth was driven mainly by an upsurge in other
creditors/accruals and deferred taxation in the period under
review. The Company’s OCF position was reinforced by good
terms of trade with customers and suppliers. This was
evidenced by 144 trade creditor days and trade debtors’
collection period of 15 days.
NB’s OCF was adequate to cover ₦45.9 billion returns to
providers of financing, comprising dividend (92%) and interest
(8%). The net OCF of ₦55.6 billion was sufficient to fund both the estimated mandatory capital of ₦38.9
billion and estimated amortized loan principal of ₦8.2 billion.
Over the last three years, the Company’s cumulative OCF amounting to ₦265.7 billion was sufficient to pay
₦101.8 billion accumulated returns to providers of finance. The balance of ₦163.9 billion was adequate to
fund the estimated mandatory capital and amortized loan principal of ₦102.4 billion and ₦26 billion
respectively.
NB’s three-year weighted average OCF to sales ratio of 34% and the corresponding operating profit margin of
25% both exceeded our expectations.
In our view, NB’s cash flow is strong.
FINANCING STRUCTURE AND ADEQUACY OF WORKING CAPITAL
As at 31 December 2014, Nigerian Breweries had working assets of
₦40.9 billion, representing an increase of 28.1% over prior year. The
working assets consisted largely of stocks (55%), trade debtors (28%)
and other debtors and prepayments (16%). As at the same date, the
Company’s spontaneous financing, which stood at ₦152.9 billion
comprised largely trade creditors (34%), deferred taxation (18%),
other creditors/accruals (15%) and taxation payable (15%). The
spontaneous financing was adequate to fund the working assets,
leaving a short term financing surplus of ₦112 billion.
As at the same date, the Company’s long term funds of ₦196.7
billion comprised equity (87%) and long term borrowings (13%). These long term funds were insufficient to
Figure 4: Working Capital Surplus/
(Deficiency) N'billion
Figure 3: OCF/Sales
2
4
6
8
10
2014 2013 2012
5.47
9.53 9.51
0%
10%
20%
30%
40%
2014 2013 2012
7
Nigerian Breweries Plc
finance NB’s long term assets of ₦303.1 billion, thus leaving a long term financing need of ₦106.5 billion.
This shortfall was covered by the short term financing surplus of ₦112 billion, resulting in a working capital
surplus of ₦5.47 billion.
In our opinion, the Company’s working capital is adequate but the financing structure requires improvement
as short term funds were used to finance long term assets year-on-year.
LEVERAGE
As at 31 December 2014, NB’s total liabilities amounted to ₦177.8
billion, of which non-interest bearing accounted for 86% (Interest
bearing liabilities represented 14%). The Company’s interest bearing
debts was largely composed of long term borrowings (₦24.7 billion),
which accounted for 99% of total interest bearing liabilities. The
Company had loans with seven major commercial banks in Nigeria as
at 31 July 2015, with a year revolving tenor for a maximum of five
years. Interest rates on loans conform to market dictates and are quite
competitive.
NB’s net debt at 59% of average total assets and interest bearing
liabilities to equity ratio of 11% are both in line with our expectations. Interest expense of ₦3.6 billion
represented 1.4% of turnover, which in our opinion, is low.
The Company’s operating cash flow is sufficient to cover interest 28 times, which in our view, is very good.
Non-interest bearing liabilities consisted mainly of trade creditors (34%), deferred taxation (18%), while other
creditors/accruals and taxation payable constituted 15% each.
In our opinion, Nigerian Breweries has low leverage.
Figure 5: Interest Expense to Sales (%)
0.0%
1.0%
2.0%
3.0%
2014 2013 2012
8
Nigerian Breweries Plc
OWNERSHIP, MANAGEMENT & STAFF
As at 31 December 2014, NB’s issued shares stood at 7,562,704,432 Ordinary Shares of 50 kobo each.
Heineken N.V Group held majority shareholding (54.09%) of the Company through Heineken Brouwerijen B.V
(37.73%) and Distilled Trading International B.V (16.36%) as at that date. The remaining 45.91% of the issued
shares were held by Stanbic Nominees Nigeria Limited (16.27%) and other individuals & institutions
(29.64%).
