Agusto & Co. assigns “B-” rating and a stable outlook to UACN Property Development Company Plc

Rating Release

Agusto & Co. assigns “B-” rating and a stable outlook to UACN Property
Development Company Plc.
This rating expires 30 June 2021.

Agusto & Co. has affirmed the “B-“ rating assigned to UACN Property Development Company Plc (“UPDC” or “the Company”) on the strength of the strategic initiatives being implemented by the Company and its parent company – UAC of Nigeria Plc, which would see UPDC’s financial performance improve significantly in the medium term. Nonetheless, the assigned rating still reflects our view on UPDC’s weaknesses such as recurring losses before tax, negative operating cash flows, high finance costs (which have consistently been higher than revenue over the past three years) and
inadequate working capital.

UACN Property Development Company Plc is a subsidiary of UAC of Nigeria Plc (UACN). In line with the strategic growth plans, the unbundling of the Company’s interest in the UPDC REITs and unbundling by UACN of its shares in UPDC is expected to be concluded before the end of 2020 after obtaining regulatory approvals. We note that UACN and Custodian Investment Plc have reached a binding agreement for the latter to purchase 51% equity stake in UPDC in two tranches, subject to regulatoryapprovals. Once this sale becomes effective, UPDC will no longer be a subsidiary of
UACN and this will enable the Company drive growth across all business segments in
the medium term.

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