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A 171.32Billion Naira Loss…This Financial Analysts’ report on Oando has Everyone Talking

BellaNaija.com

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Tunji Andrews TunjiAndrews TwitterThe global crash of oil prices has had a devastating effect on the Nigerian economy. Major oil players are suffering the consequences and the FY2014 report and Q12015 released by Oando today has got everyone talking.

Oando is currently No 2 on the Lagos Trends list on Twitter.

8 oando Twitter Search

The company reported a 171.32Billion Naira Loss in 2014. Other intriguing numbers include 271billion Naira in administrative expenses.

This TV report by BTVA is racking up hits as they analyze Oando, Mobil and Forte’s numbers.

63 Comments

  1. Charles

    October 23, 2015 at 11:03 pm

    We all know it has been a challenging year in the oil and gas industry due to the oil price volatility, Naira devaluation etc. This has negatively impacted the indigenous companies and IOC businesses. Most of them have made losses or reduced profits in their financial year statements.

    • Wale

      October 24, 2015 at 7:23 am

      Okay, I have watched the video, there is a political angle to this, this all seemed to well rehearsed and orchestrated. They kept focusing on the “administrative cost” of Oando-yes the loss is massive but, I smell something fishy going on with this two analysts. I couldn’t find anything on the ownership of this bvta. This looks like Saraki’s people trying to get back at Bola Tinubu. If we dig further these two chaps have some extra dough in their pockets; their credibilty of these two men as analysts have gone to the dogs-Shame on them.
      …I don’t trust and can’t stand men that intentionally keep showing off their wrist watches, I bet you he is right handed. That is some annoying insecure Naija men shit.

    • ElessarisEllendil

      October 24, 2015 at 8:04 am

      Of-course you’ll attack the video!! Wale………………………………………..Tinubu.

      ???

      I’m joking of-course, but to be fair, you walked into that one.

    • Oluwayemisi

      October 24, 2015 at 12:34 pm

      HI.
      I am the producer of that show and I have been producing business news production for over 7 years. I have never met any of the people you mentioned above neither has any member of the production.
      Our aim is to report unbiased business and financial news.
      Feel free to check our YouTube page for more videos. It’s btvanewsroom.

    • Oluwayemisi

      October 24, 2015 at 12:34 pm

      HI.
      I am the producer of that show and I have been producing business news production for over 7 years. I have never met any of the people you mentioned above neither has any member of the production.
      Our aim is to report unbiased business and financial news.
      Feel free to check our YouTube page for more videos. It’s btvanewsroom.

    • Wale

      October 24, 2015 at 2:45 pm

      @elessarisele…I don’t think I walked into anything at least those of us that are not accountants know that there is politics in everything. I stand my ground on this one. I am not debating Oando’s loss, I am questioning the fixation,presentation, conduct and theatrics of these so called business analysts. It was “overly acted”.
      To the person that said we BNers are not smart, welcome, you are probably new-actually we are way smarter than the LiBers. That is why we leave debates to our professional experts to duke it out as they are doing below. Like someone rightly mentioned we are not all experts in all fields(?I know one or two things about politics and food?) Anyway, we do this after all mostly for fun.

    • MsMak

      October 24, 2015 at 7:22 pm

      Typical Nigerian. Blaming everything on “enemies” and “haters”. I guess Saraki’s people also forced them to release their financial results 10 months late too abi? Silly.

    • Blessedheart

      October 24, 2015 at 7:44 pm

      Oh please, not everything is political. That’s quite a huge loss and a lot of that loss comes from the admin expenses. The point is drilling down to find out what’s behind such a huge loss.

  2. Charles

    October 23, 2015 at 11:06 pm

    Also the devaluation of the Naira is probably one of the things that has affected Oando, seeing that their business listed on the Toronto stock exchange did not have such terrible results.

  3. Adedamola

    October 23, 2015 at 11:10 pm

    The significant part of losses are probably due to their recent $1b investment for expansion in their downstream division, I read this a couple of days ago. Also out of everybody, their revenues increased despite the odds in the industry. It’s sound absurd, but considering the fact that they are well hedged over the next 3years , the consequences of the oil crash won’t be as drastic. It’s probably the reason for revenue growth, plus a divestment which may also explain huge admin expenses as with debts servicing in these volatile times, I may want to understand this bit better.

    If their losses are this enormous, this new $1b road/rail facility investment, must be partly why. I wouldn’t fret much for now, we shareholders just need to be a little patient . I am confident in Wale Tinubu. He has a good head on his shoulders and seems to have things in control.

    • Wale

      October 24, 2015 at 6:54 am

      I clicked love this, because you wrote this so well that one could easily mistake you for their PR person. I haven’t even watched the video. Great job!

  4. Adedamola

    October 23, 2015 at 11:11 pm

    The significant part of losses are probably due to their recent $1b investment for expansion in their downstream division, I read this a couple of days ago. Also out of everybody, their revenues increased despite the odds in the industry. It sounds absurd, but considering the fact that they are well hedged over the next 3years , the consequences of the oil crash won’t be as drastic. It’s probably the reason for revenue growth, plus a divestment which may also explain huge admin expenses as with debts servicing in these volatile times, I may want to understand this bit better.