Table 2- Shareholding Structure
Nigerian Breweries Plc has a 15-member Board of Directors, which is led by the Chairman, Chief Kolawole B.
Jamodu (CFR), while the Managing Director and Chief Executive Officer is Mr. Mr. Nicolaas A. Vervelde.
The Company’s management team is composed of 6 Executive Directors and 57 Senior Managers. We note
that the majority of the management team have been with the Company for more than a decade, having
worked within the Heineken Group in various capacities both locally and internationally. In our opinion, NB’s
management is stable, well qualified and experienced.
Nigerian Breweries Plc has an exchange programme with Heineken International where staff are employed in
different Heineken companies across the world. In 2014, fifteen Nigerian employees were engaged in this
programme, while 2,212 employees participated in other training programmes locally and overseas.
As at 31 December 2014, Nigerian Breweries had an average of 3,048 staff on its payroll compared to 3,195
employed in the previous year. In the year under review, the Company’s average cost per employee
amounted to ₦9.5 million, representing an increase of 9.3% recorded over prior year. The net earnings per
staff of ₦20.2 million was able to cover the average cost per employee 2.13 times during the same period.
We consider the Company’s staff productivity to be satisfactory.
Stanbic Nominees
16.27%
Others
29.44%
Heineken
Brouwerijen B.V
38.68%
Distilled Trading
Int'l B.V
15.61%
Heineken N.V Group
54.29%
9
Nigerian Breweries Plc
Management Team
Mr. Nicolaas A. Vervelde became the Managing Director and Chief Executive Officer of Nigerian Breweries Plc
on 1 August 2010. Between 2001 and 2003, he was on the Board of the Company as a Non-Executive
Director while serving as the Deputy Director and later Director, Heineken Africa/Middle East. Having joined
Heineken in 1984, Mr. Vervelde had held increasingly senior management positions spanning commercial
and general management functions in Europe, Africa, Bahamas, Caribbean and Central America. He was, until
his current appointment, the Managing Director for Heineken Caribbean, Central America and Latin America.
Other members of the Nigerian Breweries Plc’s management team include:
Mr. Nicolaas A. Vervelde Managing Director/CEO
Mr. Mark P. Rutten Finance Director
Mr. Hendrik Wymenga Technical Director
Mr. Franco Maggi Marketing Director (effective 1st September 2015)
Mr. Hubert Eze Sales Director
Mr. Victor Famuyibo Human Resources Director
Mr. Henk Van Rooijen Director of Logistics
Mr. Kufre Udoudo Ekanem Corporate Affairs Adviser
Mr. Uaboi G. Agbebaku Company Secretary/Legal Adviser
10
Nigerian Breweries Plc
OUTLOOK Nigerian Breweries Plc.’s turnover dropped by about 1% in the year ended 31 December 2014 after decades
of sustained growth; this was attributed to difficult challenging business environment that adversely
impacted consumer demand and the stiff competition in the Breweries Industry. However, the Company was
able to sustain profit margins due principally to improved operational efficiencies during the period under
review. Following the successful conclusion of NB’s merger with Consolidated Breweries on 31 December
2014, Agusto & Co believes that the Company’s top-line results will improve going forward, as the benefits
of the consolidation (expanded product offering including non-alcoholic beverages , larger market share, and
economies of scale) will begin to bear on performance. This has already reflected in the half-year results
ended 30 June 2015 with revenue growing by 7.2% to ₦151.7 billion over the corresponding period in 2014.
The impact of Naira devaluation may not materially affect the Company’s performance as about 35% of raw
materials were imported with 65% locally sourced in 2014. Moreover, in the first half of 2015, the proportion
of imported raw materials has reduced to 28%, while 92% of packaging materials were sourced locally with a
deliberate strategy to continually increase quantity of raw materials that are sourced locally in the short to
medium term. Therefore, NB is committed to the sustainable commercial production of sorghum in Nigeria.
