Oando Delivers 77% growth in PAT in 2007

• Gross profit grew to N21.4billion from N16.8b
• Gross profit margin increased to 11.5% from 9.0%
• Operating profit of N8.1 billion in 2007 from N5.3 billion
• Profit attributable to shareholders up 78% to N4.8 billion from N2.7 billion
• Adjusted earnings per share increases from N4.76k to N7.51k

The operating profit also shows remarkable improvement of 53% from N5.3billion in 2006 to N8.1 billion in 2007. These significant growths are attributable to the increases in non-fuel revenue. The over 100% increase in other income made up for the effectual increase in selling, marketing and administrative expenses caused by further expansion of its business activities and general increase in the cost of doing business. Such expansion has resulted in its visible presence in the upstream oil service segment with the recent acquisition of two swamp oil rigs.

Commenting on the results, Wale Tinubu, Chief Executive Officer, Oando PLC, states; “We are pleased to report another set of inspiring results for the year ended December 2007. These results validate our long term goal of diversification along the energy value chain. The market positioning of our entities have improved significantly enabling us to outperform our competitors. Our Supply and Trading division was particularly able to utilise expertise garnered over the years to bridge gaps in the supply chain thereby delivering results well above the previous year’s level”.

Also noteworthy is the reduction in finance costs by 38%, from N2.1 billion in 2006 to N1.3 billion in 2007. This was achieved through well negotiated terms with creditors and also by effective working capital management. Improved debt restructuring and alternative finance source also contributed to the reduction in finance costs.

While the underlying businesses all performed at or above prior year levels, the consolidated numbers are lower due to the higher level of inter-company activities. Also, the instability experienced during the second quarter of the year had an unfavaourable effect on turnover; a hike in the pump price of major petroleum products led to industrial and general strike actions which in turn crippled economic activities thereby impacting on revenues. This was further aggravated by the several labour-work hours lost during public holidays declared to enable voting and mark the transition to a new democratic government.

Despite the reduction in turnover, the Group’s Gross profit increased by 29% compared to the previous year. The gross profit margin also increased by 11.5% compared to 9% in 2006, which was attributable to improved margin efficiency.

Commenting further, Tinubu said; “2007 was a year of strategic investment in the Gas, Oil Services and Upstream sector of our business, and we remain focused on delivering the unexploited potential of our portfolio in the short to medium term. As we look forward to another exciting year, Oando’s strategic intent of exploring business opportunities in the higher margin products and segments will further boost margin efficiency. All leading indicators are positive and affirm our strategic objective of becoming the number one energy platform in sub-Saharan Africa, whilst delivering excellent returns to our shareholders.”