    If their losses are this enormous, this new $1b road/rail facility investment, must be partly why. I wouldn’t fret much for now, we shareholders just need to be a little patient . I am confident in Wale Tinubu. He has a good head on his shoulders and seems to have things in control

  5. O~Intuition!

    October 23, 2015 at 11:18 pm

    “The company reported a 171.32Billion Naira Loss in 2014. Other intriguing numbers include271billion Naira….”
    So who benefits from this ‘loss’?… Money does not evaporate.
    My Point: Some media houses are ready to label certain countries affected as Being under Recession….. Thus fueling unimaginable thoughts in the minds of common man.

  6. Samuel

    October 23, 2015 at 11:23 pm

    Tunji Andrews made a very fair point. You cannot blame Oando, there are other factors surrounding it. And you cannot compare Oando to Forte, Forte is a downstream company. Oando is moving upstream, the transition is obviously going to come at a cost.

    • Africhic

      October 24, 2015 at 7:14 am

      But he stated exactly what aspects he was comparing and why he was making the comparison.

  7. Ejiro

    October 23, 2015 at 11:34 pm

    Gboyega makes a very fair point! A lot of other companies are not compliant. You cannot grill Oando alone. Also, that is the NSE’s problem. If they understand, why does everyone else want to hang themselves?

  8. JayJay

    October 23, 2015 at 11:36 pm

    Can I just say that Comparing Forte and Oando, Rookie ass move!

    • Oluwayemisi

      October 24, 2015 at 12:40 pm

      It was more of stating the numbers of all oil companies that released in the last week. Upstream or downstream.

    • Oluwayemisi

      October 24, 2015 at 12:40 pm

      It was more of stating the numbers of all oil companies that released in the last week. Upstream or downstream.

  9. Maryam

    October 23, 2015 at 11:41 pm

    Even Tunji Andrews says it himself, If Oando has managed to make so much less of a loss in H1 2015, then clearly you see whatever they have planned is working for them, and they will finally break even. These guys here are just commenting based on using calculator to count money, so they can insult people. If they have ever handled the cash to build their own business, they will understand how a business actually works and know that the people behind the business are not stupid and know what they are doing! Moving from Marketing to E&P is a good step to take. Risky, but necessary, I can’t wait for when Oando breaks even on your asses!!

    • Tosin

      October 24, 2015 at 5:55 am

      i don’t even remember what you wrote, but if i was a guy…
      #fanningself

    • ElessarisEllendil

      October 24, 2015 at 8:09 am

      ????

      So now’s time to buy Oando stock. If it backfires though,

      **Insert Taken Meme**

  10. Dehinde B

    October 23, 2015 at 11:49 pm

    I can only imagine that with the magnitude of their impairments, they most have undergone the most lengthy and time-consuming due diligence to make sure everything was transparent and correct. I definitely appreciate that more than releasing dodgy and not properly compiled results early. We don’t need those over hurrr!

  11. BB Omotosho

    October 23, 2015 at 11:52 pm

    As a financial analyst, someone who is actually intellectually capable of understanding the results Oando has just released, their losses are hinged primarily on the devaluation of assets not physical cash!

  12. Tajudeen

    October 23, 2015 at 11:56 pm

    Global crude oil prices have never been so low and it looks like it will remain so for a while longer. This has reduced potential revenues and operating cash flows for all! So let’s not single anyone out. Also, if anyone compares Oando to Forte again, I go off shoe nack for someone head. What does forte know about oil and gas. Is it not just import and sell? Even sef, was there not a time Forte didn’t release for two years! Mehn you guys just like picking on this poor Wale Tinubu guy! Pele jare. I feel for you.

    • Wale

      October 24, 2015 at 6:59 am

      Actually, global oil prices have been lower, it’s just that we have gotten accustomed to it in the higher price levels. Always better for any economy to diversify and have a mix of cash products.

    • ElessarisEllendil

      October 24, 2015 at 8:11 am

      “Global crude oil prices have never been so low” and yet once upon a time, OPEC was celebrating getting Crude to $13 per barrel. Tsk Tsk,

    • Oba

      October 24, 2015 at 9:07 pm

      The guy should resign. Shareholds funds. Meanwhile if it is china ,United states he would be jailed or sacked

  13. Gift

    October 24, 2015 at 12:00 am

    Mehn! People have forgotten Oando just bought new assets, only for crude oil to be less than half the price. Biko if you carry cloth come from yankee, buy everything ship, you spend like 100m, lets say the cloth worth like 80m out of it, you come reach your country, the value of cloth come down reach 38m. If you sell am back, see the loss wey person go make. I surprise sef se as them see oil price fall heart attack no hook them first. Sorry o. I go de pray for una, my mama buy your shares, na only prayer person fit pray.