In this vein, the Company in conjunction with agricultural experts has developed high yielding varieties of
sorghum with improved quality for distribution to farmers for cultivation. In addition, the Company has
committed significant resources to research and development to perfect the use of sorghum in brewing some
of its beverages.
We expect NB’s cash flow to remain strong given the favorable terms of trade that the Company enjoys from
customers and with suppliers. We believe that the working capital will remain adequate but skew towards
more of spontaneous financing as in previous years. With the proposed plan to establish a three-year ₦100
billion Commercial Paper Issuance (CIP) Program commencing with the first tranche of ₦20 billion to be
issued before the end of 2015, the Company’s debt as a percentage of total assets will rise moderately from
55% to about 60%, which is still within our benchmark. We expect NB’s interest expense-to-sales ratio to
remain fairly stable, as the CIP Program is aimed at diversifying the short term funding of the Company to a
relatively cheaper source. Hence, in our opinion, NB’s leverage will remain low.
In spite of the challenges ranging from infrastructural deficits, security issues and stiff competition, we
believe the outlook for the Industry in the short to medium term remains strong, driven largely by increased
urbanisation and favourable demographic structure (large population with more than 50% of Nigeria’s labour
force between the ages of 24 and 44 years) and opportunities for export.
Based on the aforementioned, the outlook for Nigerian Breweries is stable.
11
Nigerian Breweries Plc
FINANCIAL SUMMARY STATEMENT OF FINANCIAL POSITION 31-Dec-14 31-Dec-13 31-Dec-12
₦'000 ₦'000 ₦'000
ASSETS
IDLE CASH 5,699,079 1.6% 9,528,848 3.8% 9,514,205 3.8%
MARKETABLE SECURITIES & TIME DEPOSITS
CASH & EQUIVALENTS 5,699,079 1.6% 9,528,848 3.8% 9,514,205 3.8%
FX PURCHASED FOR IMPORTS 364,674 0.1% 136,818 0.1% 1,866,896 0.7%
ADVANCE PAYMENTS AND DEPOSITS TO
SUPPLIERS
STOCKS 22,341,593 6.4% 16,798,073 6.6% 21,030,698 8.3%
TRADE DEBTORS 11,293,928 3.2% 8,035,165 3.2% 12,518,318 4.9%
DUE FROM RELATED PARTIES 434,509 0.1% 1,985,041 0.8% 3,742,257 1.5%
OTHER DEBTORS & PREPAYMENTS 6,451,218 1.8% 4,956,444 2.0% 4,572,228 1.8%
TOTAL TRADING ASSETS 40,885,922 11.7% 31,911,541 12.6% 43,730,397 17.2%
INVESTMENT PROPERTIES 4,208,816 1.2%
OTHER NON-CURRENT INVESTMENTS 829,625 0.2% 150,000 0.1% 150,000 0.1%
PROPERTY, PLANT & EQUIPMENT 193,569,624 55.4% 153,366,133 60.7% 142,348,420 56.1%
SPARE PARTS, RETURNABLE CONTAINERS, ETC 6,136,866 1.8% 3,845,080 1.5% 3,622,025 1.4%
GOODWILL, INTANGIBLES & OTHER L T ASSETS 98,346,852 28.1% 53,958,031 21.3% 54,268,582 21.4%
TOTAL LONG TERM ASSETS 303,091,783 86.7% 211,319,244 83.6% 200,389,027 79.0%
TOTAL ASSETS 349,676,784 100.0% 252,759,633 100.0% 253,633,629 100.0%
Growth 38.3% -0.3% 17.7%
LIABILITIES & EQUITY
SHORT TERM BORROWINGS 230,380 0.1%
CURRENT PORTION OF LONG TERM BORROWINGS
LONG-TERM BORROWINGS 24,670,000 7.1% 9,000,000 3.6% 45,000,000 17.7%
TOTAL INTEREST BEARING LIABILITIES (TIBL) 24,900,380 7.1% 9,000,000 3.6% 45,000,000 17.7%
