| Tue 7 Nov 2006, 12:05 | | Oando Plc - Unaudited results for the 9 months end |
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OAO
UNTP
Oando Plc - Unaudited results for the 9 months ended 30 September 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 results for the 9 months ended 30 September 2006
Highlights
- Turnover of $1,741.61m
- Gross profit of $101.04m
- Gross profit margin of 5.6%
- Operating profit of $32.28m
- Profit after tax of $21.09m
- Attributable profit after tax of $18.60m
- Earnings per share of 3.25c
- 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 profit after tax ("PAT")
for the 9 months ended 30 September 2006 of $21.09.m.
Income statement analysis
The strong growth recorded in consolidated turnover of 68% to $1,741.61m for
the 9 months ended September 2006 from $1,039.57m in 2005 is explained by two
major underlying drivers:
the impact of the Oando Energy Services business introduced in 2005; and
increased product availability.
Since the start of 2006, Oando has positioned itself to make optimal use
of the opportunities that arose from the ongoing liberalisation of the
downstream petroleum sector including the introduction of a petroleum subsidy
fund which makes 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.
As a result of increased turnover, overall gross profit grew by 18% to
$101.04m from $85.81m in 2005, despite the tight margin environment. A tight
rein on costs helped ensure a 37% increase in operating profit to $32.28m.
Selling and marketing costs increased by 15% due to Oando"s increased product
costs in the marketing business, while other administrative expenses grew by
13%,this is directly related to increased operational costs. The impact of
this was, however, dampened by the rise in net finance costs which was as a
result of increased financing needs for the import of petroleum products.
Based on the foregoing, PAT increased by 15% to $21.09m from $18.33m in the
same period in 2005. PAT attributable to ordinary shareholders rose by 17% to
$18.60m from $15.87m in the 9 months of 2005. This resulted in a
corresponding rise in earnings per share from 2.77c to 3.25c for the 9 months
ended 30 September 2006.
Balance sheet analysis
Oando"s total assets rose by 85% to $891.57m compared to $480.72m in the third
quarter of 2005 and total liabilities grew by 139% to $707.37m from $295.8m,
driven largely by the increased level of activity in all the businesses.
The Group continues to expand into higher margin segments and higher value
areas of the energy value chain such as Upstream Exploration & Production,
a strategy which we believe will yield significant returns in the near future.
Prospects
Oando"s vision is to expand our current platform into one of the
foremost integrated energy players in Africa. Oando Exploration and
Production is currently firming up on its farm-in agreements with its
partners for the development of the Obodugua/Obodeti field in the OML 56 block.
The Company continues to explore other opportunities within this sector.
Further, Oando anticipates that the existing businesses - Marketing, Supply &
Trading, Energy Services and Gaslink, will continue to report strong
performance in the final quarter of the year.
For and on behalf of the Board
Mr J Adewale Tinubu
Group Chief Executive Officer
November 2006
Directorate:
1. General M. Magoro (Rtd.) - Chairman
2. Mr. J. A. Tinubu - Group CEO
3. Mr. O. Boyo - Deputy Group CEO
4. Mr. O. P. Okoloko - Director
5. Prince F. N. Atako JP. - Director
6. Mr. A. Akinrele SAN - Director
7. HRM Oba A. Gbadebo - Director
8. Mr. O. Ibru - Director
9. Alhaji H. Mahmud - Director
10. Mr. I. Osakwe - Director
11. Mr. O. Osifo - Director
Company Secretary: Mrs. Oredeji Delano
Registered office in Nigeria: Stallion House, 2, Ajose Adeogun Street,
Victoria Island, Lagos, Nigeria
Registered office in South Africa: 1st Floor, 32 Fricker Road, Illovo
Boulevard, Sandton, 2196, South Africa
South African transfer secretaries: Computershare Investor Services 2004
(Proprietary) Limited (Registration number: 2004/003647/07)
70 Marshall Street, Johannesburg, 2001. PO Box 61051, Marshalltown, 2107
Auditors: PricewaterhouseCoopers, Plot 252E Muri Okunola Street, Victoria
Island, Lagos
E-mail: info@oandoplc.com
Consolidated Balance Sheet
As at 30 September 2006
ASSETS 2006 2005
US$m US$m
Non current assets
Property, plant and equipment 102.17 94.97
Intangible assets 103.73 75.78
Long-term receivables 25.60 26.77
231.50 197.52
Current assets
Inventories 154.63 43.59
Work-in-progress 1.05 -
Trade and other receivables 447.82 215.79
Held for sale investment - 0.08
