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OAO - Oando - Unaudited results for the second quarter ended 30 June 2009

Release Date: 18/08/2009 15:23:27      Code(s): OAO
OAO - Oando - Unaudited results for the second quarter ended 30 June 2009       
Oando Plc                                                                       
(Incorporated in Nigeria and registered as an external company in South Africa) 
Registration number: RC 6474                                                    
(External company registration number: 2005/038824/10)                          
Share Code on the JSE Limited: OAO                                              
Share Code on the Nigerian Stock Exchange: UNTP                                 
ISIN: NGOANDO00002                                                              
("Oando" or "the Company" or "the Group")                                       
Unaudited results for the Second quarter ended 30 June 2009                     
-    Turnover of $1,128m                                                        
-    Gross profit of $96m                                                       
-    Operating profit of $49m                                                   
-    Profit after tax of $26m                                                   
-    Attributable profit after tax of $26m                                      
-    Earnings per share of 2.88c                                                
-    Marked improvement in gross margin                                         
-    Two more rigs were acquired                                                
-    Continued depreciation of the Local currency                               
Review of results                                                               
Oando, which has a primary listing on the Nigerian Stock Exchange ("NSE") and a 
secondary listing on the JSE Limited ("JSE"), reports profit after tax ("PAT")  
for the Second quarter year ended 30 June 2009 of $26m.                         
Income statement analysis                                                       
Our exploration division consolidated its contribution to the performance of the
company compared with the corresponding period of the prior year. The marketing 
section of the business also delivered strong results. However, the impact of   
the devaluation of the local currency against the USD and the unclear stance of 
the Federal Government on petroleum subsidy adversely affected the supply and   
trading part of the business.                                                   
The growth in earnings is a reflection of improved margin efficiency experienced
on white products; seamless supply chain management processes; proactive cash   
management; efficient working capital re-alignment and strong organic growth    
especially within our upstream operation. This improved performance was recorded
against mixed macros economic factors represented by reduction in pump price of 
PMS, fluctuating exchange rate, increasing fear over the continuous availability
of petroleum products and uncertainties surrounding the full deregulation of the
downstream sector.                                                              
In spite of reduction in the value of naira against USD by about 25%, the       
Group`s turnover increased by about 7% over prior year. The increase was from   
revenue earned on the upstream assets.                                          
Profit after tax was however 16% below the level in prior year driven by        
increased operating costs, an increase in finance costs as a result of higher   
interest rates (up to 22% from about 16% in 2008) and the increase in           
depreciation charges arising from the newly introduced upstream assets.         
Balance sheet analysis                                                          
Total assets rose by about 37% from $1.4bn $2.0bn as at June 2009. Also,        
Total liabilities increased from $1.2bn to $1.7bn. The increase                 
in assets and borrowings arose from acquisition of more rigs, investment in     
upstream assets and natural gas pipelines construction projects.                
The company continue to improve working capital management technique in order to
ensure a robust liquidity. However, the significant capital investment and      
delayed settlement of PSF receivables by the Federal Government exerted some    
pressures on the cash position. We expect this trend to reverse soon after the  
capital investments enter their cash generation phases. Furthermore, the process
of raising additional long-term funding, (a combination of debt and equity, of  
about $1.3bn) to finance its growth aspirations. This is expected to be         
finalised during the second half of 2009.                                       
Expectations and Prospects for the Future                                       
The impact of the upstream assets has started to manifest in the performance of 
the company. It is expected that the company will explore strategic alliances   
formed with major producers to accelerate our block-to-production process for   
identified assets in the division.                                              
We are aggressively selling the additional natural gas distribution capacity    
created by the completion of the Greater Lagos Phase III Gas project. We expect 
a leap in contribution to the Group`s performance from the Gas and power        
division as more customers are connected to the supply grid. In addition, work  
has reached advanced stages in the construction of the East Horizon, 124km gas  
pipeline project and this is expected to become operational by the end of this  
year. The Akute power plant, a pioneering effort of the Gas and Power division  
is also expected to be commissioned for use before the end of the financial     
Although, government has not taken a definite position on petroleum sector      
deregulation, we do not expect any negative effect on the marketing division.   
