| Fri 10 Aug 2007, 13:25 | | OAO - Oando Plc - Unaudited interim results for 6 |
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OAO
UNTP
OAO - Oando Plc - Unaudited interim results for 6 months ending 30 June
2007
Oando Plc
(Incorporated in Nigeria and registered as an external company in South
Africa)
Registration number: RC 6474
(External company registration number: 2005/038824/10)
Share Code on the JSE Limited: OAO
Share Code on the Nigerian Stock Exchange: UNTP
ISIN: NG00000UNTP0
("Oando" or "the Company")
Unaudited interim results for 6 months ending 30 June 2007
Highlights
- Turnover of $844.09m
- Gross profit of $52.72m
- Gross profit margin of 6.25%
- Operating profit of $27.70m
- Profit After Tax of $18.38m
- Attributable Profit After Tax of $14.81m
- Earnings Per Share: 2.59c
- Gaslink business expansion plan almost near completion
- Upstream activities gaining momentum pre-production activities at near
completion level
- Continuous operating and administrative expenses curtailment
Review of Results
Oando which has a primary listing on the Nigerian Stock Exchange and a
secondary listing on the JSE Limited ("JSE") reports attributable Profit
After Tax ("PAT") for the half year ended 30 June 2007 of $14.81m, an
increase of 45% on the comparable period for 2006 when $10.23m was
reported.
Income Statement Analysis
The marginal decrease in consolidated turnover of 7% to $844.09m for the
half year 2007 from $912.08m in 2006 reflects mixed macro economic factors
that prevailed during the months under review, which include:
* Fluctuating Price of crude oil, our base product, which was above $74
at some points during the period under review and currently still
hovers above $68;
* Industrial and general strike to protest the increase in the price of
pump price of petroleum and other ancillary product which for a number
of days disrupted businesses activities;
* Scarcity of petroleum products in the early part of the second quarter
impacted negatively on turnover and margin respectively; and
* Several man-hours lost due to several election holidays.
Towards the end of the second quarter, the Federal Government
increased the price of petroleum products by almost 15%. This action
brought about industrial and labour dispute with attendant adverse
effect on Oando operations. Total turnover was negatively impacted as
a result of this action coupled with several election holidays that
were declared by the Federal Government, although the effect was
cushioned by the price increase. Furthermore, there was an increase in
pump head margins at about the same time which resulted in increased
gross margins despite the lower turnover.
The overall Company gross profit increased by 14% to $52.72m mainly
due to the net effect of the issues laid out above, Oando`s ongoing
strategic drive to increase volumes of higher margin products such as
lubricants, and contributions made by new businesses. At the operating
level, Oando`s profit increased to $27.70m. Operating expense costs
increased marginally by 2%, which is lower than inflation due to the
aggressive expense curtailment strategy put in place by management.
Especially in the downstream marketing, non fuel revenue making
initiatives are becoming increasingly important. This is reflected in
the 135% increase in other operating income which contributed to the
61% increase in PAT increase to $18.38m.
Attributable PAT to ordinary shareholders rose by 45% to $14.81m from
$10.23m in the first half of the year 2007. More importantly the PAT
attributable to minority Interest increased substantially by 98% to
$3.57m underscoring the positive contribution from the subsidiaries
and the benefit that will accrue to the shareholders of Oando upon the
full completion of the share swap exercise.
Earnings per share increased by 45% to 2.59c from 1.79c in prior year.
Balance Sheet Analysis
Oando`s total assets rose by 4% to $679.95m compared to $655.19m in
2006 and total liabilities grew by 2% to $488.92m from $479.66m driven
mainly by the increased level of activities. The Group continues its
expansion drive, which involves moving away from the lower margin
segments and into higher value areas of the energy value chain like
Upstream Exploration & Production, a strategy which Oando believes
will yield significant returns in future.
Prospects
Our sole aspiration continues to be the transformation our current platform
into becoming one of the foremost integrated energy players in Africa
through aggressive organic growth and sound diversification and
acquisition. This forms the basis of our continuous investment in the
upstream sector of the energy industry, a move, which will yield
significant dividend to all our stakeholders in the coming years.