Cash and cash equivalents 56.57 23.82
660.07 283.20
Total assets 891.57 480.72
EQUITY
Capital and reserves attributable to equity holders
Share capital 2.22 2.17
Share premium 123.88 121.06
Revaluation reserve 18.79 18.36
Retained earnings 27.74 28.24
172.63 169.83
Minority interest 11.58 15.52
Total equity 184.21 185.35
LIABILITIES
Non current liabilities
Borrowings 26.97 25.95
Deferred income tax liabilities 1.79 3.55
Retired benefit obligation 1.22 1.10
Provisions 0.18 -
30.16 30.60
Current liabilities
Trade and other payables 125.49 265.21
Dividend payable 0.02 0.01
Current income tax liabilities 8.12 -
Reserves for bonus issues 62.18 -
Borrowings 481.42 -
677.23 265.22
Total liabilities 707.39 295.81
Total equity and liabilities 891.60 481.16
Consolidated Income Statement
For the 9 months ended 30 September 2006
2006 2005
US$m US$m
Sales 1,741.61 1.039.57
Cost of sales (1,640.57) (953.76)
Gross profit 101.04 85.81
Selling and marketing costs (58.59) (51.02)
Administration expenses (14.34) (12.69)
Interest received 0.03 0.01
Other operating income 4.13 1.47
Operating profit 32.27 23.58
Share of profit for associates - -
Finance costs (5.81) (2.12)
Profit before tax 26.46 21.46
Income tax expense (5.38) (3.11)
Profit after tax 21.08 18.35
Attributable to:
Minority interest 2.49 3.17
Equity holders of the Company 18.60 15.87
21.09 19.04
Summarised Consolidated Cash Flow Statements
As at 30 September 2006
2006 2005
US$m US$m
Cash and cash equivalents at the beginning of the 50.42 51.26
period
Net cash inflow used in operating activities (38.20) 25.10
Cash used in investing activities 7.91 16.20
Net cash flows (used in)/generated from financing 17.96 36.89
activities
Exchange gains / (losses) in cash and cash 1.19 1.10
equivalents
Cash and bank overdrafts at end of period (12.45) 24.37
Consolidated Statement of changes in Shareholder"s Equity
Attributable to equity holders of the Company
As at 30 September 2006
Share Share Revaluation
Capital Premium reserve
US$m US$m US$m
Balance as at 1st
Jan. 2005 2.16 120.74 18.31
Currency translation
adjustments 0.10 0.01
Restatement of
residual value of
property, plant and
equipment
Deferred tax effect of
residual value
restatement
Net expense
recognised directly
into equity
Retained profit for the
period
Total income
recognised for half
year
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
Balance as at 1st
January 2006 2.16 120.84 18.32
Currency translation
adjustments 0.06 3.04 0.48
Net expense
recognised directly
into equity 0.06 3.04 0.48
Retained earnings
for the period
Total recognised
income for the half
year 0.06 3.04 0.48
Dividend relating to
2005
Minority interest
dividend in subsidiary
Balance as at 30th
September 2006 2.22 123.88 18.79
Cumulative Retained Minority Total
translation earnings interest equity
adjustment US$m US$m US$m
US$m
Balance as at 1st
Jan. 2005 (0.25) 11.96 10.73 163.65
Currency translation
adjustments (2.13) (1.59) (3.62)
Restatement of
residual value of
property, plant and
equipment 7.09 7.09
Deferred tax effect of
residual value
restatement (2.13) (2.13)
Net expense
recognised directly
into equity (2.13) 4.96 (1.59) 1.35
Retained profit for the
period 15.81 1.95 17.79
Total income
recognised for half
year (2.13) 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 (2.38) 21.41 10.97 171.32
Balance as at 1st
January 2006 (2.38) 21.41 10.97 171.32
Currency translation
adjustments 2.38 - 0.10 6.05
Net expense
recognised directly
into equity 2.38 2.76 0.10 8.80
Retained earnings
for the period 18.60 2.49 21.09
Total recognised
income for the half
year 2.38 21.36 2.59 29.89
Dividend relating to
2005 (15.03) (15.03)
Minority interest
dividend in subsidiary (1.97) (1.97)
(15.03) (1.97) (17.01)
Balance as at 30th
September 2006 (0.00) 27.74 11.58 184.20
Notes to the condensed unaudited results for the 9 months ended 30 September
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 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) 18,603 15,870
Weighted average number of shares in issue (thousands) 572,301 572,301
Basic earnings per share (cents) 3.25 2.77
Diluted earnings per share (cents) 3.25 2.77
Headline earnings per share to earnings basis (cents) 3.25 2.77
Diluted headline earnings per share (cents) 3.25 2.77
Net assets per share (cents) 32 30
Tangible assets per share (cents) 161 132
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 for the 9 months ended 30 September 2006 have not been reviewed by
Oando"s auditors.
Sponsor to Oando:
Deutsche Securities (SA) (Proprietary) Limited
7 November 2006
Date: 07/11/2006 12:05:51 PM Produced by the JSE SENS Department
