Fellow Shareholders,

It is my pleasure to welcome you to this year's Annual General Meeting (AGM) of our company, UAC OF NIGERIA PLC and to present to you the audited Annual Report and Accounts of the Company for the financial year ended 31st December 2008. In Order to put the Report in its proper context, please permit me to review the operating environment for the period

2008 OPERATING ENVIRONMENT

The year marked the first full year of the administration of President Umaru Musa Yar'Adua and so much hope was hinged on the administration's seven (7) point agenda and its expected positive impact on the economy. The expectations were high as businesses and the general populace looked up to the administration for an improvement, especially in the comatose power sector which constituted the greatest source of increase in operating cost of businesses. Unfortunately, we are still faced with the perennial power outages. The situation became worse as the price of diesel increased astronomically to as high as N150 per litre. Given the heavy reliance of our restaurant business on electricity supply, the irregular power supply affected the business adversely.

On the political scene, the regime consolidated its hold on power with the Supreme Court's affirmation of the President's election and change in key government functionaries. The situation in the Niger Delta remained worrisome, affecting oil exploration and production activities and degenerating into criminality, especially kidnapping for ransom, arson and oil theft. The Government empanelled a Technical Committee on the Niger Delta which made recommendations for the implementation of the Niger Delta master plan. It also established a Ministry of Niger Delta, which along with the Niger Delta Development Commission, is expected to drive development in the troubled region.

The earlier part of the year witnessed astronomical increases in the international prices of crude oil with a peak of $147 per barrel in July, resulting in significant increases in manufacturing material inputs, particularly those sourced from outside the country. The financial crisis, which started from the mortgage sub-sector in the United States, spread through the entire financial services industry and across global economies precipitating a global economic downturn and falling commodity prices. By the third quarter, the decline in the international prices of crude oil as a result of falling global demand and restiveness in the Niger Delta, had begun to affect revenue projections built into the Nigerian budget assumptions.

Domestic price inflation in the year came under immense pressure with food and fuel crisis accentuating the rate with the worst affected being rice and maize. The headline inflation in October stood at 12% in July and 14.5% year-on-year. Government response to the scarcity of these commodities has provided no evident solution to the perennial problem. The exchange rate of the naira was stable all through the year around N117/$, with some appreciations recorded during the second and third quarters. However, there was a sudden reversal of this trend in December as the naira came under pressure due to falling oil revenue and capital flight as more investors repatriated their funds abroad. The congestion at the ports also began to take its toll on imports and the resulting delay in the clearance of goods from the ports had its attendant effect on the availability and prices of raw material for production.

The Nigerian Stock Exchange share price index began declining during the second quarter and has since then been on the downward trend due to general pessimism about stocks in view of domestic and global developments. The perception that the market prices of many stocks were unsustainable, coupled with declining confidence and the high level of margin borrowing to finance share purchases, forced many investors and speculators to sell into a weak market further driving down prices. There is need for the government and the financial and capital market regulators to restore confidence in the stock market.

OUTLOOK FOR 2009

Since the beginning of the year, Nigeria has been reeling under the impact of the global economic meltdown. Initial feelings that Nigeria may not be significantly affected by the crisis have since turned out to be misplaced. The major channel for domesticating the crisis has been the decline in oil prices which have significantly lowered revenue expectations at all levels of government across the country. Another consequence has been Naira depreciation due to instability of oil revenue, decline in capital flows and concerns over the sustainability of current foreign reserve levels. Revenue to government from oil sources will be depressed thereby and may force governments at all levels to look at more non-oil sources of revenue with increasing attention on the corporate sector. The Naira has depreciated by more than 52% in the autonomous market from N118/$1 to N180/$1 with debilitating effect on costs and prices in the economy. In the official markets, the Naira has also depreciated to a range of N145-150/$.

Investor apathy is widespread across the economy and until confidence is restored in the market and the economy, no successful share offer may sail through. The downturn in the capital market has also affected the stability in the financial services sector as many banks are said to be exposed to margin lending to stockbrokers and investors to the tune of about N1 trillion. A large percentage of these credits for now appear irrecoverable thereby putting the lender institutions and their debtors in quandary. To check against a run on the banks, most institutions involved have embarked on many schemes to attract and retain deposits, as well as curtailing withdrawals by customers. It is possible that extension of credits to customers, especially manufacturers and large private sector companies this year may be affected.

In spite of all these, our company is well positioned, to weather the "economic storm". We have re-ordered our investment outlay to focus on maintenance and acquisition of value adding assets. We will vigorously pursue our current focus on food and take advantage of the synergies in our current business portfolio. We have launched new varieties of snacks from our ambient factory (SNAPS and Funtime Cake) of UAC Foods, Supreme Flavoured Milk products from UAC Dairies and Vital Fish Feed from Grand Cereals and Oil Mills Limited. Our restaurants business is also being restructured to improve profitability. We are confident that our company will sustain its current level of performance in spite of the expected strain on the economy.

DIVIDEND

The sum of N2, 561,152,516, representing 99% of Profit After Tax and Non-controlling Interest, is being proposed by the Board as dividend to shareholders. This amounts to a dividend payout of N2 for each 50 kobo share held against N1.70k paid out in the last financial year representing a 18% growth. At the appropriate time in the course of the AG M, I shall put the necessary motion for this to be approved.

UNITED NATIONS GLOBALCOMPACT

It is gratifying to state that your company continues to pursue and align with the principles of United Nations Global Compact, which advocates Human Rights, Labour Standards, Environmental Responsibilities, Anti-Corruption Ideals and Good Corporate Governance.

CONCLUSION
Distinguished shareholders, Ladies and Gentlemen, our employees deserve much appreciation for their unrelenting dedication and service. To my colleagues on the Board and Mr V G Hammond, who resigned from the Board towards the end of the year, I am indeed grateful for their support, co-operation and guidance. To our valued shareholders, please accept our sincere thanks for your unflinching support. On behalf of the Board, I also express appreciation and gratitude to our numerous customers for their support and patronage at all times.

Distinguished Ladies and Gentlemen, I thank you all for your kind attention.

Lt. Gen. M.I. Wushishi (rtd), GCON, CFR, FSS, PSC
Chairman