Our Non-fuel revenue in the downstream sector will continue and be improved upon
while cost curtailment drive will permeate all our business actions. We expect  
profitability for the rest of the year to improve on the back of envisaged      
improvement in turnaround time in PSF receivables settlement and bridging       
The proposed divestment of part of Company`s interest in Marketing`s business,  
which was put on hold due to olatility in the capital market, shall be          
resuscitated during the second half of 2009. The proceeds of this divestment    
shall be deployed into higher margin segments of the energy value chain to      
enhance shareholders` value.                                                    
Our Energy service division has acquired two additional rigs and now control    
more than 50% market share of that part of the swamp business. We expect        
drilling operations and consequently revenue generation to commence by two of   
our rigs that have signed 2 major upstream drilling contracts with Agip         
Consolidated Balance Sheet                                                      
As at 30 June 2009                                                              
ASSETS                                            2009        2008              
                                                 $`Millions  $`millions         
Non-current assets                                                              
Property Plant & Equipment                        732.27      284.54            
Intangible Assets                                 152.83      251.81            
Long Term Investments                             0.07        2.83              
Long Term Receivables                             115.74      117.79            
                                                 1,000.90    656.97             
Current ASSETS                                                                  
Inventories                                       251.57      287.58            
Trade & Other Receivables                         493.02      345.31            
Cash & Cash Equivalents                           298.53      525.15            
                                                 1,043.12    1,158.04           
Total assets                                      2,044.02    1,815.01          

Capital & Reserves attributable to equity holders                               
Share Capital                                     3.09        3.83              
Share Premium                                     203.19      232.91            
Revaluation Reserve                               49.81       85.20             
Foreign Exchange Difference                                                     
Retained Earnings                                 76.25       45.69             
332.34      367.63             
Minority Interest                                 1.04        1.61              
Total equity                                      333.38      369.24            
Non-Current Liabilities                           383.62      404.05            
Current Liabilities                                                             
Trade & Other Payables                            342.95      275.42            
Current Income Tax Liabilities                    34.57       18.78             
Borrowings                                        949.50      747.53            
                                                 1,327.02    1,041.73           
Total Liabilities                                 1,710.64    1,445.78          
Total Equity & Liabilities                        2,044.02    1,815.01          
Consolidated Income Statement                                                   
for the Second quarter ended 30 June 2009                                       
                                            2009         2008                   
                                            $`millions   $`millions             
Sales                                        1,128.45     1,054.37              
Cost of Sales                                (1,032.18)   (967.06)              
Gross Profit                                 96.27        87.30                 
Selling & Marketing Costs                    (21.13)      (13.70)               
Administrative Expenses                      (39.23)      (25.45)               
Other Operating Income                       13.52        3.02                  
Operating Profit                             49.43        45.36                 
Shares of Profit  of Associates              -            -                     
Finance Costs                                (13.38)      (5.28)                
Profit Before Taxation                       36.06        40.08                 
Income Tax Expense                           (10.01)      (8.95)                
Profit After Expense                         26.04        31.13                 
Attributable to:                                                                
Non-Controlling Shareholders                 0.01         0.03                  
Equity Holders of the Company                     26.03   31.10                 
Consolidated Statement of changes in Shareholder`s Equity Attributable to equity
holders of the Company for the Second quarter ended 30 June 2009                
Share        Share         Revaluation          
                                Capital      Premium       reserve              
                                US$m         US$m          US$m                 
Balance as at 31 December 2008   3.46         227.28        55.10               
Retained profit for the period                                                  
Exchange difference              (0.37)       (24.09)       (5.29)              
Balance as at 30 June 2009       3.09         203.19        49.81               