Our future aspiration however does not reduce our strong support and
passion for our existing businesses. We anticipate continuous strong
performance of the existing businesses - Marketing, Supply & Trading,
Energy Services and Gaslink..
Our downstream marketing business is being carved out of the group company
to give room for fair peer group comparison and sharp focus on its primary
activities. The company continues to play a leading role in the sales of
petroleum products through its existing retail outlets. The company has the
largest retail outlets in the country.
Our Supply & Trading business continues to benefit from the impact of the
Petroleum subsidy Fund introduced by the government thus contributing
significantly to the bottom line of the group. The historically thin
margins in this business are compensated for by the high volume of business
transaction it undertook in the last quarter. The Company has established
itself as a premier company in the supply and distribution of petroleum
products in the country and West Africa region. The Company continues to
position itself as a strategic supplier to many countries in the sub
region.
Our Gaslink Company, the pioneering gas distribution company of its kind in
Nigeria is about to complete its Great Lagos expansion project. The project
once completed will see a strong increase in the number of its customers
and improved profitability and cashflow. We should start seeing the impact
of this on the bottom line by the last quarter of the year.
The strategic initiatives the Group have pursued in the past years to
modernise and improve on our processes and procedures, reduce cost, improve
quality, enhance service delivery, invest in new and emerging opportunities
and expand into new frontiers both locally and along the west coast of
Africa have positioned us exceptionally well for the long term.
For and on behalf of the Board
Mr J Adewale Tinubu
Group Chief Executive Officer
10 August 2006
Directorate:
General M. Magoro (Rtd.)- Chairman
Mr. J. A. Tinubu - Group CEO
Mr. O. Boyo - Deputy Group CEO
Prince F. N. Atako JP. - Director
Mr. A. Akinrele - Director
HRM Oba A. Gbadebo - Director
Mr. O. Ibru - Director
Alhaji H. Mahmud - Director
Mr. O. P. Okoloko - Director
10.Mr. I. Osakwe - Director
11.Mr. B. Osunsanya - Director
Company Secretary: Mrs. Oredeji Delano
Registered office: Stallion House, 2, Ajose Adeogun Street, Victoria
Island, Lagos, Nigeria
(Registered office in South Africa: 1st Floor, 32 Fricker Road, Illovo
Boulevard, Sandton, 2196, South Africa)
Office of the South African registrars: Computershare Investor Services
2004 (Proprietary) Limited (Registration number: 2004/003647/07)
70 Marshall Street, Johannesburg, 2001. PO Box 61051, Marshalltown, 2107
Auditors: PriceWaterhouseCoopers, Plot 252E Muri Okunola Street, Victoria
Isalnd, Lagos
E-mail: info@oandoplc.com
Consolidated Balance Sheet
As at 30 June 2007
ASSETS 2007 2006
US$m US$`m
Non current Assets
Property, Plant and equipment 102.28 100.29
Intangible Assets 113.37 99.00
Investment 0.44
Long-term Receivables 22.36 26.54
238.44 225.83
Current assets
Inventories 114.66 92.78
Work-in-progress
Trade and other receivables 233.88 313.83
Held for sale investment
Cash and cash equivalents 92.98 22.75
441.52 429.36
Total Assets 679.95 655.19
EQUITY
Capital and reserves attributable to
equity holders
Share capital 2.16 2.16
Share premium 120.47 120.47
Revaluation reserve 18.48 18.48
Exchange difference 7.75 4.33
Retained earnings 23.84 19.37
172.70 164.81
Minority interest 18.33 10.73
Total equity 191.03 175.54
LIABILITIES
Non current liabilities
Borrowings 15.93 24.33
Deferred income tax liabilities 5.32 4.85
Retired benefit obligation 1.15 2.17
