• Targets 100,000b/d Of Oil By 2020
Photo Caption Ms. Ayotola Jagun, Chief Compliance Officer & Company Secretary, Oando Plc; Oscar N. Onyema, Chief Executive Officer, The Nigerian Stock Exchange (NSE); Jubril Adewale Tinubu, Group Chief Executive, Oando Plc; Haruna Jalo-Waziri, Executive Director, Capital Markets Division, NSE and Omamofe Boyo, Deputy Group Chief Executive, Oando Plc at its Facts Behind the Figures presentation on the Nigerian Stock Exchange Thursday.
The management of Oando Plc, on Thursday in Lagos took members of the nation’s capital market community through its operations for the 2016 full year and 2017 first quarter numbers, which were released in the past few weeks, assuring that so much more wonderful things have happened behind and beyond the numbers on display.
Addressing management of the Nigerian Stock Exchange (NSE), stockbrokers, investors and newsmen, the Oando management, led by Adewale Tinubu, the group managing director, had a simple message.
In a presentation during the occasion of the “Facts-Behind-the-Figures,” Tinubu assured investors: “Please be assured that our company is safe and is healthy,” confirming that Oando Group is considering fresh capital to reduce debts and reduce investors’ waiting period.
Although he did not state how much is being considered, in answer to a question at the occasion, the Group Chief Executive said: “It is possible that we would raise fresh capital,” to reduce its debt to roughly about N60bn.
The group, he continued, is weighing options like discussions with strategic or portfolio investors on the kind of capital injection, whether it would be a convertible loan.
The fund raising plan is not a problem, he added, given that investors are very interest in a group that earns 90% of its income in US$.
Oando Group, Tinubu stressed, has entered into an agreement with the Federal Government to repair, operate and maintain the brown-field Port Harcourt Refinery in Rivers State, with the target of taking it from 30% capacity utilization, first to 100% and then 120%. With the cash-flow generated from this venture, he said, the group hopes to build a green-field 100 barrels per day capacity refinery within the complex.
The refinery operations, he said, would be in partnership with Italian oil giant- Agip, with Oando’s job being to pre-finance the project, after which “anybody can bring their crude, we would refine.”
On further development of the nation’s gas infrastructure, Tinubu said “Oando needs developmental funding to build gas pipelines from BOI (the Bank of Industry),” just as it has received approval to build a 550 megawatt independent power project in Kwale, Delta State, which boasts of huge gas reserves.
Reviewing the group’s operations for 2016, the Group CEO described the period as a challenging one, when there was a production decline, added to low oil price and foreign exchange volatility in Nigeria, all of which impacted negatively on the numbers.
The group, he noted, opted to sell down on its Naira earning assets, concentrating on the Dollar yielding investments, such that forex revaluation would always be in its favour. He listed some of the assets sold as the Alausa and Akuta IPP in Lagos, which were part of the 70% equity buy-in of Oando Gas and Power for $115.8m, added to the N156bn deleveraging of the group’s balance sheet through Oando Energy Services management buy-out.
The group successfully exported 13m barrels of crude oil in 2016; lamenting the Federal Government’s $900m debt, following which there was an agreement on the repayment plan, and the offer $700m over the next five years.
Still on crude oil production, Tinubu said the group plans to grow capacity first to 60,000 barrels per day (bp/d); and then 80,000bp/d in 2018; before increasing it to 100,000bp/d in 2020.
On the 2016 financials, Femi Adeyemo, the Group’s Chief Finance Officer, noted that turnover improved by 49% to N569bn; gross margin dropped 37% to N48.553bn from N77.676bn; while non-interest expenses increased 20% from N70.35bn to N84.48bn, driven by a N22bn foreign exchange rate loss. Other operating income jumped 169% from N3.759bn to N106.923bn, lifted by profit from disposal of assets, especially its energy business which fetched N22bn; and gas/power business, N21bn.The group’s reported before tax of N32.816bn, down from N51.137bn in 2015; and a net profit of N3.494bn, resulting from an income tax credit of N36.307bn; as against previous year’s N49.69bn loss.
For the 2017 Q1, the group reported turnover of N138.413bn, 116% better than N63.973bn in the corresponding period of 2016; with gross margin rising by 53% from N8.786bn to N13.409bn. Non-interest expenses dropped 37% to N8.762bn; other operating income fell 67% from N25.815bn; following which profit before tax stood at N494m from the N461m loss in the preceding first quarter. Income tax credit fell to N1.218bn from N4.562bn; resulting in net profit for the period of about N1.712bn, down by 58% from N4.101bn in the 2016 Q1.
