| Mon 12 May 2008, 12:00 | | OAO - Oando Plc - Unaudited Results For The 3 Mont |
|
OAO
UNTP
OAO - Oando Plc - Unaudited Results For The 3 Months Ended 31 March 2008
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" or "the Group")
Unaudited results for the 3 months ended 31 March 2008
Highlights:
- Turnover of USD597.96m
- Gross profit of USD38.57m
- Operating profit of USD17.71m
- Profit after tax of USD12.06m
- Attributable profit after tax of USD12.04m
- Earnings per share of 1.60c
- Significant profit growth in traditional marketing business
- Sustained high contribution of non-marketing business
- Commencement of business operation of Greater Lagos II gas project
- Upstream activities gaining momentum-Pre production activities at near
completion level
- Improved performance over previous year on all major indicators
Review of results
Oando, which has a primary listing on the Nigerian Stock Exchange and a
Secondary listing on the JSE Limited ("JSE"), reports profit after tax
("PAT") for the 3 months ended 3 1 March 2008 of USD12.06m.
Income statement analysis
Our first quarter results show an increase in consolidated turnover by 61%
from USD372m in the first quarter of 2007 to USD598m in 2008. The increase in
turnover can be attributed to the high performance of our non-marketing
business, specifically our Supply and Trading division. Also significant to
turnover was the higher trade volume undertaken by our downstream marketing
division. This was despite a quarter characterised by periods of intermittent
product shortages.
The increase in turnover trickled down to gross profit, at USD39m a 55%
increase over the previous year. The Company was able to maintain its margin
efficiency despite the significance of our lower margin supply and trading
division`s contribution to the overall profit level.
Ongoing expansion of our businesses led to an increase in operating expenses
by 49%. Our non-fuel revenue showed a reduction of 58% from the previous
year. The 2008 position reflects the ongoing level of business as the prior
year level was boosted by income accruing from the disposal of a non-core
asset. The net effect of the lower non-fuel revenue and the higher operating
expenses was a 34% increase in operating profit from USD13.20m in the first
quarter of 2007 to USD17.71m as at the end of March 2008.
Continuing from management`s efforts in 2007 to bring down financing costs,
our net-interest expenses for the quarter under review was about 5% lower
than the corresponding period in 2007. This is a benefit from the efforts
undertaken last year to improve trade debt and secure more price competitive
facilities from our financial institution partners. With the increase in
sales and reduction in interest expense, consolidated PAT increased by 42%
from USD8.49m to USD12.06m in the three months of 2008. PAT attributable to
ordinary shareholders rose by 82% to USD12.04m from USD6.63m. Apart from the
organic growth in earnings, the increase in attributable earnings is an
outcome of the successful share restructuring carried out during the second
half of 2007. Finally, the net effect of all the foregoing was a 38% rise in
earnings per share from 1.16c to 1.60c.
Balance sheet analysis
The Group`s total assets rose by 152% to USD1,501m compared to USD596m as at
March 2007, while total liabilities grew by the same margin all driven mainly
by the increased level of activities - organic and otherwise. The Group,
during the period under review, continued its expansion drive, which involved
moving away from the lower margin segments and into higher value areas of the
energy value chain like Upstream Exploration & Production, a strategy which
we believe will yield significant returns in future.
Strategic acquisitions in the upstream sector carried out in the last 12
months culminated in a significant increase in fixed asset balances while
business expansion and the need to tap into emerging opportunities within the
energy chain brought about increased short-term borrowing to support business
growth and market development.
Prospects
The huge investments in our Gas and Power division is expected to yield
significant returns this year, with resulting better margin efficiency as
well as overall profits. One of its operating companies, Eastern Horizon is
expected to commence gas delivery in the eastern part of the country towards
the end of 2008 fiscal year. Other companies within the division have also
entered into several partnerships with the state government departments in
areas of power development.
We expect our Marketing division to sustain its current upward trend in
profitability. Powered by Oracle, its seamless operating framework has given
it an edge over competition. Non-fuel revenue is also expected to improve
significantly with the introduction of new products into the market this
year.
The Company will also continue its march towards a paperless environment;
intensify its cost curtailment drive; continuous improvement in customers
delivery service and efficient working capital management.