Provisions 0.16
Other non-current liabilities
22.40 31.51
Current liabilities
Trade and other payables 217.37 157.02
Dividend payable 1.50 0.02
Current income tax liabilities 9.82 8.96
Borrowings 237.83 282.15
466.53 448.15
Total liabilities 488.92 479.66
Total equity and liabilities 679.95 655.19
Consolidated Income Statement
For the first half of the year ended 30 June 2007
2007 2006
US$m US$m
Turnover 844.09 912.08
Cost of Sales (791.38) (865.90)
Gross Margin 52.72 46.18
Other Operating Income/(Charges) 6.40 2.72
Operating Expenses (31.41) (30.65)
Operating Profit 27.70 18.25
Interest Payable & Similar Charges (4.28) (3.01)
Profit/(Loss) Before Tax 23.42 15.24
Provision for Taxation (5.04) (3.81)
Profit After Tax 18.38 11.43
Attributable to Minority Interest 3.57 1.20
Attributable to the Group 14.81 10.23
Earnings per share (Cents) 2.59 1.79
Adjusted Earnings per share (Cents) 2.59 1.79
Summarised Consolidated Cash Flow Statements
As at 30 June 2007
June 2007 June 2006
US$m US$m
Cash and cash equivalents at the
beginning of the period (52.440) (167.753)
Net cash inflow (used in)/generated from 53.430 (58.970)
operating activities
Cash (used in)/ generated from investing 6.100 (0.590)
activities
Net cash flows used in financing
activities ( 26.670) ( 16.780)
Exchange gains / (losses) in cash and
cash equivalents 1.190
Cash and cash equivalents at end of (19.580) (242,903)
period
Consolidated Statement of changes in Shareholder`s Equity
Attributable to equity holders of the company
Share Share Revalaution Cummulative Retained Minority Total
Capit Premiun reserve translation earnings interest equity
al US$m US$m adjustment US$m US$m US$m
US$m US$m
Balance 2.16 120.74 10.65 20.03 10.79 164.38
as at
1ST Jan.
2006
Currency
translat
ion
adjustme
nts
Restatem
ent of
residual
value of
Property
, plant
and
equipmen
t
Deffered
tax
effect
of
residual
value
restatem
ent
Net 7.83 19.27 1.10 8.93
expense
recognis 2.76 22.02
ed
directly
into
equity
Retained
profit
for the
period
Total
income
recogniz
ed for
half
year
Dividend
relating
to 2004
Minority
interest
in
subsidia
ry
Interest
in
subsidia
ry
excluded
from
consolid
ation
Interest
in share
capital
transfer
red
Dividend (11.28) (11.28)
s: Final
for 2005
Balance
as at 2.16 120.74 18.48 28.03 14.65 184.05
31st
December
2006
Balance
as at 2.16 120.74 18.48 28.03 14.65 184.05
1st
January
2007
Currency 7.75 0.11 7.60
translat
ion
adjustme
nts
Net
expense
recognis
ed
directly
into
equity
Retained
Earrning
s for
the
period
Total 14.81 3.57 18.38
recognis
ed
income
for the
half
year
Dividend (19.00) (19.00)
relating
to 2006
Minority
interest
dividend
in
subsidia
ry
Balance
as at 2.16 120.47 18.48 7.75 23.84 18.33 191.03
30th
June
2007
Notes to the condensed unaudited financial statements
30 June 2007
1. General information
Oando Plc (formerly Unipetrol Nigeria Plc) was registered by special
resolution as a result of the acquisition of the shareholding of Esso
Africa Incorporated (principal shareholder of Esso Standard Nigeria
Limited) by the Federal Government of Nigeria. The Company was partially
privatised in 1991. It was however fully privatised in the year 2000
consequent upon the sale of Federal Government`s 40% shareholding in the
Company. 30% was sold to core investors (Ocean and Oil Investments Limited)
and the remaining 10% to the Nigerian public. In December 2002, the Company
merged with Agip Nigeria Plc following its acquisition of 60% Agip
Petroli`s stake of Agip Nigeria Plc in August of the same year. The Company
formally changed its name from Unipetrol Nigeria Plc to Oando Plc in
December 2003.
Oando and its subsidiaries (together "the Group") have their primary
listing on the Nigerian Stock Exchange.
