| Tue 8 Aug 2006, 17:30 | | Oando Plc - Unaudited interim results for the 6 mo |
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OAO
UNTP
Oando Plc - Unaudited interim results for the 6 months ended 30 June 2006
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 the 6 months ended 30 June 2006
Highlights
- Turnover of $1,182.98m
- Gross profit of $65.42m
- Gross profit margin of 6%
- Operating profit of $20.26m
- Profit After Tax of $13.46m
- Attributable profit after tax of $12.26m
- Earnings per share of: 2.14c
- Continued expansion of Oando and its subsidiaries (the "Group") into new
business areas - Oil field and Energy Services, Oil field exploration and
Production and Power
Review of Results
Oando which has a primary listing on the Nigerian Stock Exchange and a
secondary listing on the JSE Limited (JSE) reports Group Profit After Tax
(PAT) for the half year ended 30 June 2006 of $12.26m, an increase of 14%
on the comparable period for 2005 when $11.83m was reported.
Income Statement Analysis
The strong growth recorded in consolidated turnover of 63% to $1,182.98m for
the half year ended June 2006 from $726.42m in 2005 reflects three important
underlying drivers:
- the price of crude oil, our base product, reached over $74 during the
period
under review, a significant increase:
- the newer businesses in the Oando Group, Oando Supply and Trading and Oando
- Energy Services increased: and
- increased product availability also boosted the turnover growth.
Early in the year, the Federal Government introduced a petroleum subsidy fund
which formalised the fuel subsidy thereby making it easier for well capitalised
and properly structured corporations such as Oando, to source finished products
for supply into the local market. This has led to improved product availability
as well as an increase in activity in the sector.
Oando"s Supply & Trading business was the main beneficiary of the Petroleum
Subsidy Fund, however the historically thin margins in this business led to the
lower gross margin overall, although in absolute terms gross margin rose by 5%.
Despite the tight margin environment, the overall gross profit expanded by 5%
to $65.42m mainly due to 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 $20.26m.
Selling and marketing costs increased by 23% due to Oando"s increased activity
in marketing business, while other administrative expenses declined by 10%.
The PAT increase of 14% to $13.46m partly highlights the significant drop in
net finance costs from $3.98m to $3.00m.
Attributable PAT to ordinary shareholders rose by 28% to $12.27m from $9.56m in
the first half of 2006, while the PAT attributable to minority
interest dropped from $2.27 to $1.20 in the same period under review, due to
the relatively lower contribution from partly owned businesses. This
resulted in a corresponding rise in earnings per share from 1.67c to 2.14c for
the half year period under review.
Balance Sheet Analysis
Oando"s total assets rose by 39% to $661.17m compared to $474.91m in the first
half of 2005 and total liabilities grew by 59% to $479.65m from
$301.60m driven mainly by the increased level of activity. 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 we believe will yield significant returns in
future driven by continued strong crude prices over the medium term.
Prospects
Our primary ambition continues to be the development of our platform to become
one of the foremost integrated energy players in Africa. We anticipate the
continued strong performance of the existing businesses i.e. Marketing, Supply &
Trading, Energy Services, Exploration & Production and Gaslink.
Regarding the refinery, the delays in the privatisation process of the Port
Harcourt refineries by the Federal Government of Nigeria, for which Oando is a
strong contender, has resulted in the company shifting its focus its focus to
its longer term option to assess the feasibility of a new build and other
refinery opportunities.
For and on behalf of the Board
Mr J Adewale Tinubu
Group Chief Executive Officer
8 August 2006
Directorate:
1. General M. Magoro (Rtd.) - Chairman
2. Mr. J. A. Tinubu - Group CEO
3. Mr. O. Boyo - Deputy Group CEO
4. Mr. O. P. Okoloko - Director
5. Prince F. N. Atako JP. - Director
6. Mr. A. Akinrele - Director
7. HRM Oba A. Gbadebo - Director
8. Mr. O. Ibru - Director
9. Alhaji H. Mahmud - Director
10.Mr. I. Osakwe - Director
11.Mr. O. Osifo - 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 2006
ASSETS 2006 2005
US$m US$m
Non current assets 100.29 104.61
Property, plant and equipment 71.38
99.00
Intangible assets 0.23
Investment in associates 26.54 30.86
Long-term receivables 225.83 207.08
Current assets
Inventories 92.08 39.71
Work-in-progress 0.70
Trade and other receivables 313.83 197.48
Held for sale investment 0.08
Cash and cash equivalents 22.75 30.56
429.36 267.83
Total assets 655.19 474.91
EQUITY
Capital and reserves attributable
to equity holders
Share capital 2.23 2.16
Share premium 124.36 120.78
Revaluation reserve 18.86 18.31
Exchange difference 0.00 1.55
Retained earnings 19.37 17.83
164.82 160.63
Minority interest 10.73 12.68
Total equity 175.54 173.31
LIABILITIES
Non current liabilities
Borrowings 24.33 11.65
Deferred income tax liabilities 4.85 4.04
