Oando Plc admits being challenged, posts N133bn loss

Okey Onyenweaku

Oando Plc has finally released its results for the period ended December 31, 2022 after fours years of delay, admitting in the process that it has indeed been engaged in a fight for life.

The results which was made public recently on NGX platform is painted in the red showing a generally negative performance. Details reveal that the Company posted a loss before tax of -N133.42billion in 2020 as against the deeper negative (loss) figure of -N377.41billion in the corresponding period of 2019.

Continuing, the company disclosed that it recorded a 5 per cent production increase, 44,550boe/day compared to 42,492boe/day in 2019; Oil production of 15,912bbls/day ( vs 17,969bbls/day in 2019; Natural Gas Production of 26,881boe/day (vs 22,047boe/day in in 2019;NGL production of 1,757bbls/day (vs 2,476bbls/day in 2019.

The company also recorded 13% increase in traded crude oil volumes of 16.1 million (vs 14.2 million in 2019; 53% increase in traded refined petroleum products( 694,653 MT compared to 452,919 MT in 2019.

It also recorded 15% decrease in turnover,N490.0 billion compared to N576.6 billion in 2019.Total group Borrowings increased 16% from N362.2 billion in 2019 to N419.6billion in 2020.

Commenting on the results Wale Tinubu, Group Chief Executive, Oando PLC said: “2020 proved to be an unprecedented year for the global economy due to the impact of the novel COVID-19 pandemic. The Oil & Gas industry was no exception as the year turned out to be one of the most challenging years in its history as we witnessed the lowest oil prices since our sojourn into Nigeria’s upstream sector in 2008, thus negatively impacting our revenue during the period. This resulted in us having to impair a portion of the goodwill on our balance sheet to ensure the carrying value of our assets was a true reflection of the environment we were operating in.

“Furthermore, the second tranche funding of the settlement of a protracted and disruptive shareholder issue resulted in us taking a further impairment on a category of our financial and non-financial assets. Despite these challenges, our hedging policy and long-term offtake contracts ensured our cash flows were not severely stressed during this period.

“Amid an uncertain operating environment, our operational performance remained on track as we grew our upstream production by 5%, whilst downstream traded volumes of crude oil and refined products ramped up by 13% and 53% respectively”.

In the same vein, the company posted a loss before tax of N61.008billion in the first quarter ended March 31, 2020 from a profit of N8.770billion in 2019. Its revenue also declined from N168.009billion in Q1 2019 to N113.288billion in 2020. While cost of sales dropped from N144.9billion to N101.6billion, operating (expense) income rose from N17.100billion in 2019 to N46.717billion in 2020.

In the second quarter 2020, the company recorded a loss before tax of N73.886billion in 2020 from N17.280billion in 2019. Its revenue for the second quarter also declined from N315.40billion in 2019 to N203.97billion in 2020. While cost of sales dropped N273billion in 2019 to N181billion in 2020, finance cost rose from N21.285billion in the previous quarter to N33.314billion in 2020.

The company’s third quarter for the period ended September 30, 2020 revealed that its loss before profit tax rose from a loss of N9.233billion in 2019 to N92.402billion in 2020. Revenues also dropped from N413.75billion in 2019 to N288.63billion in 2020.While cost of sales also dropped from N351.46billion in 2019 to N255.78billion in 2020, finance cost rose marginally from N34.095billion in 2019 to N48.928billion in 2020.

That Oando’s results is painted in the red is not a surprise. After all for four years the company was immersed in an ownership tussle which has had excruciating negative impact on its operations and performance.

The management of the company has however blamed the poor performance on;
“The adverse impact of the COVID-19 pandemic on the global demand for oil in 2020 resulted in lower forecasted oil prices, thus triggering a re-assessment of the expected future cash flows from our oil and gas assets. Accordingly, we have taken the prudent approach of recognizing a substantial impairment of a portion of the Group’s intangible assets that arose from acquisitions done in prior years.

“Following the successful resolution of a disruptive and value destructive longstanding shareholder dispute, we have taken a decision to recognize a significant impairment on a category of the Group’s intangible and financial assets arising from the financing and settlement of the resolution.”

The company also promised to make public results of four other quarters including Unaudited financial statements for 2020 on May 5,2022, audited financial statements for 2020 on July 31, 2022, Unaudited financial statements for 2021 on August 5, 2022 and Audited financial statements for 2021 on October 31, 2022.

However, this is a good move by the company whose shareholders have been kept in the dark on its performance in the last few days.

Mr. Boniface Okezie of the Progressive Shareholders Association of Nigeria told Business Hallmark on the telephone that investors in Oando Plc are happy and eagerly waiting for the results to be made public to enable them know the health condition of their company after a long crisis.

WHAT HAPPENED TO OANDO

Recall the former Director General of SEC, Mounir Gwarzo had insisted on investigating Oando when some of its major shareholders, notably Ansbury and Manga petitioned the Securities and Exchange Commission, alleging gross abuse of corporate governance standards and acts of financial recklessness by the firm’s management. They subsequently called for the removal of the management of the company as well as the associated removal of all board members.

This development occurred at about the same time when Gwarzo was alleged to have himself been involved in unethical practices, including paying to himself the sum of N104.8million as severance package and was suspended by the then Minister of Finance, Mrs. Kemi Adeosun.
Unfortunately for the Oando management, even the acting SEC Director General who came in after Gwarzo insisted on yet carrying out a forensic Audit on the activities of Oando Plc despite the Minister of Finance, Mrs. Kemi Adeosun’s suspension of Mounir Gwarzo, for alleged financial impropriety. And at that point, market observers yet feared that Oando’s fate still hung in a balance. But everyone waited.

The catastrophe in Oando heightened when two of its major shareholders, Ansbury and Manga petitioned the Securities and Exchange Commission, alleging gross abuse of corporate governance standards and reckless fiscal management. They subsequently called for the removal of the management of the company and other board members from its leadership.
Oando PLC (formerly Unipetrol Nigeria Plc.) was registered by a special resolution as a result of the acquisition of the shareholding of Esso Africa Incorporated (principal shareholder of Esso Standard Nigeria Limited) by the Federal Government of Nigeria. It was partially privatised in 1991 and fully privatised in the year 2000 following the disposal of the 40% shareholding of Federal Government of Nigeria to Ocean and Oil Investments Limited and the Nigerian public.

In December 2002, the company merged with Agip Nigeria Plc. following its acquisition of 60% of Agip Petrol’s stake in Agip Nigeria Plc. The Company formally changed its name from Unipetrol Nigeria Plc. to Oando PLC in December 2003.

Oando PLC is listed on the Nigerian Stock Exchange and the Johannesburg Stock Exchange. In 2016, the Company embarked on a reorganisation and disposed some subsidiaries in the Energy, Downstream and Gas & Power segments. The Company retains its significant ownership in Oando Trading Bermuda (OTB), Oando Trading Dubai (OTD) and its upstream businesses.