                               Cumulative   Retained  Minority  Total           
translation  earnings  interest  equity          
                               US$m         US$m      US$m      US$m            
Balance as at 31 December 2008               56.16     1.15      57.31          
Retained profit for the period               26.03     0.00      26.03          
Exchange difference             (29.75)      (5.94)    (0.12)    (6.06)         
Balance as at 30 June 2009                   76.25     1.03      77.28          
                               Share         Share        Revaluation           
Capital       Premium      reserve               
                               US$m          US$m         US$m                  
Balance as at 31 December 2007  2.89          232.91       85.20                
Retained profit for the period                                                  
Bonus issue of shares           0.94                                            
Dividend paid                                                                   
Balance as at 31st June 2008    3.83          232.91       85.20                
                              Cumulative   Retained  Minority   Total           
translation  earnings  interest   equity          
                              US$m         US$m      US$m       US$m            
Balance as at 31 December      28.25        53.74     1.61       376.35         
Retained profit for the                     31.10     0.03       31.13          
Bonus issue of shares                       (0.94)               0.00           
Dividend paid                               (38.24)              (38.24)        
Balance as at 31st June 2008   28.25        45.66     1.64       369.24         
Notes to reviewed results                                                       
1. General information                                                          
Oando (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. The Company was partially privatised in 1991. It was     
however fully privatised in the year 2000 consequent upon the sale of Federal   
Government`s 40% shareholding in the Company. 30% was sold to core investors    
(Ocean and Oil Investments Limited) and the remaining 10% to the Nigerian       
public. In December 2002, the Company merged with Agip Nigeria Plc following its
acquisition of 60% Agip Petroli`s stake of Agip Nigeria Plc in August of the    
same year. The Company formally changed its name from Unipetrol Nigeria Plc to  
Oando Plc in December 2003.                                                     
Oando has its primary listing on the Nigerian Stock Exchange.                   
The Group has marketing and distribution outlets in Nigeria, Ghana and Togo and 
other smaller markets along the West African coast.                             
2. Summary of significant accounting policies                                   
The principal accounting policies applied in the preparation of these           
consolidated financial statements are set out below. These policies have been   
consistently applied to all the years presented, unless otherwise stated.       
2.1 Basis of preparation                                                        
The consolidated financial statements of Oando have been prepared in accordance 
with International Financial Reporting Standards (IFRS). The consolidated       
financial statements have been prepared under the historical cost convention, as
modified by the revaluation of land and buildings, and financial assets and     
financial liabilities at fair value through profit or loss.                     
The preparation of financial statements in accordance with IFRS requires the use
of certain critical accounting estimates. It also requires management to        
exercise judgement in the process of applying the Group`s accounting policies.  
The interim results are prepared in accordance with IAS 34 Interim Financial    
Reporting and have not been audited.                                            
Early adoption of standards                                                     
In 2004, the Group early adopted the IFRS below, which are relevant to its      
operations. These have been consistently applied in this unaudited financial    
report for the Second quarter of 2008.                                          
IAS 2 (revised 2003) Inventories                                                
IAS 8 (revised 2003) Accounting Policies, Changes in Accounting Estimates and   
IAS 10 (revised 2003) Events after the Balance Sheet Date                       
IAS 16 (revised 2003) Property, Plant and Equipment                             
IAS 17 (revised 2003) Leases                                                    
IAS 21 (revised 2003) The Effects of Changes in Foreign Exchange Rates          
IAS 24 (revised 2003) Related Party Disclosures                                 
IAS 27 (revised 2003) Consolidated and Separate Financial Statements            
IAS 28 (revised 2003) Investments in Associates                                 
IAS 32 (revised 2003) Financial Instruments: Disclosure and Presentation        
IAS 33 (revised 2003) Earnings per share                                        
IAS 36 (revised 2004) Impairment of Assets                                      
IAS 38 (revised 2004) Intangible Assets                                         
IAS 39 (revised 2003) financial instruments: Recognition and measurement        
IFRS 2 (issued 2004) Share-based payments                                       
IFRS 3 (issued 2004) Business Combinations                                      
IFRS 5 (issued 2004) Non-current Assets Held for Sale and Discontinued IFRIC 10 
(Issued 2006) Interim Financial Reporting and Impairment.                       