Retired benefit obligation 2.17 7.30
provisions 0.16 3.89
Other non-current liabilities 11.61
31.51 38.49
Current liabilities
Trade and other payables 157.02 163.69
Dividend payable 0.02 0.01
Current income tax liabilities 8.96 3.03
Borrowings 282.15 96.38
448.15 263.11
Total liabilities 479.66 301.60
Total equity and liabilities 655.19 474.91
Consolidated Income Statement
For the first half of the year ended 30 June 2006
2006 2005
US$m US$m
Sales 1,182.98 726.42
Cost of sales (1,117.56) (664.09)
Gross profit 65.42 62.33
Selling and marketing costs (30.570 (24.780
Administration expense (17.31) (19.12)
Interest received 0.40
Other operating income 2.32 0.68
Operating profit 20.26 19.11
Share of profit for associates 0.03
Finance costs (3.00) (3.98)
Profit before tax 17.26 15.15
Income tax expense (3.80) (3.32)
Profit after tax 13.46 11.83
Attributable to:
Minority interest 1.20 2.27
Equity holders of the Company 12.26 9.56
13.46 11.83
Summarised Consolidated Cash Flow Statements
As at 30 June 2006
June 2006 June 2005
US$ US$
Cash and cash equivalents at the beginning of the
period
50.77 53.63
Net cash inflow used in operating activities (58.97) (26.08)
Cash used in investing activities (0.59) (10.30)
Net cash flows (used in)/generated from financing
activities (16.78) (42.97)
Exchange gains / (losses) in cash and cash
equivalents 1.19 1.03
Cash and bank overdrafts at end of period (24.38) (24.69)
Consolidated Statement of changes in Shareholder"s Equity
Attributable to equity holders of the Company
Share Share Revalaution Cummulative
Capital Premiun reserve translation
US$m US$m US$m adjustment
US$m
Balance as at 1ST Jan.
2005 2.16 120.74 18.31 (0.25)
Currency translation
adjustments
0.10 0.01 (2.13)
Restatement of residual
value
of Property, plant and
equipment
Deffered tax effect of
residual
value restatement
Net expense recognised
directly into equity (2.13)
Retained profit for the
period
Total income recognized
for
half year (2.13)
Dividend relating to
2004
Minority interest in
subsidiary
Interest in subsidiary
excluded from
consolidation
Interest in share
capital
transferred
Balance as at 31st
December
2005 2.16 120.84 18.32 (2.38)
Balance as at 1st
January
2006 2.16 120.84 18.32 (2.38)
Currency translation
adjustments 0.07 3.52 0.54 2.38
Net expense recognised
directly into equity
Retained Earrnings for
the
period 3.52 0.54 2.38
Total recognised income
for
the half year 0.07 3.52 0.55 2.38
Dividend relating to
2005
Minority interest
dividend in
subsidiary
Balance as at 30th June
2006 2.23 124.36 18.87 (0.00)
Retained Minority Total
earnings interest equity
US$m US$m US$m
Balance as at 1ST Jan. 2005 11.96 10.73 163.65
Currency translation
adjustments
(1.59) (3.62)
Restatement of residual value
of Property, plant and
equipment 7.09 7.09
Deffered tax effect of residual
value restatement (2.13) (2.13)
Net expense recognised
directly into equity 4.96 (1.59) 1.35
Retained profit for the period 15.81 1.95 17.79
Total income recognized for
half year 20.77 0.36 19.11
Dividend relating to 2004 (8.65) (8.65)
Minority interest in subsidiary (2.67) (2.67)
Interest in subsidiary
excluded from consolidation (0.07) (0.07
Interest in share capital
transferred 0.02 0.02
(11.32) (0.05) (11.37)
Balance as at 31st December
2005 21.41 10,97 171.32
Balance as at 1st January
2006 21.41 10.97 171.32
Currency translation
adjustments 0.04 0.12 7.1
Net expense recognised
directly into equity
Retained Earrnings for the
period 0.04 0.12 7.14
12.26 1.20 11.4
Total recognised income for
the half year 12.30 1.13 11.33
Dividend relating to 2005
Minority interest dividend in
subsidiary (14.34) (14.34)
(1.56) (1.56)
Balance as at 30th June 2006 19.37 10.73 175.54
Notes to the Condensed unaudited financial statements
30 June 2006
1. General information
Oando (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 the
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 in December 2003.
The Group 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. 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.
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 of 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.
2006 2005
Profit attributable to equity holders of
the Company ($"000) 260 9,560
Weighted average number of shares in issue (thousands) 572,301 572,301
Basic earnings per share (cents)
2.14 1.67
Profit attributable to equity holders of the Company
($"000) 12,260 9,560
Weighted average number of shares in issue (thousands) 572,301 572,301
Adjustment for bonus issues - -
Weighted average number of shares for diluted EPS
(thousands) 572,301 572,301
Diluted earnings per share (cents)
2.14 1.67
Headline earnings per share (for JSE listing purposes)
Profit attributable to equity holders of the Company 12,270 9,560
Headline earnings per share to earnings basis (cents) 2.35 2.07
Headline earnings per share diluted earnings basis
(cents) 2.35 2.07
Net assets per share (cents)
32 30
Tangible assets per share (cents) 116 83
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 interim results have not been reviewed by Oando"s auditors.
Sponsor to Oando:
Deutsche Securities (SA) (Proprietary) Limited
8 August 2006
Date: 08/08/2006 05:30:19 PM Produced by the JSE SENS Department
