Oando’s financials boost shareholders’ confidence

….To raise fresh capital from market
Oando Plc has said the company is considering raising fresh funds to meet need of new business opportunities, creating more value and returning increased earnings to shareholders.

This was coming as the company’s equities price on the Nigerian Stock Exchange sustains upwards momentum, spurred by the performances of the company in its 2016 audited year result and the recently released 2017 first quarter result for the period ended 30 March 2017.

Oando stocks hit a four-month high earlier this week, lifted by gains in Nigeria’s largest indigenous energy conglomerate, Oando PLC, and improved investor sentiment towards the country’s recession-hit economy.

The stock market had gained N117 billion by Tuesday this week to extend a bullish eight-day run, while Oando rose by 131 per cent, its highest level in 18 months.

Oando’s return to profitability and increase in share price is indicative of the successful implementation of its corporate initiatives focused on Growth across its operations; Deleverage via the divestment of non-performing assets; and Profitability, by focusing on dollar-denominated export earnings.

Mr. Haruna Jalo-Waziri, Executive Director, Business Development, Nigeria Stock Exchange (NSE), at the recently concluded Facts behind the Figures session at the NSE, lauded Oando’s FYE 2016 and Q1 2017 financials.

Mr. Wale Tinubu, Oando PLC’s Group Chief Executive, said that the company is considering raising fresh funds, but still in the process of working out the modalities, either through strategic investors, rights, debt equity conversion or any other process the company deems fit, subject to the shareholders endorsement.

Tinubu said “The challenge we faced was the economic and sector downturn, we came clean to the market, created a 5-point plan and successfully delivered on every part of that plan.”

According to him, Oando Plc deleveraged its balance sheet through the divestment of its upstream services company Oando Energy Services and embarked on the expansion of its retail and gas footprint through a strategic partnership with Helios Investment Partners and Vitol Group to recapitalize its downstream business for US$210 million and the US$115.8 equity buy-in of its Gas and Power business by Helios Investment Partners.

Oando acquired a N108 billion medium-term-loan with 11 Nigerian banks; this medium term 5-year consolidated facility, with a 3 year moratorium on principal, enabled the overall restructure of the Group’s obligations.
Today, Oando’s borrowings have significantly reduced by 29% to N225.9 billion in the first quarter of 2017 from N355.4 billion in the first quarter of 2016 and its year to year return increased by 103.62% compared to the comparative period in 2016, quelling concerns of critics.

The successful deployment of the company’s five-pronged strategy is evident in its FYE 2016 results with a N3.5 billion profit-after-tax, a 107% increase from the loss of FYE 2015.

A review of Oando’s results further show positive performance across all financial indices, turnover increased by 49% to N569 billion from N382 billion in FYE 2015, while EBITDA increased by 51% to N71.0 billion from N47.0 billion in FYE 2015, boosting investors and shareholders confidence in the company and its management team.

In Q1 2017, Oando’s turnover grew by 116% to N138.4 billion and gross profit by 53% to N13.4 billion compared to the first quarter of 2016. Profit-Before-Tax increased by 207% to N494 million compared to (N461 million) in the first quarter of 2016 while profit-after-tax decreased by 58% to N1.7 billion compared to N4.1 billion in Q1 2016.

“The first quarter earnings underscore our proactive decision to focus on our dollar denominated export businesses.

Our resilience is evident in our capacity to grow via a diversified model, and as we continue to chart our deliberate path in this challenging business environment, we look forward to better performance in the quarters to come,” said Tinubu.

With the gradual decline in pipeline disruptions, increased efforts by the government to curb security issues in the Niger Delta, and an upturn in oil prices north of $50, the sector is optimistic of a near term recovery.

“The plan is to go from 60,000boedp by the last quarter 2017 to 80,000 in 2018 and hopefully 100,000 by 2020. We also got approval from the president to repair, operate and maintain the Port-Harcourt refinery together with our partner Agip.

We plan to increase the refinery capacity from 30% to a 100%, subsequently to 120%” the Group Chief Executive said at the NSE” Tinubu said.