The Group has marketing and distribution outlets in Nigeria, Ghana and Togo
and other smaller markets along the West African coast. During the year,
the Group`s beneficial ownership in two subsidiaries, Oando Trading
(Bermuda) and Oando Supply and Trading, was increased from 49% to 51%.
Oando Trading and Oando Supply and Trading have been treated as
subsidiaries. The other investors currently having 49% respectively of
Oando Trading and Oando Supply and Trading are Ocean and Oil Holdings
(Nigeria) Limited and Ocean and Oil Holdings (BVI) Limited respectively.
Furthermore, the Group invested in a new subsidiary, Oando Energy Services,
in January 2005 to carry out its energy services business, holding a 51%
interest while the remaining 49% is owned by Ocean and Oil Holdings
(Nigeria) Limited.
By the scheme of arrangement concluded on the 30th June 2007, wherein Oando
Plc acquired Ocean and Oil Investment`s shares in the following
identifiable subsidiaries of Oando:
Oando Energy Service,
Oando Supply and Trading,
Oando Production and Development Company
Oando Exploration and Production Limited and;
Oando Trading Limited in return for increase in shares in Oando plc.
The Company also acquired the right of 12 identifiable holders of Gaslink
shares in exchange for cash and shares in the Oando plc. By this
transaction, Oando now owns and can exercise full control over all these
subsidiaries.
2. Summary of significant accounting policies
The principal accounting policies applied in the preparation of these
consolidated financial statements are set out below. These policies have
been consistently applied to all the years presented, unless otherwise
stated.
2.1 Basis of preparation
The consolidated financial statements of Oando have been prepared in
accordance with International Financial Reporting Standards (IFRS). The
consolidated financial statements have been prepared under the historical
cost convention, as modified by the revaluation of land and buildings, and
financial assets and financial liabilities at fair value through profit or
loss.
The preparation of financial statements in accordance with IFRS requires
the use of certain critical accounting estimates. It also requires
management to exercise judgement in the process of applying the Group`s
accounting policies.
Early adoption of standards
In 2004, the Group early adopted the IFRS below, which are relevant to its
operations. These have been consistently applied in these financial
statements.
IAS 2 (revised 2003) Inventories
IAS 8 (revised 2003) Accounting Policies, Changes in Accounting Estimates
and Errors
IAS 10 (revised 2003) Events after the Balance Sheet Date
IAS 16 (revised 2003) Property, Plant and Equipment
IAS 17 (revised 2003) Leases
IAS 21 (revised 2003) The Effects of Changes in Foreign Exchange Rates
IAS 24 (revised 2003) Related Party Disclosures
IAS 27 (revised 2003) Consolidated and Separate Financial Statements
IAS 28 (revised 2003) Investments in Associates
IAS 32 (revised 2003) Financial Instruments: Disclosure and Presentation
IAS 33 (revised 2003) Earnings per share
IAS 36 (revised 2004) Impairment of Assets
IAS 38 (revised 2004) Intangible Assets
IAS 39 (revised 2003) Financial instruments: Recognition and measurement
IFRS 2 (issued 2004) Share-based payments
IFRS 3 (issued 2004) Business Combinations
IFRS 5 (issued 2004) Non-current Assets Held for Sale and Discontinued
Operations
The early adoption of IAS 10 has resulted in a change in the accounting
policy for dividends. Proposed dividends, which were previously recognised
in the year prior to the declaration have been adjusted in accordance with
IAS 10 and 37 respectively.
The application IAS 16 has affected the accounting for fair value reserve
relating to revalued land and buildings upon disposal.
Under previous GAAP, the revaluation surplus included in equity in respect
of an item of property, plant and equipment were transferred to the income,
when the asset is disposed of, to determine profit on disposal. Adjustments
have been passed to transfer the related amounts directly to retained
earnings in accordance with IAS 16. Also, early adoption of IAS 16 (revised
2004) has necessitated the disclosure of prior year comparatives for all
movements in property plant and equipment.