Our Supply and Trading business is expected to build on the strong pace it
has set in 2007. The division will consolidate on strategic alliances formed
with the Group`s upstream operations amongst other partners in order to boost
the trading of crude production while also leveraging on its emerging brand
as the supplier of choice of petroleum products to tap into other business
opportunities that may arise from time to time.
We shall continue with products divestment strategic in our Energy business
division. Accordingly efforts will be geared towards commencement of
operation of the recently acquired rigs in upstream operations and additional
emphasis shall be placed on other high margin products and services.
Consolidated Balance Sheet
As at 31 March 2008
ASSETS 2008 2007
USD`000 USD`000
Non-current assets
Property Plant & Equipment 225,802 102,209
Intangible Assets 259,583 104,173
Long Term Investments 90 45
Long Term Receivables 45,133 20,243
530,608 226,670
Current assets
Inventories 318,126 75,964
Trade & Other Receivables 325,877 252,217
Debenture
Cash & Cash Equivalents 329,199 41,237
973,202 369,418
Total assets 1,503,810 596,088
EQUITY
Capital & Reserves attributable to
equity holders
Share Capital 2,896 2,162
Share Premium 232,909 120,742
Revaluation Reserve 85,201 18,475
Retained Earnings 65,779 34,380
386,785 175,759
Minority Interest 1,633 16,783
Total equity 388,418 192,542
LIABILITIES
Non-Current Liabilities 396,030 28,263
Current Liabilities
Trade & Other Payables 88,344 82,896
Current Income Tax Liabilities 12,298 8,646
Borrowings 618,720 283,741
719,362 375,283
Total Liabilities 1,115,392 403,546
Total Equity & Liabilities 1,503,810 596,088
Consolidated Income Statement
For the Quarter ended 31 March 2008
2008 2007
USD`000 USD`000
Sales 597,955 371,756
Cost of Sales (559,386) (346,932)
Gross Profit 38,569 24,824
Selling & Marketing Costs (19,224) (12,250)
Administrative Expenses (3,052) (2,708)
Other Operating Income 1,414 3,334
Operating Profit 17,707 13,200
Shares of Profit of Associates - -
Finance Costs (2,466) (2,573)
Profit Before Taxation 15,241 10,626
Income Tax Expense (3,177) (2,133)
Profit After Expense 12,064 8,493
Attributable to:
Minority Interest 21 1,866
Equity Holders of the Company 12,043 6,628
12,064 8,493
Segment reporting showing inter-segment revenue and profit and loss
The Group`s segment results are as follows:
31 March 2008
Energy
Services,
Refining Gas &
& Marketing Power Group
Total gross segment sales 831,673 24,903 856,576
Inter-segment sales (258,621) - (258,621)
Sales 573,052 24,903 597,955
Operating profit 17,439 268 17,707
Finance cost (2,157) (309) (2,466)
Exceptional items - - -
Profit before income tax 15,241
Income tax expense (3,177)
Profit for the year 12,064
31 March 2007
Energy
Services,
Refining Gas &
& Marketing Power Group
Total gross segment sales 519,570 35,195 554,766
Inter-segment sales (183,010) - (183,010)
Sales 336,560 35,195 371,756
Operating profit 9,675 1,147 10,822
Finance cost (2,530) (43) (2,573)
Exceptional items 2,378 - 2,378
Profit before income tax 10,627
Income tax expense (2,133)
Profit for the year 8,494
Consolidated Statement of changes in Shareholder`s Equity
Attributable to equity holders of the Company
For the quarter ended 31 March 2008
Share Share Revaluation Cumulative
capital premium reserve translation
adjustment
USDm USDm USDm USDm
Balance as at 31st 2.89 232.91 56.95 28.25
December 2007
Retained profit for
the period - - - -
Balance as at
31st March 2008 2.69 232.91 56.95 28.25
Retained Minority Total
earnings interest equity
USDm USDm USDm
Balance as 31st 53.74 1.61 376.35
December 2007
Retained profit for
the period 12.04 1.64 13.68
Balance as at
31st March 2008 65.78 3.25 390.03
Share Share Revaluation Cumulative
capital premium reserve translation
adjustment
USDm USDm USDm USDm
Balance as at 31st 2.16 120.74 11.37 7.11
December 2006
Revaluation surplus - - 66.31 -
on property, plant
and equipment
Deferred tax - - (20.55) -
effect of residual
value restatement
Issue of shares 0.73 112.17 - -
Fair value gain/loss - - (0.173) -
on available for
sale investments
Currency translation - - - 21.14
adjustment
Profit for the year - - - -
Final dividend - - - -
for 2006
Balance as at 31st
December 2007 2.89 232.91 56.96 28.25
Retained Minority Total
earnings interest equity
USDm USDm USDm
Balance as at 31st 28.03 14.65 184.05
December 2006
Revaluation surplus - - 66.31
property, plant
and equipment
Deferred tax - - (20.55)
effect of residual
value restatement
Issue of shares - (13.23) 99.67
Fair value gain/loss - - (0.173)
on available for
sale investments
Currency translation - - 21.14
translation adjustment
Profit for the year 43.94 0.19 44.13
Final dividend (18.23) - (18.23)
for 2006
Balance as at 31st
December 2007 53.74 1.61 376.35
Notes to reviewed results
1. General information
Oando Plc (formerly Unipetrol Nigeria Plc) was registered by a 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 has its 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.
