Distinguished Shareholders, Ladies and Gentlemen,

It gives me great pleasure to welcome you to the 2015 Annual General Meeting of our company, UAC OF NIGERIA PLC and to present to you the Annual Report of the Company for the financial year ended 31st December 2015.

Before reporting on our company’s performance, I would like to highlight some of the key issues in the business environment that impacted our operations during the year.


The Nigerian economy was significantly influenced by the elections and election-related activity that took place during the year as well as various macroeconomic challenges, all leading to significantly reduced commercial activity and consumer purchasing power. The current government, which was formed by a party that was previously in opposition, assumed office in May 2015 with the benefit of a tremendous amount of goodwill, and the burden of a high level of expectations, from both within and outside the country.

As a result, however, of what was thought to be a delay in constituting the federal cabinet, and the uncertainty which that created in relation to the economic policy direction of the Federal Government, business activities slowed down. The business environment became even more challenging, thus undermining the capacity of investors to maximize the business opportunities in the economy. The year was also characterized by the inability of most State Governments to meet their salary obligations, which required the Federal Government to provide the affected State Governments with a financial bail-out package.

The macro-economic context for the deceleration of the Nigerian economy in 2015 can be found in the low crude oil prices that manifested during the year. The year started with crude oil prices of about $55.00, peaked at almost $70.00 in April, 2015 and ended with a crude oil price of about $37.72, compared with a benchmark price of $53.00 that was contained in the Federal Governments budget for 2015. The low crude oil prices led to imbalances in Nigeria’s foreign exchange markets, turmoil in its financial markets, and caused the Nigerian economy to suffer its worst economic downturn in decades.

By way of further background to the very difficult year in which our company operated, the National Bureau of Statistics reported that the growth rate of Nigeria’s Gross Domestic Product (GDP) in 2015 was about 3%, which was well below the 6.2% growth rate that the country experienced in 2014. Inflation was also high in 2015, and the year ended with an inflation rate of 9.6% in December. In terms of the financial markets, the Nigerian Stock Exchange All-Share Index was reduced by about 17.36% and market capitalization, which opened at N11.478 trillion at the beginning of the year, had declined by over N1.63 trillion by year end.

Nigeria started the year with foreign exchange reserves of almost $30 billion and at the end of the year the nation’s foreign reserves had declined to about $29.00 – largely as a result of declining crude oil prices. Although the Central Bank of Nigeria (CBN) was able to maintain relative stability in the official foreign exchange market (circa: N200.00 / USD 1.00), the prevailing exchange rates for cash transactions at bureaux de change, as well as the ‘unofficial’ exchange rate for the US Dollar, hovered above N230 to the dollar (now over N300), despite the various measures adopted by the CBN. The shortage of foreign exchange at official rates, and uncertainty over whether there would be an adjustment to the official exchange rate, was a major drag on our company’s overall business performance.

On the monetary policy front, in November 2015 the CBN reduced the Monetary Policy Rate (MPR) from 13% to 11% (the lowest rate since 2009) and the Cash Reserve Ratio for banks to 20%, in order to address the weak fundamentals of the economy and in particular the low output of the productive sector, rising unemployment and the uncertainty of the global economic environment. In the course of the year, JP Morgan removed Nigeria from its Government Bond Index on the basis that Nigerian government bonds had failed its liquidity and transparency tests. That decision had a further, negative, impact on Nigeria’s foreign reserves, stock market and yields on the country’s debt.

The year 2015 was also shaped by the insurgency of the Boko Haram terrorist group, which decimated entire communities in the North East of Nigeria and displaced hundreds of thousands of people, while destroying lives and properties including farmlands and poultry farms. In relation to poultry farms, the outbreak of Avian Influenza (Bird Flu) in two-thirds of the States of Nigeria led to a depopulation of birds, which negatively impacted our Animal Feeds business. Our businesses also had to grapple with a ‘soft’ real estate market, high borrowing costs, a worsening public power supply, deteriorating roads and various other infrastructural challenges.


You will recall that the objective of the capital raising proposals that were presented to the shareholders at the Annual General Meeting that took place on 23 September, 2015 was to attract a strategic investor or investors and obtain equity capital that would be used to drive growth in certain subsidiaries.

Following your approval of a 1 for 12 Rights Issue of 160,072,032 ordinary shares, your Board and Management made all necessary arrangements to launch the Issue. Unfortunately, however, the weak performance of the Nigerian capital market has made it impossible to raise the required capital on optimal terms and at the end of March 2016, a decision was taken by the Board to discontinue the Rights Issue.

Your Board and Management will now undertake the needed investment and financial restructuring of those subsidiaries using internally generated funds.


Against the background of the extremely challenging economic and business environment in 2015, your Company recorded a Group Revenue of N73.1 billion, which was down by 14.6% from the N85.6 billion of the previous year. Group Profit After Tax of N5.2 billion was down by 52.6% on N10.9 billion of the previous year.


In view of the results that I have just highlighted, and the need to conserve funds so that we can participate in the Rights Issues that will be undertaken by three of our subsidiaries (i.e. UACN Property Development Company PLC, Livestock Feeds PLC and Portland Paints & Products Nigeria PLC), the Board is recommending for your approval a dividend of 100 kobo per share in respect of the 2015 financial year.


The National Bureau of Statistics forecasts that the Nigerian economy will expand by 3.8% in 2016. World economic growth for 2016 is projected at 3.4% and growth forecasts for China and India are put at 6.4% and 7.6%, respectively. The key issues that will continue to dominate the Nigerian economy are crude oil prices and Nigeria’s exchange rate policy, interest rate policy, fiscal policy and trade policy.

Low or further declines in oil prices will result in lower revenues for all tiers of government, lower foreign exchange earnings, sustained or increased pressure on the exchange rate, increased borrowings and higher levels of debt servicing and heightened inflation. In order to address these challenges the Federal Government’s budget for 2016 indicates that Nigeria has adopted a fiscal strategy that is anchored, among other things, on improving tax collection in order to boost revenue, diversification of the economy and of the Governments revenue base, promotion of local petroleum refining, local manufacture of previously imported items, as well as increased spending on infrastructure and in particular on power. All of these will have to be fasttracked if the economy is to avoid a recession.


Since the last Annual General Meeting two members of the Board of Directors of our Company, namely, Senator Udoma Udo Udoma, CON and Dr. Okechukwu Eyinnaya Enelamah were appointed as Honourable Ministers of the Federal Republic of Nigeria. Following the earlier appointment of Chief Ernest Shonekan, our former Group Executive Chairman, as Interim Head of State in 1993, their appointment is an attestation to the high quality of our people.

We acknowledge with profound appreciation the congratulatory messages received from our Shareholders on their appointments and as good ambassadors of our Company, we wish them a very successful tenure of office. Following their appointments and resignation from the Board, Dr. Okechukwu John Mbonu and I were appointed to the Board. In accordance with the law and Articles of Association of the Company, Dr Umaru Alka is the Director retiring by rotation at this meeting, while the two new Directors will be presented for election by shareholders.


Distinguished shareholders, I wish to express the appreciation of the Board of Directors to the staff and management of our company for their unstinting contributions during what was a very challenging year. My appreciation also goes to our valued customers for their continued patronage and loyalty to our brands and company. I also thank my colleagues on the Board for their support and co-operation. Finally I wish to thank you, our loyal shareholders, for keeping faith with our company and for your support over the years.

Thank you for your attention.

Mr Dan Agbor