Oando Plc 2016 Financial Summary

Oando result was released today after the close of trading session. The Market would wake up tomorrow to this pleasant surprise. For the past two years Oando had been one of the late filers of result and in the Oil and gas sector it only better Conoil.

Although the result is not outstanding but the market may see a ray of hope in its early filing. Below is the summary of the result:

12 Months Report OANDO PLC
	2016 N'000	2015 N'000	change	Year End
Revenue	455,746,734	203,431,526	124%	December
Profit/Loss before taxation	63,375,512	39,113,508	-62%
Profit/Loss for the period	3,494,037	49,689,877	107%
Issued Shares (Units)	9,084,685,738	9,084,685,738
Basic Earnings Per Shares (Kobo)	26.00	422.00	106%
Last total dividend paid (Kobo)	0.00	0.00	#DIV/0!

Quarter on Quarter performance

Revenue                                                                   PAT

N'000                                                                       N'000

Q1: #27,725,309                                                      Q1: #4,101,356

Q2: #88,511,262                                                      Q2:(#31,092,566)

Q3: #111,609,377                                                    Q3 (#8,895,460)

Q4: #227,900,786                                                    Q4:#39,380,707

A closer look at the result shows the followings:

Cost of sales of N426.93billion for 2016 impacted the gross profit negatively against N156.77billion in 2015.

Also administrative expenses increased by 57.97% from N69.77billion in 2015 to N109.25billion in 2016 but 

Net Finance cost increased marginally by 6.25% from N48.63.billion to N51.05billion.

Share of loss of associates increased by 430.87%  from N878million in 2015 to N4.6billion in 2016 This is mainly as a result of the loss on Copper JV

However, income tax credit of N37,569,028,000 in 2016 against N4,192,937,000 in 2015 was to the benefit of the company . This was as a result of tax effect on income not subject to tax, tax effect on rate differential and over provision for income tax in prior years.

it should be noted also that Oando made money from other operating income this increased by118.18% from N33.51billion in 2015 to N72.78.billion at the end of 2016. This was as a result of Forex gain and sundary income which is largely made up of gain on sale of Premium Motor Spirit (PMS) to Oando Marketing Limited.

Inventories stood at N12.8billion in 2016 against 2.2billion in 2015. This was as a result of majorly products in transit of N10.6billion. This is a N10.6billion risk for insurance companies. 

Trade and other receivables increased significantly during the period due to other receivables which relate to cash call advances to joint operations partners N18.7billion, COP consent refund of N7.6billion and bankers N878million on realized portion of commodity.

A total of N108.33billion was restructured for oando by its creditors. Oando is indebted to Access bank to the tune of 28.30Billion followed by Ecobank for N16.57billion, Zenith N15.67billion, FCMB N12.82billion, Fidelity N12.23billion, Union Bank N8.07billion, Stanbic N5.78billion, Keystone N3.71billion, UBA N3.07billion, FBN N1.17billion and Diamond N0.94billion.

Going Concern

Oando planned to restructure the reserve based loan and corporate loan facilities at Oando Energy Resources to ensure the loans:

• Are default free and fully compliant with credit agreements
• Achieve a tenor extension of up to two years, and
• Reduce debt service requirements in the near term

The net effect of these two initiatives will be to reclassify up to N117billion of net current liabilities into long-term liabilities thus creating a substantial remedy to the negative working capital position. The implementation of this started in 2016 and will be completed between may 2017 and june 2017.

The take away from the above and other plans not mentioned here is to improve the profitability of the group through interest savings arising from repayment of borrowings.

The Caveat here as emphasized by the Auditors that these conditions indicate the existence of material uncertainty which may cast significant doubt on the company’s ability to continue as a going concern and therefore , the company may be unable to realize its assets and discharge its liabilities in the normal course of business. 

The Market would weigh its options at the next trading session as the company did not declare any benefit as it need a lot of money to support its working capital.