TRADE CREDITORS 51,695,706 14.8% 47,821,328 18.9% 44,619,713 17.6%
DUE TO RELATED PARTIES 8,550,842 2.4% 11,385,638 4.5% 6,400,308 2.5%
ADVANCE PAYMENTS AND DEPOSITS FROM
CUSTOMERS
OTHER CREDITORS AND ACCRUALS 23,569,778 6.7% 10,625,683 4.2% 10,672,671 4.2%
TAXATION PAYABLE 22,944,629 6.6% 24,086,538 9.5% 19,493,550 7.7%
DIVIDEND PAYABLE 7,563,291 2.2% 6,376,528 2.5% 5,648,226 2.2%
DEFERRED TAXATION 27,833,732 1.0% 21,830,000 1.0% 22,384,550 1.0%
OBLIGATIONS UNDER UNFUNDED PENSION SCHEMES 10,735,596 3.1% 9,274,733 3.7% 5,966,719 2.4%
MINORITY INTEREST
REDEEMABLE PREFERENCE SHARES
TOTAL NON-INTEREST BEARING LIABILITIES 152,893,574 36.8% 131,400,448 44.3% 115,185,737 37.6%
TOTAL LIABILITIES 177,793,954 50.8% 140,400,448 55.5% 160,185,737 63.2%
SHARE CAPITAL 3,781,353 1.1% 3,781,353 1.5% 3,781,353 1.5%
SHARE PREMIUM 65,133,301 18.6% 4,567,967 1.8% 4,567,967 1.8%
IRREDEEMABLE DEBENTURES
REVALUATION SURPLUS 241,676 0.1% 50,114 0.0% 152,536 0.1%
OTHER NON-DISTRIBUTABLE RESERVES
REVENUE RESERVE 102,726,500 29.4% 103,959,751 41.1% 84,946,036 33.5%
SHAREHOLDERS' EQUITY 171,882,830 49.2% 112,359,185 44.5% 93,447,892 36.8%
TOTAL LIABILITIES & EQUITY 349,676,784 100.0% 252,759,633 100.0% 253,633,629 100.0%
12
Nigerian Breweries Plc
STATEMENT OF COMPREHENSIVE INCOME 31-Dec-14 31-Dec-13 31-Dec-12
₦'000 ₦'000 ₦'000
TURNOVER 266,372,475 100.0% 268,613,518 100.0% 252,674,213 100.0%
COST OF SALES (130,788,296) -49.1% (132,136,476) -49.2% (127,222,069) -50.4%
GROSS PROFIT 135,584,179 50.9% 136,477,042 50.8% 125,452,144 49.6%
OTHER OPERATING EXPENSES (70,440,771) -26.4% (69,381,076) -25.8% (63,520,376) -25.1%
OPERATING PROFIT 65,143,408 24.5% 67,095,966 25.0% 61,931,768 24.5%
OTHER INCOME/(EXPENSES) (62,915) 0.0% 27,012 0.0% 953,618 0.4%
PROFIT BEFORE INTEREST & TAXATION 65,080,493 24.4% 67,122,978 25.0% 62,885,386 24.9%
INTEREST EXPENSE (3,618,672) -1.4% (4,882,661) -1.8% (7,261,020) -2.9%
PROFIT BEFORE TAXATION 61,461,821 23.1% 62,240,317 23.2% 55,624,366 22.0%
TAX (EXPENSE) BENEFIT (18,941,568) -7.1% (19,159,968) -7.1% (17,581,652) -7.0%
PROFIT AFTER TAXATION 42,520,253 16.0% 43,080,349 16.0% 38,042,714 15.1%
NON-RECURRING ITEMS (NET OF TAX) (415,579) -0.2% (1,581,984) -0.6% 19,353 0.0%
MINORITY INTERESTS IN GROUP PAT
PROFIT AFTER TAX & MINORITY INTERESTS 42,104,674 15.8% 41,498,365 15.4% 38,062,067 15.1%
DIVIDEND (43,485,550) -16.3% (22,688,113) -8.4% (22,687,687) -9.0%
PROFIT RETAINED FOR THE YEAR (1,380,876) -0.5% 18,810,252 7.0% 15,374,380 6.1%
SCRIP ISSUES
OTHER APPROPRIATIONS/ ADJUSTMENTS 147,625 203,463 (289,231)
PROFIT RETAINED B/FWD 103,959,751 84,946,036 69,860,887
PROFIT RETAINED C/FWD 102,726,500 103,959,751 84,946,036
Proof - - -
ADDITIONAL INFORMATION 31-Dec-14 31-Dec-13 31-Dec-12
Staff costs (₦'000) 28,817,068 27,645,906 23,919,971
Average number of staff 3,048 3,195 3,214
Staff costs per employee (₦'000) 9,454 8,653 7,442
Staff costs/Turnover 11% 10% 9%
Capital expenditure (₦'000) 84,328,378 32,997,540 68,035,904
Depreciation expense - current year (₦'000) 43,757,041 21,188,510 22,198,388
(Profit)/Loss on sale of assets (₦'000) - - -
Number of 50 kobo shares in issue at year end
('000)
7,562,706 7,562,706 7,562,706
