The board of Oando Plc, on Wednesday presented its delayed audited financials for the full-year ended December 31, 2019, highlights of which included a loss after tax of N207.078bn, which could have been worse, but for the N170.336bn tax credit, against the N17.609bn tax expense in the corresponding period of 2018; which brought prior year’s net profit to N24.432bn. Revenue for the period fell from N679.466bn to N576.571bn.
The loss, the company said in the accompanying statement to the financials filed with the Nigerian Exchange, arose primarily from the N316.7bn asset impairments, which was partially offset by the income tax credit of N170.3bn.
Based on this, the directors say they are unable to propose a dividend payment.
Among others, the external auditor firm, E&Y, in its report noted the group’s total comprehensive loss of N200.6bn for the year under review, compared to an income of N38.1bn in 2018; adding that as of that date, Oando Plc’s current liabilities exceeded current assets by N432.8bn, up from N318.5bn in 2018.
Accordingly, the auditors say Oando Plc “continues to incur losses and reversal of this is dependent on successful actions to raise capital to pay down the significant debt levels and through achievements of revenue forecasts.”
These conditions, along with other matters, E&Y continued, indicate the existence of a material uncertainty that may cast significant doubt on the company and group’s ability to continue as a going concern and therefore, may be unable to realise its assets and settle its liabilities in the ordinary course of business.”
The external auditors also drew attention to material uncertainty related to the group’s going concern, including the total comprehensive loss of N63.2bn, a jump from N18.3n in 2018, during which period, it said current liabilities exceeded current assets by N163.2bn, compared to a net current liabilities of N63bn in the preceding year.
E&Y also flagged the fact that Oando Oil Limited (OOL), a subsidiary of Oando
Plc obtained a loan of $425m (N154.9 billion) from Afrexim Bank during the year and used it to “partially settle Ansbury Investments Inc on behalf of Whitmore Asset Management Ltd, Ansbury, Whitmore, OODP BVI and OODP Nigeria entered into a Settlement Deed for a total sum of $550m due from Whitmore to Ansbury.
“In respect of the partial settlement on behalf of Whitmore, OOL recorded a receivable of $438.1 million (.W159.6 billion) from Whitmore representing total amount disbursed inclusive of transaction costs.
“Management performed impairment assessment on the receivable and fully impaired the amount in the consolidated statement of profit or loss. Subsequent to year end, upon full settlement of the indebtedness of Whitmore to Ansbury, Ansbury transferred its shares in OODP BVI to Whitmore thereby making Whitmore the sole owner of OODP BVI. Consequently, the Group Chief Executive and the Deputy Group Chief Executive of Oando PLC (the owners of Whitmore) have become the ultimate owners of the 57.37% of Oando Plc.”
Commenting on the results, Wale Tinubu, Oando Plc’s Group Chief Executive, said “2019 witnessed the completion of our corporate strategy of divesting from our naira earning businesses to focus on a dollar-earning portfolio following the sale of our 25% residual stake in Axxela to Helios Investment Partners. This guarantees that future income is protected from foreign exchange fluctuations which have hindered us in the past.
The COVID-19 pandemic, despite surfacing at the tail end of 2019, he continued, “had major repercussions on financial reporting across the globe with the oil industry recording over $145bn in write-downs due to the impact of the pandemic on future cash flows, and consequently, the valuation of oil and gas assets. We were no exception as following a thorough evaluation of our oil and gas assets, we had to book non-financial impairments of N169bn during the year in line with IFRS reporting guidelines. In addition, following the successful resolution of a longstanding, and value destructive shareholder dispute that had plagued the company since 2017, we had to recognize a significant impairment of N148 billion on the financial assets arising from the financing and settlement of the resolution.”
Tinubu assured that mechanisms were quickly put in place to safeguard the business by implementing a hedging programme to protect its oil revenue, the proceeds of which was utilised in April 2020, to reduce debt obligations, due to which “cashflows were not severely stressed during a period which witnessed cashflow challenges for many of our peers.
He assured that the group remains “focused on aggressively increasing our upstream production, growing our trading volumes, and optimising our balance sheet towards returning the company to profitability within the shortest possible time”.
Details of the audited result for the period showed that cost of sales also dropped from N583.191bn to N504.011bn; resulting in gross profit of N72.56bn; down from N96.273bn.
Other operating expense stood at N2.609bn as against an income of N11.006bn in the preceding year; impairment of non-financial assets ballooned from N5.977bn to N169.107bn; impairment of assets amounted to N147.57bn, as against reversal of financial assets of N13.155bn in 2018; while administrative expenses rose from &0.457bn to N88.153bn. These resulted in operating loss for the period of N334.88bn, from a profit of N44.001bn.
Finance costs increased to N49.685bn from N42.706bn; finance income dropped from N10.265bn to N8.972bn; resulting in net finance costs of N40.712bn from N32.441bn.
The group’s share of loss of associates stood at N1.821bn from N372.369m; resulting in loss before income tax of N377.414bn; as against a profit of N11.188bn.
Current assets for the period amounted to N188.87bn, up from the previous N133.156bn; while current liabilities rose from N451.228bn to N621.651bn; driven by trade and other payables which rose from N268.692bn to N350.043bn; while borrowings increased by 72% to N231.531bn from N134.052bn to finance the resolution of its protracted shareholder dispute.