-   The early adoption of IAS 10 has resulted in a change in the accounting     
   policy for dividends. Proposed dividends, which were previously              
   recognised in the year prior to the declaration, have been adjusted in       
   accordance with IAS 10 and 37 respectively.                                  
-   The application IAS 16 has affected the accounting for fair value           
   reserve relating to revalued land and buildings upon disposal.               
-   Under previous GAAP, the revaluation surplus included in equity in          
   respect of an item of property, plant and equipment were transferred to      
the income, when the asset is disposed of, to determine profit on            
   disposal. Adjustments have been passed to transfer the related amounts       
   directly to retained earnings in accordance with IAS 16. Also, early         
   adoption of IAS 16 (revised 2004) has necessitated the disclosure of         
prior year comparatives for all movements in property plant and              
-   IAS 21 (revised 2003) has affected the translation of foreign entities`     
   income statements, on which closing rates were previously applied but        
now amended and translated at average rates. The functional currency of      
   each of the consolidated entities has also been re-evaluated based on        
   the guidance to the revised standard. All the Group entities have the        
   same functional currency as their presentation currency. These               
financial statements have been presented in a currency other than the        
   Company`s functional currency, being US Dollars, to meet the filing          
   requirements of the JSE.                                                     
-   IAS 24 (revised 2003) has affected the identification of related            
parties and some other related-party disclosures.                            
-   IAS 27 (revised 2004) has affected the consolidation of subsidiaries.       
   Certain subsidiaries, which were not included in the consolidation           
   under previous GAAP have now been consolidated.                              
-   The early adoption of IAS 33 has resulted in a change in the                
   computation of earnings per share. Earnings per share, which were            
   previously computed on the basis of the number of shares in issue at         
   the end of the reporting period, have been adjusted on the basis of the      
weighted average number of shares in accordance with IAS 33                  
-   The early adoption of IAS 39 has resulted in a change in accounting for     
   financial assets and liabilities.                                            
-   The group has recently obtained approval for its share-based option         
scheme, all share based payments will be accounted for under IFRS 2.         
   The operational framework for the scheme is still being worked out.          
-   The early adoption of IFRS 5 has resulted in a change in the accounting     
   for non-current assets held for sale and discontinued operations as          
qualifying assets have been reclassified accordingly.                        
-   The early adoption of IFRS 3, IAS 36 (revised 2004) and IAS 38 (revised     
   2004) resulted in a change in the accounting -policy for goodwill.           
   Until 31 December 2002, goodwill was:                                        
-   Amortised on a straight line basis over a period ranging from 5 to       
       20 years; and                                                            
   -   Assessed for an indication of impairment at each balance sheet           
-   In accordance with the provisions of IFRS 3:                                
   -   The Group ceased amortisation of goodwill from 1 January 2003;           
   -   Accumulated amortisation as at 31 December 2002 has been eliminated      
       with a corresponding decrease in the cost of goodwill;                   
-   Goodwill was tested for impairment at 1 January 2003, the transition        
   date. Also, from the year ended 31 December 2003 onwards, goodwill is        
   tested annually for impairment, as well as when there are indications        
   of impairment. The Group has also reassessed the useful lives of its         
intangible assets in accordance with the provisions of IAS 38. No            
   adjustment resulted from this reassessment.                                  
All changes in the accounting policies have been made in accordance with the    
transition provisions in the respective standards.                              
The early adoption of IAS 1, 2, 8, 17 28, and 32 (all revised 2003) did not     
result in substantial changes to the Group`s accounting policies.               
In summary:                                                                     
- IAS 1, 2, 28 and 32 had no material effect on the Group`s policies.           
