• Numbers Hampered By Security Breaches, Recurrent Pipeline Vandalism- GMD

Oando Plc, on Monday finally published its audited result for the full-year ended December 31, 2023, giving investors the nation’s investment community reasons to heave a sigh of relief, following its return to profit after years of recurrent losses that prevent the payment of dividend, a situation that sent and kept its share price southward over the year.

According to the numbers presented through the Nigerian Exchange Limited, Oando Plc reported total revenue of N2.845tr, which was 42.73% better than the previous year’s N1.993tr; from which profit before tax stood at N102.978bn, a 266.52% improvement when compared to the prior year’s N61.84bn loss; just as net profit stood at N60.277bn from N81.23bn loss, improving by 174.2%.

However, in its report to shareholders, BDO Professional Services, external auditors to the group, drew attention to the N216.2bn comprehensive loss at the end of the review period as stated in the consolidated and separate financial statements, compared to the N41.7bn loss in the corresponding period of 2022.

At the end of December 31, 2023, BDO Professional Services in its review signed by enry B. Omodigbo, a fellow of the Institute of Chartered Accountants of Nigeria (ICAN) reported that Oando Plc’s “current liabilities exceeded current assets by N469.2 billion (2022: net current liabilities of N267 billion).

“The Company also reported net liabilities of N460.1 billion (2022: net liabilities of N243.9 billion).

“The Group recorded total comprehensive loss for the year ended 31 December 2023 of N70.0 billion (2022: total comprehensive profit of N56.8 billion) and as at that date, the Group’s current liabilities exceeded its current assets by N1.6 trillion (2022: net current liabilities of N816.8 billion). The Group also reported net liabilities of N267.2 billion (2022: net liabilities of N197.2 billion),” he added.

Omodigbo stressed that Oando Group and the company “continue to incur losses and the reversal of this trend is dependent on successful outcomes of its planned actions to refinance its debts in order to manage the funding gap of N3.0 trillion and N1.4 trillion and the attainment of revenue in the Group’s forecast for the years ending 31 December 2024 and 31 December 2025 respectively.”

The success of the planned actions, he further noted, “will only address 53.60% of the Group’s projected funding gap for the year ending 31 December 2024. Management has additional plans to address the 46.4% funding gap shortfall through equity raises until such a time that profit and healthy cash flows from profitable operations will be achieved.”

The group’s management, he hinted, “is currently making efforts to sign a binding agreement with each prospective equity provider.

Management is hopeful, yet uncertain of the success and timing of the bond and equity raises,” he added

A statement released to the NGX by Ayotola Jagun (Ms.), Chief Compliance Officer and Company Secretary of the group quoted Wale Tinubu, the Group Chief Executive, as saying the result was “despite the operational hurdles occasioned by security breaches and persistent pipeline vandalism in the Niger Delta.”

The numbers, he said was “bolstered by the strength of our global trading alliances, a 12% increase in total production, and favorable exchange gains from our foreign currency denominated assets.”

The recently completed transformational acquisition of Nigeria Agip Oil Company Limited, he enthused, “stands as a pivotal moment for the Company due to the expansive reserves and vast infrastructure network.

“Following our 2014 acquisition of Conocophillip’s Nigerian unit, this transaction was the next phase in our long-term strategy to increase our reserves and production capacity by leveraging on the exit of the International Oil Companies, whilst securing operational control of the assets,” he said.

Tinubu said the group’s “immediate focus now shifts to a seamless integration and execution of initiatives towards achieving a marked increase in production. We are confident about the opportunities this platform provides and are committed to delivering sustainable value to all stakeholders.”

A breakdown of the result showed that the group’s supply & trading business remained its cash cow, accounting for all of N2.07tr of revenue, compared to N1.111tr in the same period of 2022; followed by N648.179bn from corporate & others, down from N761.625bn; while exploration and production contributed N126.778bn, a marginal increase over the previous N120.389bn.

A further breakdown of the revenue from exploration and production activities showed that sale of crude amounted to N75.549bn, a decline from prior year’s N81.672bn; while sale of gas pooled N35.422bn, up from N28.783bn; energy, N11.743bn, compared to the previous N6.211bn; among others.

According to the 2023 full-year report, cost of sales rose to N2.76tr from N1.915tr, resulting in a gross profit of N85.02bn, up from N78.594bn in the same period of 2022.

Other operating income boost the numbers by N399.986bn from just N28.479bn, with foreign exchange gain contributing N388.02bn, up from N32.906bn. Impairment in non-financial assets fell to N3.915bn from N16.81bn; impairment of financial assets net stood at N1.431bn, as against the previous N12.493bn reversal.
Administrative expenses rose from N82.172bn to N261.353bn, the lion’s share of which was the N156.066bn foreign exchange loss, from N31.51bn. This resulted in an operating profit of N218.305bn, up from a mere N20.584bn in the same period of 2022.

Finance costs soared from N97.372bn to N133.38bn, with bank borrowings contributing N102.745bn, up from N77.234bn; just as unwinding of discount on provisions rose from N19.204bn to N30.23bn. Finance income increased marginally from N15.772bn to N16.903bn, buoyed by interest on finance lease of N15.353bn from N9.827bn; while interest income on bank deposits, loans and advances slipped from N5.945bn to N1.55bn; leaving net finance costs of N116.477bn, up from N81.599bn.

Profit per share for the period, therefore amounted to five kobo, from the previous six kobo loss.