Market value per share of 50 kobo (year end) 16,530 16,790 14,700
Market capitalisation (₦'000) 1,250,115,302 1,269,778,337 1,111,717,782
Market/Book value multiple 7 11 12
Non-operating assets at balance sheet date
(₦'000)
5,038,441 150,000 150,000
Market value of tradeable assets (₦'000)
Revaluation date - Investment properties
Revaluation date - Other properties
Average age of depreciable assets (years) 6 5 6
Sales at constant prices - base year 1985 (₦'000) 1,364,264 1,485,045 1,507,805
Auditors KPMG KPMG KPMG
Opinion CLEAN CLEAN CLEAN
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Nigerian Breweries Plc
STATEMENT OF CASHFLOW 31-Dec-14 31-Dec-13 31-Dec-12
₦'000 ₦'000 ₦'000
Operating cash flow (OCF) 101,567,135 96,557,826 67,586,462
Less: Returns to providers of finance (45,917,459) (26,842,472) (29,022,439)
OCF after returns to providers of finance 55,649,676 69,715,354 38,564,023
Non-recurring items (415,579) (1,581,984) 19,353
Free cash flow 55,234,097 68,133,370 38,583,376
Investing activities (135,529,580) (32,118,727) (55,793,513)
Financing activities 76,465,714 (36,000,000) 5,891,820
Change in cash (3,829,769) 14,643 (11,318,317)
PROFITABILITY 2014 2013 2012
PBT as % of Turnover 23% 23% 22%
Return on equity 43% 60% 65%
Real sales growth -8.1% -1.5% 8.8%
CASH FLOW
Interest cover (times) 28.1 19.8 9.3
Principal payback (years) 1.5 0.3 3.5
WORKING CAPITAL
Working capital need (days) - - -
Working capital deficiency (days) - - -
LEVERAGE
Interest bearing debt to Equity 14% 8% 48%
Total debt to Equity 103% 125% 171%
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Nigerian Breweries Plc
RATING DEFINITIONS
Aaa This is the highest rating category. It indicates a company with impeccable financial
condition and overwhelming ability to meet obligations as and when they fall due.
Aa
This is a company that possesses very strong financial condition and very strong
capacity to meet obligations as and when they fall due. However, the risk factors are
somewhat higher than for Aaa obligors.
A
This is a company with good financial condition and strong capacity to repay
obligations on a timely basis.
Bbb
This refers to companies with satisfactory financial condition and adequate capacity to
meet obligations as and when they fall due.
Bb
This refers to companies with satisfactory financial condition but capacity to meet
obligations as and when they fall due may be contingent upon refinancing. The
company may have one or more major weakness (es).
B
This refers to a company that has weak financial condition and capacity to meet
obligations in a timely manner is contingent on refinancing.
C
This refers to an obligor with very weak financial condition and weak capacity to meet
obligations in a timely manner.
D In default.
Rating Category Modifiers
A "+" (plus) or "-" (minus) sign may be assigned to ratings from ‘Aa’ to ‘C’ to reflect comparative position within the rating category. Therefore, a
rating with + (plus) attached to it is a notch higher than a rating without the + (plus) sign and two notches higher than a rating with the -
(minus) sign.
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