- IAS 8 (revised 2004) has resulted in the disclosure of the impact of new      
2.2 Consolidation                                                               
(a) Subsidiaries                                                                
Subsidiaries include all entities (including special purpose entities) over     
which the Group has the power to govern the financial and operating policies    
generally accompanying a shareholding of more than one half of the voting       
rights. The existence and effect of potential voting rights that are currently  
exercisable or convertible are considered when assessing whether the Group      
controls another entity. Subsidiaries are fully consolidated from the date on   
which control is transferred to the Group. They are deconsolidated from the date
that control ceases.                                                            
The purchase method of accounting is used to account for the acquisition of     
subsidiaries by the Group. The cost of the acquisition is measured as the fair  
value of the assets given, equity instruments issued and liabilities incurred or
assumed and the date of plus costs directly attributable to the acquisition.    
Identifiable assets acquired and liabilities and contingent liabilities assumed 
in a business combination are measured initially at their fair values at the    
acquisition date irrespective of the extent of any minority interest. The excess
of the cost of acquisition over the fair value of the Group`s share of the      
identifiable net assets acquired is recorded as goodwill. If the cost of        
acquisition is less than the fair value of the net assets of the subsidiary     
acquired, the difference is recognised directly in the income statement. All    
balances and unrealised surpluses and deficits on transactions between group    
companies have been eliminated. Where necessary, accounting policies for        
subsidiaries have been changed to be consistent with the policies adopted by the
Company, Separate disclosure (in equity) is made of Minority Interests.         
(b) Associates                                                                  
Associates are all entities over which the Group has significant influence but  
not control, generally accompanying a shareholding of between 20% and 50% of the
voting rights. Investments in associates are accounted for by the equity method 
of accounting and are initially recognised at cost. The Group`s investment in   
associates includes goodwill (net of any accumulated impairment loss) identified
on acquisition. The Group`s share of its associates` post-acquisition profits or
losses is recognised in the income statement, and its share of post acquisition 
movements in reserves is recognised in reserves. The cumulative post-acquisition
movements are adjusted against the carrying amount of the investment.           
When the Group`s share of losses in an associate equals or exceeds its interest 
in the associate, including any other unsecured receivables, the Group does not 
recognise further losses, unless it has incurred obligations or made payments on
behalf of the associate. Unrealised gains on transactions between the Group and 
its associates are eliminated to the extent of the Group`s interest in the      
associates. Unrealised losses are also eliminated unless the transaction        
provides evidence of an impairment of the asset transferred. The accounting     
policies of the associates are consistent with the policies adopted by the      
Goodwill included in the carrying amount of an investment is neither amortised  
nor tested for impairment separately by applying the requirements for impairment
testing goodwill in IAS 36, Impairment of Assets. Instead, the entire carrying  
amount of the investment is tested under IAS 36 for impairment.                 
All subsidiaries and associates have uniform calendar year ends.                
2.3 Segment reporting                                                           
A business segment is a group of assets and operations engaged in providing     
products or services that are subject to risks and returns that are different   
from those of other business segments. A geographical segment is engaged in     
providing products or services within a particular economic environment that are
subject to risks and return that are different from those of segments operating 
in other economic environments.                                                 
2.4 Foreign currency translation                                                
(a) Functional and presentation currency                                        
Items included in the financial statements of each of the Group`s entities are  
measured using the currency of the primary economic environment in which the    
entity operates (`the functional currency`). The functional currency of the     
Group is the Naira. The consolidated financial statements are presented in US   
dollars, which is the Company`s presentation currency for the purpose of filing 
outside Nigeria.                                                                
(b) Transactions and balances                                                   
Foreign currency transactions are translated into the functional currency using 
the exchange rates prevailing at the dates of the transactions. Foreign exchange
gains and losses resulting from the settlement of such transactions and from the
translation at year-end exchange rates of monetary assets and liabilities       
denominated in foreign currencies are recognised in the income statement, except
when deferred in equity as qualifying cash flow hedges and qualifying net       
investment hedges.                                                              
c) Group Companies                                                              
The results and financial position of all the group entities (none of which has 
the currency of a hyperinflationary economy) that have a functional currency    
different from the presentation currency are translated into the presentation   
currency as follows:                                                            
1   Assets and liabilities for each balance sheet presented are translated      
at the closing rate at the date of that balance sheet.                       