IAS 21 (revised 2003) has affected the translation of foreign entities`
income statements, on which closing rates were previously applied but now
amended and translated at average rates. The functional currency of each of
the consolidated entities has also been re-evaluated based on the guidance
to the revised standard. All the Group entities have the same functional
currency as their presentation currency. These financial statements have
been presented in a currency other than the Company`s functional currency,
being US Dollars, to meet the filing requirements of the JSE.
IAS 24 (revised 2003) has affected the identification of related parties
and some other related-party disclosures.
IAS 27 (revised 2004) has affected the consolidation of subsidiaries.
Certain subsidiaries, which were not included in the consolidation under
previous GAAP, have now been consolidated.
The early adoption of IAS 33 has resulted in a change in the computation of
earnings per share. Earnings per share, which were previously computed on
the basis of the number of shares in issue at the end of the reporting
period, have been adjusted on the basis of the weighted average number of
shares in accordance with IAS 33
The early adoption of IAS 39 has resulted in a change in accounting for
financial assets and liabilities.
Although the Group did not have any share-based payments as at the balance
sheet date, upon adoption of a scheme, which is
currently being considered by the Group, all share based payments will be
accounted for under IFRS 2.
The early adoption of IFRS 5 has resulted in a change in the accounting for
non-current assets held for sale and discontinued operations as qualifying
assets have been reclassified accordingly.
The early adoption of IFRS 3, IAS 36 (revised 2004) and IAS 38 (revised
2004) resulted in a change in the accounting policy for goodwill. Until 31
December 2002, goodwill was:
* Amortised on a straight line basis over a period ranging from 5 to 20
years; and
* Assessed for an indication of impairment at each balance sheet date.
In accordance with the provisions of IFRS 3:
* The Group ceased amortisation of goodwill from 1 January 2003;
* Accumulated amortisation as at 31 December 2002 has been eliminated
with a corresponding decrease in the cost of goodwill; and
* Goodwill was tested for impairment at 1 January 2003, the transition
date. Also, from the year ended 31 December 2003 onwards, goodwill is
tested annually for impairment,
as well as when there are indications of impairment. The Group has also
reassessed the useful lives of its intangible assets in accordance with the
provisions of IAS 38. No adjustment
resulted from this reassessment.
All changes in the accounting policies have been made in accordance with
the transition provisions in the respective standards.
The early adoption of IAS 1, 2, 8, 17 28, and 32 (all revised 2003) did not
result in substantial changes to the Group`s accounting
policies. In summary:
* IAS 1, 2, 28 and 32 had no material effect on the Group`s policies.
* IAS 8 (revised 2004) has resulted in the disclosure of the impact of
new standards
2.2 Consolidation
(a) Subsidiaries
Subsidiaries include all entities (including special purpose entities) over
which the Group has the power to govern the financial and operating
policies generally accompanying a shareholding of more than one half of the
voting rights. The existence and effect of potential voting rights that are
currently exercisable or convertible are considered when assessing whether
the Group controls another entity. Subsidiaries are fully consolidated from
the date on which control is transferred to the Group. They are
deconsolidated from the date that control ceases.
The purchase method of accounting is used to account for the acquisition of
subsidiaries by the Group. The cost of the acquisition is measured as the
fair value of the assets given, equity instruments issued and liabilities
incurred or assumed and the date of plus costs directly attributable to the
acquisition. Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are measured initially at
their fair values at the acquisition date irrespective of the extent of any
minority interest. The excess of the cost of acquisition over the fair
value of the Group`s share of the identifiable net assets acquired is
recorded as goodwill. If the cost of acquisition is less than the fair
value of the net assets of the subsidiary acquired, the difference is
recognised directly in the income statement. All balances and unrealised
surpluses and deficits on transactions between group companies have been
eliminated. Where necessary, accounting policies for subsidiaries have been
changed to be consistent with the policies adopted by the Company. Separate
disclosure (in equity) is made of minority interests.
(b) Associates
Associates are all entities over which the Group has significant influence
but not control, generally accompanying a shareholding of between 20% and
50% of the voting rights. Investments in associates are accounted for by
the equity method of accounting and are initially recognised at cost. The
Group`s investment in associates includes goodwill (net of any accumulated
impairment loss) identified on acquisition. The Group`s share of its
associates` post-acquisition profits or losses is recognised in the income
statement, and its share of post acquisition movements in reserves is
recognised in reserves. The cumulative post-acquisition movements are
adjusted against the carrying amount of the investment.
