Seplat Reports 99% Net Profit Growth, On Tax Expense Drop

Barely hours to the end of the regulatory deadline for companies with December year-end on the Nigerian Stock Exchange (NSE) to file their third-quarter earnings reports, Seplat Petroleum Development Company Plc, on Tuesday presented the most dramatic score-card yet this season, highlight of which was the 99% growth in net profit, despite a mild drop in revenue, just as cost of sales dropped.
The major booster of the bottom-line for the period was the 97.19% drop in tax expense, compared to the previous nine-month.
A look at the financials showed that the company’s revenue for the period dropped by N21.833bn or 12.57%, from N173.71bn in 2018 to N151.877bn. The drop was even more significant, sliding by N26.009bn or 37.74% from N68.916bn in the 2019 third quarter, to N42.907bn. Crude oil sales fetched N99.076bn, compared to N134.849bn in 2018; while gas sales and tolling accounted for N52.801bn, as against N38.861bn. The cost of sales fell from N80.2bn to N70.654bn, the bulk of which was the N23.101bn royalties, compared to N29.342bn, followed by depletion, depreciation and amortization, N21.195bn, which dropped from N27.903bn; just as crude handling fees fell to N12.252bn, compared to N14.45bn in 2018; among others. This resulted in a gross profit of N81.223bn, a decline of N12.287bn or 13.14% from N93.51bn in 2018 nine-month.
Other income (net) for the period climbed by N5.112bn, or 84.85% from N6.025bn in 2018 to N11.137bn; general and administrative expenses was flat at N16.744bn from N16.851bn; even as impairment on financial assets (net) soared to N12.318bn from just N521m. Fair value gain during the period stood at N1.515bn, compared to a net loss of N2.45bn.
Operating profit therefore fell by N15.942bn or 19.74% from N80.755bn in the first nine months of 2018, to N64.813bn this year.
Finance income for the period rose marginally from N2.05bn in 2018 to N2.813bn; while costs dropped to N11.14bn from N17.76bn; leaving net finance costs at N8.327bn, as against the N15.71bn recorded in the corresponding period of 2018.
Profit before tax stood at N56.713bn, down by N8.332bn or 12.81% from N65.96bn; while tax expenses dropped by 97.19% from N37.085bn to N1.042bn; which resulted in net profit of N55.671bn, as against N27.96bn reported in 2018. This translated to Earnings Per Share of N97.88, compared to N49.18 in 2018 nine-month.
The company’s gas business contributed N45.672bn PBT, with zero tax expense, as against N31.425bn and N8.152bn tax expense that left a net profit of N23.273bn; just as crude oil contributed N11.041bn and N1.042bn tax expense, down from N33.62bn and N28.933bn tax.
A breakdown by segment showed that the lion’s share of the net profit within the period showed that gas generated N45.672bn, up from N23.273bn; while oil contributed N9.999bn, as against the previous N4.687bn.
The company which is listed both on Nigerian Stock Exchange (NSE) and London Stock Exchange (LSE), declared an interim dividend of $29m, assuring in a statement that its recent £382m cash acquisition of Eland Oil and Gas Plc would create more value opportunities for shareholders going forward.
The statement quoted Austin Avuru, its chief executive as saying the company made significant progress towards furthering its ambitious growth strategy in 2019, with a core business that “remains highly cash generative and with four rigs now operational in the field we expect to quickly regain momentum. This is reflected in our decision to declare an interim dividend of US$29m, at $0.05 per share, just as it did last year.
“We have set the next major growth phase of our gas business in motion having taken FID for the large scale ANOH gas and condensate development to position us as Nigeria’s largest supplier of processed gas to the domestic market. In another major step, and in line with our overall growth strategy, we have made a strong statement of intent by becoming the first Nigerian company to undertake a public market acquisition of a London Stock Exchange-listed company, and in doing so highlighted our ambitions to be a consolidator within our space.
“The recommended acquisition of Eland for £382m is a logical continuation of our business model and represents a rare opportunity to secure a well-run asset base that lies firmly within our core geographical area of focus and expertise. Following completion, the enlarged asset base will enhance our inventory of production, development, appraisal and exploration opportunities and enable us to ensure capital continues to be deployed to the most value creative opportunities for shareholders.”