7/19/2004 VANGUARD (NIGERIA) AAGM - SINCE 2002, Presco Plc, has embarkedupon massive expansions of its plantations and processing facilities. Inthis piece, the company's Managing Director/CEO, Mr. Pierre Vandebeeck,says its production base has doubled, and the company is now wellpositioned to meet the needs of food manufacturing industry which dependson oil palm products for their operation.

" What are the prospects for the agriculture sub-sector, with emphasis onthe oil palm industry? "

The prospects for the edible oils sub-sector are good. Market demand inNigeria is strong and the requirements of the food manufacturing industrycan be supplied by a fully-integrated operation such as Presco's. ThePresident has, for some time, been making efforts to increase domesticproduction in order to decrease the dependence on imports, many of whichare brought in illegally. Presco is playing its part in increasingdomestic production by expanding its own planted area and processingcapacity. However, Presco is also playing an active role in encouragingoutgrower farmers. A scheme has been put in place, with part of thefinancial support coming from the Edo State government to assist outgrowerfarmers to plant small farms with high quality oil palms, which will inturn supply their fruits to Presco's palm oil mill.

" What work is being done by Presco in the host communities? "

Our vision in this direction is to open up the communities around us andraise the standard of living of the people in these communities throughthe provision of basic social infrastructure and the introduction of theoutgrowers' scheme. We maintain on a regular basis the roads and potablewater supply sources in these communities and provide electricity.

A scholarship scheme is in place in all our host communities to prepareindegenes of these communities to be able to compete for the senior andmanagement positions. In partnership with the Edo State government, aproject is underway to provide electricity to six communities aroundObaretin Estate. We are also working with the Edo State government toexpand a school in one of the villages to cater for the secondaryeducation needs of the children of our workers and our host communities.

" Are there any interesting developments that you would like to share withus? "

One of Presco's many achievements in 2003 was to be awarded organiccertification for a part of the plantation and the processing and refiningoperation from ECOCERT, an internationally recognised body. This means wecan now produce, process and refine organic palm products, for which thereis a significant demand in Europe. We have already produced organic RBDO,olein and stearin ready for export. This, we believe, is a first forNigeria.

" We have heard that Siat, the core shareholder of Presco, is expandinginto Gabon. Is this true? "

Your information is correct. Siat has acquired in Gabon 10,000 hectares ofrubber plantations, 10,000 hectares of oil palm plantations, a palm oilrefinery and fractionation plant, a packaging plant and a soap factory.Additionally there is a cattle ranch on which a several thousand head ofcattle are reared. This acquisition is part of our group's strategy todiversify regionally while remaining with what we know best. It alsoconfirms once more our commitment and confidence in the future of ourbusiness in Africa.

" Presco has just announced that its AGM will be held on July 15, 2004.Can you give us some background to performance in 2003? "

Despite being a difficult year for business in general in Nigeria, Prescofared well in 2003. Turnover was up by 55% to N2.1 billion and profitafter tax increased from N154 million in 2002 to N375 million. All in all,it was a good trading year for Presco. On the supply side, fruitproduction from our own estates increased in 2003 by 7%. Sales increasedin line with estate production as the demand side of our business remainedhealthy.

We have a broad, but loyal, customer base for our products (RBDO, olein,stearin, palm kernel oil), as they are aware that we can provide both thequantity and quality to meet the increasingly more exacting requirementsof the food manufacturing industry and the general public. In 2003 Prescoundertook the restructuring of its debt, a move that has made the balancesheet healthier thereby significantly reducing short-term debt byconverting it to long-term debt. In the exercise the entire foreign debtwas paid back and we therefore no longer have foreign exchange risk andlosses on exchange.

" What dividend does Presco propose for its shareholders? "

The dividend for 2003 will remain at 50 kobo per share. A total of N250million will be paid to shareholders. This is in line with our commitmentgiven in the information memorandum to our present shareholders prior togoing public in 2002. With the 2004 outlook being substantially better,dividends will follow suit.

" What plans does Presco have for 2004 and beyond? "

For its plantation operations Presco has for several years been replantingold planting so that palms with declining productivity can be replaced bynew, higher yielding planting material. This replanting programme willcontinue. Furthermore, Presco has acquired a 6,000 hectares concession atOlogbo where work has already started with a view to start planting in2005.

Another concession of approximately 3000 hectares adjacent to the one Ijust mentioned has also been acquired. With these two areas Presco canexpand its productive base to almost double that which it has today. Onthe processing side, work has progressed well in 2003 and in 2004 on theexpansion of our palm oil mill to be able to process the expected futurecrop.

Already, fruit pressing capacity has been doubled, and in the next sixmonths the oil clarification station will be completely remodeled toincrease capacity and efficiency. A second weighbridge is already in placeand improvements to fruit handling are underway.

As you know, Presco has West Africa's only fully integrated plantation,with palm oil mill and refining/fractionation operation. We have also beenworking to increase the processing capacity of the refinery andfractionation plant. Several stages have already been completed and thewhole project will be commissioned at the year-end. Presco has alsorecently signed a contract to purchase a new state-of-the-art boiler. Theincreased capacity of the palm oil mill and refinery requires that thereis more steam, so we will be building a 30 tonnes per hour steam boiler.In conjunction with this, Presco will improve its electricity generationcapacity. Palm oil mills are almost unique in being able to use theby-products of fruit processing as fuel for boilers.

Presco will be pioneering technology that will allow its boilers to usenot only fruit fibre and kernel shells, but also empty fruit bunches as afuel source. Steam from the boiler is used for the processing of fruitsand refining of oil, but is also used to generate all the plant'selectricity needs. As from mid 2005, Presco will be totallyself-sufficient in respect of power generation exclusively fromby-products generated by the oil mill, thus saving huge amounts on diesel,while becoming more environmentally friendly.