When the Group`s share of losses in an associate equals or exceeds its
interest in the associate, including any other unsecured receivables, the
Group does not recognise further losses, unless it has incurred obligations
or made payments on behalf of the associate. Unrealised gains on
transactions between the Group and its associates are eliminated to the
extent of the Group`s interest in the associates. Unrealised losses are
also eliminated unless the transaction provides evidence of an impairment
of the
asset transferred. The accounting policies of the associates are consistent
with the policies adopted by the Group.
Goodwill included in the carrying amount of an investment is neither
amortised nor tested for impairment separately by applying the requirements
for impairment testing goodwill in IAS 36, Impairment of Assets. Instead,
the entire carrying amount of the investment is tested under IAS 36 for
impairment.
All subsidiaries and associates have uniform calendar year ends.
2.3 Segment reporting
A business segment is a group of assets and operations engaged in providing
products or services that are subject to risks and returns that are
different from those of other business segments. A geographical segment is
engaged in providing products or services within a particular economic
environment that are subject to risks and return that are different from
those of segments operating in other economic environments.
2.4 Foreign currency translation
(a) Functional and presentation currency
Items included in the financial statements of each of the Group`s entities
are measured using the currency of the primary economic environment in
which the entity operates (`the functional currency`). The functional
currency of the Group is the Naira. The consolidated financial statements
are presented in US dollars, which is the company`s presentation currency
for the purpose of filing outside Nigeria.
(b) Transactions and balances
Foreign currency transactions are translated into the functional currency
using the exchange rates prevailing at the dates of the transactions.
Foreign exchange gains and losses resulting from the settlement of such
transactions and from the translation at year-end exchange rates of
monetary assets and liabilities denominated in foreign currencies are
recognised in the income statement, except when deferred in equity as
qualifying cash flow hedges and qualifying net investment hedges.
c) Group companies
The results and financial position of all the group entities (none of which
has the currency of a hyperinflationary economy) that have a functional
currency different from the presentation currency are translated into the
presentation currency as follows:
1 assets and liabilities for each balance sheet presented are translated
at the closing rate at the date of that balance sheet;
2 Income and expenses for each income statement are translated at
average exchange rates; and all resulting exchange differences are
recognised as a separate component of equity.
3 On consolidation, exchange differences arising from the translation of
the net investment in foreign entities are taken to shareholders`
equity. Upon disposal of part or all of the investment, such exchange
differences are recognised in the income statement as part of the gain
or loss on sale.
3. Earnings per share
Basic Earnings per Share (EPS) is calculated by dividing the profit
attributable to the equity holders of the Company by the weighted average
number of shares in issue during the period.
2007 2006
Profit attributable to equity holders of the 14.81 10.23
Company ($`m)
Weighted average number of shares in issue 572,301 572,301
(thousands)
Profit attributable to equity holders of the 14.81 10.23
Company ($`m)
Basic earnings per share (cents) 2.59 1.79
Weighted average number of shares in issue 572,301 572,301
(thousands)
Adjustment for bonus issues - -
Weighted average number of shares for diluted 572,301 572,301
EPS (thousands)
Diluted earnings per share (cents) 2.59 2.79
Headline earnings per share (for JSE listing
purposes)
Profit attributable to equity holders of the 14.81 10.23
Company
Headline earnings per share to earnings basis 2.59 1.79
(cents)
Headline earnings per share diluted earnings 2.59 1.79
basis (cents)
Net assets per share (cents) 33.34 32
Tangible assets per share (cents) 118.81 116
4. Adjustments to Prior year results
We have made adjustments to prior year results to enable like for like
comparisons with current year results
5. Post balance sheet events
There are no significant post balance sheet events.
6. Independent review by the auditors
These results have not been reviewed by Oando`s auditors
Date: 10/08/2007 13:25:13 Produced by the JSE SENS Department.
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