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 unaudited financial
reports for the first quarter of 2008.
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
IFRIC 10 (Issued 2006) Interim Financial Reporting and Impairment
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`s 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;
- 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`s 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.
2008 2007
Profit attributable to equity holders of the 12,043 6,628
Company (USD`000)
Average number of shares in issue (thousands) 754,070 572,301
Basic Earnings Per Share (cents) 1.60 1.16
Diluted
Profit attributable to equity holders of the 12,043 6,628
Company
Weighted average number of shares in issue 754,070 572,301
(thousands)
Adjustment for Bonus issues
Weighted average number of shares for diluted 754,070 572,301
Earnings Per Share (thousands)
Diluted Earning Per Shares (cents) 1.60 1.16
Headline Earnings Per Share
Profit Attributable to equity holders of the 12,043 6,628
Company
Adjusted for:
Profit on sale of buildings associated with - -
discontinued operations
Profit/(Loss) on sale of other assets
Loss on sales of investment in affiliate companies - -
Tax thereon - -
Headline Earnings Per Share attributable to 1.60 1.16
earnings basis (cents)
Headline Earnings Per Share attributable to diluted 1.60 1.16
earnings basis (cents)
Net Assets Per Share (cents 51.5 33.6
Tangible Assets Per Share (cents) 165.0 86.0
4. Independent audit by the auditors
This condensed consolidated result has not be en audited by our auditors
PricewaterhouseCoopers being the first quarter of our financial year
5. Post balance sheet events
There are no significant post balance sheet events that in the opinion of the
Directors will have a material impact on the accounts herein presented.
For and on behalf of the Board
Mr J Adewale Tinubu
Group Chief Executive Officer
8 May 2008
Directorate:
1 General M. Magoro (Rtd) Chairman
2 Mr. J. A. Tinubu Group CEO
3 Mr. O. Boyo Deputy Group CEO
4 Mr. B. Osunsanya Group Executive Director
5 Mr. A. Akinrele SAN Non-executive Director
6 Prince F. N. Atako JP Non-executive Director
7 HRM. Oba. A. Gbadebo Non-executive Director
8 Mr. O. Ibru Non-executive Director
9 Alhaji H. Mahmud Non-executive Director
10 Mr Onajite Okoloko Non-executive Director
11 Mr. I. Osakwe Non-executive Director
Company Secretary: Mrs. Oredeji Delano
Registered office: 2, Ajose Adeogun Street, Victoria Island, Lagos, Nigeria
Auditors: PricewaterhouseCoopers, Plot 252E Muri Okunola Street, Victoria
Island, Lagos
E-mail: info@oandoplc.com
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
(Proprietary) Limited (Registration number: 2004/003647/07) 70 Marshall
Street, Johannesburg, 2001. PO Box 61051, Marshalltown, 2107
Johannesburg
12 May 2008
Sponsor: Deutsche Securities (SA) (Proprietary) Limited
Date: 12/05/2008 12:00:01 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