2   Income and expenses for each income statement are translated at average     
   exchange rates; and all resulting exchange differences are recognised        
   as a separate component of equity.                                           
3   On consolidation, exchange differences arising from the translation of      
   the net investment in foreign entities are taken to shareholders`            
   equity. Upon disposal of part or all of the investment, such exchange        
   differences are recognised in the income statement as part of the gain       
or loss on sale.                                                             
3. Earnings per Share                                                           
Basic Earnings Per Share (EPS) is calculated by dividing the Profit Attributable
to the equity holders of the Company by the weighted average number of shares in
issue during the period.                                                        
                                                         30     30              
                                                         June   June            
                                                         2009   2008            
Profit attributable to equity holders of the Company      26.03  31.10          
Average number of shares in issue (millions)              904.88 754.07         
Basic Earnings Per Share (cents)                          0.03   0.04           
Profit attributable to equity holders of the Company      26.03  31.10          
Weighted average number of shares in issue (millions)     904.88 754.07         
Adjustment for Bonus issues                                                     
Weighted average number of shares for diluted Earnings    904.88 754.07         
Per Share (millions)                                                            
Diluted Earning Per Shares (cents)                        0.03   0.04           
Headline Earnings Per Share                               0.03   0.04           
Profit Attributable to equity holders of the Company      26.03  31.10          
Adjusted for:                                                                   
Profit on sale of buildings associated with               0      0              
discontinued operations                                                         
Profit/(Loss) on sale of other assets                     0      0              
Loss on sales of investment in affiliate companies        0      0              
Tax thereon                                               0      0              
Headline Earnings Per Share attributable to earnings      0.03   0.04           
basis (cents)                                                                   
Headline Earnings Per Share attributable to diluted       0.03   0.04           
earnings basis (cents)                                                          
Net Assets Per Share (cents)                                                    
Tangible Assets Per Share (cents)                                               
4. Independent audit by the auditors                                            
This condensed consolidated result has not been audited by our auditors         
PricewaterhouseCoopers being the Second quarter of our financial year           
5. Post balance sheet events                                                    
There are no significant post balance sheet events that in the opinion of the   
Directors will have any material impact on the accounts herein presented.       
For and on behalf of the Board                                                  
Mr J Adewale Tinubu                                                             
Group Chief Executive                                                           
29 July 2009                                                                    
1   Major General M. Magoro (Rtd.) OFR,  Chairman                               
   Galadiman Zuru                                                               
2   Mr. J. A. Tinubu                     Group CEO                              
3   Mr. O. Boyo                          Deputy Group CEO                       
4   Mr. B. Osunsanya                     Group Ex. Director                     
5   Mr.Femi Adeyemo                      Group Executive Director, Finance      
6   Mr. A. Akinrele SAN                  Director                               
7   Mr. Navaid Burney                    Director                               
8   HRM. Oba. A. Gbadebo CFR             Director                               
9   Mr. O. Ibru                          Director                               
10  Alhaji H. Mahmud Walin Mubi          Director                               
11  Mr Onajite Okoloko                   Director                               
Company Secretary: Mrs. Oredeji Delano                                          
Registered office: 2, Ajose Adeogun Street, Victoria Island, Lagos, Nigeria     
Auditors: PriceWaterhouseCoopers, Plot 252E Muri Okunola Street, Victoria       
Island, Lagos                                                                   
E-mail: info@oandoplc.com                                                       
Registered office in South Africa: 1st Floor, 32 Fricker Road, Illovo Boulevard,
Sandton, 2196, South Africa                                                     
Office of the South African registrars: Computershare Investor Services         
(Proprietary) Limited (Registration number: 2004/003647/07)                     
70 Marshall Street, Johannesburg, 2001. PO Box 61051, Marshalltown, 2107        
18 August 2009                                                                  
Sponsor: Deutsche Securities (SA) (Proprietary) Limited                         
Date: 18/08/2009 15:23:27 Supplied by www.sharenet.co.za                     
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information disseminated through SENS.                                          

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