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Distinguished Shareholders,
It is indeed my pleasure to welcome you all to the 2008 Annual General Meeting (AGM)
of our great Company, uac of nigeria plc - your Company that has been and still is 'doing
good' since 1879. It is my responsibility at this meeting to present to you, for review,
the Annual Report and Accounts of the Company for the financial year ended 31st
December, 2007. Before I do that, please permit me to highlight the developments in
the business and economic environment in the course of the year which impacted
on the company's performance.
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REVIEW OF THE ECONOMIC AND BUSINESS ENVIRONMENT
The Nigerian socio-political terrain was characterized by uncertainties and
political transition in the first half of the year. This was occasioned by the build up
to the April 2007 general election. In the atmosphere of uncertainty created due
to the proposed constitutional amendment which was later defeated, and the
subsequent unprecedented transition from one elected leader to another, it is
gratifying that the elections later held without major eventualities. Candidates
with complaints about the conduct of the general election went to the relevant
Election Petition Tribunal for redress. This resorted to the courts rather than
to a breakdown of law and order buoyed by the “rule of law” stance of
President Yar'Adua has helped to stabilize the polity.
On the social scene, there has been a noticeable increase in crime rate in
the country. Though the current administration has declared security as
one of its seven point agenda, the challenges of crime and combating
insecurity remains a major concern. Banks, business houses and
defenceless citizens are daily besieged by armed bandits leaving death, loss
of money and property in their trail. Some of our restaurants were also affected.
The Niger Delta region of the country continued to attract world attention, in view of the general state of
insecurity of lives and property, particularly of oil industry operations and workers. The penchant for kidnapping for
ransom by the militants led to heightened insecurity in the region with many expatriates and indigenes evacuating from
the region. A number of businesses also closed shop with some relocating outside the region. This situation impacted
negatively on the performance of our businesses. The business environment in the region has become rather unstable.
The poor state of the country's infrastructure persisted during the year and it impacted negatively on the operating cost of
the businesses. Power supply remained epileptic, with electricity generation in the year declining to its lowest levels in
recent years. The poor state of transport infrastructure also persisted within the period.
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PERFORMANCE OF THE GROUP
Overall, the UACN Group achieved a turnover of N28.4 billion and profit before tax of N3.893 billion. The 43% growth in profit before tax was accentuated by profit from disposal of fixed assets of N1.17 billion. Profit after taxation, minority interest and extraordinary items stood at N3.2 billion, an increase of 97% or N1.6billion over 2005 performance. As you will notice in the report, we have taken steps to reflect on the Balance Sheet the dimunition/impairment in the values of certain assets in consideration of their nature, intended use, technology and business discontinuity. It is instructive to add that as part of our corporate strategy, our portfolio is being reviewed to align our investments with future favourable trend. Thus, we liquidated our holding in Tractor & Equipment Nigeria Limited as a step aimed at redirecting our resources and strengthening our business for the long haul.
On the economic scene, the economy performed below projection, growing at an average 6.3 percent as against the target of 10 percent set for the
year. The growth realized was driven principally by the non-oil sector, as the continuing crisis in the Niger Delta area constrained crude oil
exploration and production. The downstream sector of the petroleum industry remained prostrate as the country continued to rely on the importation
of refined petroleum products. Inflation rate remained within single digit target with year-end rate put at about 6.3 percent. The consolidation in the
banking industry has helped to stem lending rates, which ranged between 15 and 21 percent. This development has liberalized access to loanable
funds to many investors who otherwise could not obtain bank finance. The Naira exchange rate not only remained stable but even appreciated
during the year. The CBN was able to give support to the external value of the Naira with the growing gross official external reserves which stood at
about $52 billion by December 2007. The prevailing macroeconomic stability assisted business in spite of concerns about the socio-political
environment.
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PERFORMANCE OF THE COMPANY
In spite of the challenging operating environment, our Company posted remarkable performance in the 2007 financial year. The Group's turnover
stood at N31.5 billion, representing an increase of 11% on the N28.4 billion posted in the preceding year. Operating Profit before Tax and Minority
Interest stood at N4.28 billion, representing 40% growth over the N3.06 billion achieved in 2006. This performance is indicative of significant
improvement in the fundamentals of the company and reflects the positive bottom line impact of various strategic initiatives during the year.
Emphasis now is on rapidly growing both the top and bottom lines. Despite a significant reduction on the level of exceptional items, Profit before Tax
and Minority Interest stood at N5.09 billion representing 31% growth.
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DIVIDEND
In view of the improved performance of the Company during the year, an interim dividend of N640.29 million representing 50k for every ordinary
share held was paid in December 2007. Given the overall result, the Board is pleased to recommend a final dividend of N1,536.69 million,
representing 120k for every ordinary share held. If approved, this will bring the total dividend paid to N2,176.98 million, representing 170k for every
50k ordinary share held. The dividend recommended reflects the Board's policy of rewarding shareholders with good return on their investment.
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CORPORATE RE-BRANDING
In August 2007, our Company undertook a Corporate Re-branding exercise, which sought to propel our march from incremental business
improvements to true transformation. As you are aware, the exercise led to the adoption of a new logo that is contemporary, and modern with a
global appeal, and depicts uac as “proactive, forward-looking, muscular, compelling and audacious”. The Company also adopted a new strap line “…doing good”.
Furthermore, our Company's Corporate Social Responsibility (CSR) thrust received fresh impetus. Our CSR initiatives have been reinforced with
our Goodness League initiative, which was unveiled during the Corporate launch. The league aims at touching the lives of our young children - the
leaders of tomorrow. The executional platform is anchored on support (infrastructural and coaching) to legacy schools in Nigeria.
Our positive interventions and active support to schools like St Finbarr's College, Akoka and CMS Grammar School, Bariga, Lagos bear testimonies
to our renewed commitment.
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OUTLOOK FOR 2008
We expect the macroeconomic environment to remain stable. We also expect likely improvement in infrastructure and security given government's
avowed commitment to ensuring same. The government's economic growth target for the year projected at 11 per cent, is predicated on the coming
on stream of new production facilities in the oil and gas sector, especially off shore. There is no gain saying that the envisaged growth would only be
achievable if the current macroeconomic stability is sustained and supportive infrastructure are provided, and more importantly, when the problem
of insecurity in the Niger Delta area is addressed.
On our part, our food-centric business focus has placed us in better stead to operate even in difficult economic situations. Our strategic initiatives of
creating separate business units for UAC Restaurants, UAC Dairies and UAC Franchising are bearing fruit, which is expected to fully manifest in the
coming years. Our other businesses provide complementary services to our Food business in addition to their unique offerings in their own industry
segments. We are ready to fully utilize our knowledge of the Nigerian economic landscape and market for higher and sustainable growth in the
future. We are confident that the re-invigorated and rejuvenated uacn will continue to enjoy the confidence of all our stakeholders, particularly our
shareholders.
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CONCLUSION
Distinguished shareholders, ladies and gentlemen, the result I have laid before you today is a testimony of our strong position in the market place.
With the renewed commitment of management and staff, the Company is poised to move to greater heights. We, therefore, thank the management
and staff for their unalloyed support and commitment which have helped to achieve this performance. We also thank you, our distinguished
shareholders, for the confidence reposed in us. I assure you that your interest will always be protected.
I also thank my colleagues on the Board for their dedication and hard work.
Thank you all.
Lt. Gen. M.I. Wushishi (rtd), GCON, CFR, FSS, PSC
Chairman
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