  14. Hamida

    October 24, 2015 at 12:04 am

    Increased output, oil prices fall because there is no demand, then no one wants Nigeria’s oil, Nigeria devalues the currency by like 8%, goverment wont pay subsidy money, they won’t pass the PIB. Bro! It can’t be easy! Maybe Oando should move out of this God forsaken nation. Their entity listed on the toronto stock exchange tried small.

  15. Femi Festus

    October 24, 2015 at 12:05 am

    People need to stop saying how did they make a loss with Conoco Philips. like every other business, when you’re starting something new; you’re bound to acquire debt and make losses before you break even.

  16. Bar Baric

    October 24, 2015 at 12:10 am

    This is very strange and very scary. Authorities have to look into the books of OandO PLC. There’s definitely something fishy somewhere. We’re talking about $1 billion here!

    • ElessarisEllendil

      October 24, 2015 at 8:14 am

      From my limited understanding, its actually chicken change in the waters Oando swims in.

  17. Deji

    October 24, 2015 at 12:32 am

    They were late but they have now released the results, what next? Let us focus on what they are going to do next rather than going on and on about how late the results are. Match de this weekend!!

  18. Agather Ruis

    October 24, 2015 at 12:59 am

    Oando hs already started to see and reap the benefits of the ConocoPhillips transaction with their production output increasing from 5,000 barrels a day to over 50,000 barrels a day. It can only get better. Patience is key

  19. Grace

    October 24, 2015 at 1:01 am

    Are we forgetting that Oando is part of the marketers that are still being owed subsidy money; these people have tried everything possible to stay afloat, cut them some slack!

  20. Ade Soneye

    October 24, 2015 at 4:53 am

    The loss is primarily tied to the post acquisition valuation of the $1.8 billion acquisition of ConocoPhillips Nigerian asset last year, and also, the fair value loss of their other financial instruments to a tune of over $100 million. Basically the strategic thinking behind the acquisition turned out to be flawed and as such they overvalued the asset they were acquiring, paid to much for it, thus finding it difficult to show a positive ROI when oil prices started to decline. They wouldn’t have acquired the asset for more than 30-35% of what they paid for it if the deal what done today.

    In hindsight they should have structured part of their purchase price to be based on achievement of future perfomance hurdles.

    • Tosin

      October 24, 2015 at 5:53 pm

      …and this one’s a guy
      #fanningself
      #talkstructuretomee

      not that i watched the video report or anything

    • Blessedheart

      October 24, 2015 at 7:32 pm

      The loss is primarily tied to valuation loss as you said, but not of the COP assets. The loss is from the legacy assets.

  21. MsMak

    October 24, 2015 at 4:58 am

    Are you folks (ye commentators) kidding me? Did you even listen to the analysis? First it took them 10 months to release their results. 10 months! What were doing all that time? Probably “finessing’ the books. Only in Naija.

    Then the juicy bit you all seem to be ignoring – a huge part of their expenditure was on Administrative Expenses in the amount of N271 billion. Same expenses were N41 billion the previous year. So exactly what type of admin expenses accounted for the N230 billion jump in the course of 1 year?! Does it include partying in south of France?

    It is unbelievable that there are people here making excuses for Oando, instead of posing some very hard questions to Wale Tinubu and the Oando board. After all, the writing has been on the wall in the global oil markets for over a year. Oil companies in the US have been tightening their belts, cutting back on capital projects and laying off since last year. Anyway I thank God I do not own Oando shares, so it’s not my money there are partying with.

    Next thing you know, Wale Tinubu will come and write “letter to the youths” here like Femi Pedro and accuse us all of being lazy…

    • Salim

      October 24, 2015 at 7:49 am

      Some of the impairments actually sit under the administrative costs. Fair enough it took them 10months but integrating COP into their present group structure must have been one of the reasons for lateness.

    • fleur

      October 24, 2015 at 3:18 pm

      me dear, exactly. May be that admin cost was for the election of Buhari

    • Blessedheart

      October 24, 2015 at 7:37 pm

      Oando is traditionally late with releasing its results. God knows why. Impairments are classified under admin costs. That accounts for the huge change.

    • Oba

      October 24, 2015 at 9:13 pm

      Love your comments this can be like Enron that got busted early 2001. Those guys are cow boys

    • Lee

      October 25, 2015 at 8:15 pm

      Clearly, you are not an accountant and don’t understand. Impairment which will be huge seats in admin cost if they have that as their accounting policy. Also, the recent acquisition bringing them to upstream will involve loads of admin cost which they will eventually capitalize depending on their policy. So it isn’t as terrible as the presenters claim.

  22. Biola

    October 24, 2015 at 7:35 am

    I thought Bella Naija readers were intelligent but after reading all these comments with the exception of MsMak, I am disappointed. All these commenter making excuses for the company without looking at the company’s issued report. First of all, when debt is issued, the balance is recorded on the balance sheet and not an income statement (losses are recorded on the Income statement) except for interest expense. As Oando reported a 171 Billion naira loss, a valid question should be what was or were the factors of the loss? If you read the entity’s financial statement, you would see that the biggest cause of the loss was General and Administrative expenses. How can one explain an increase from 41 billion to 271 billion in one year?

    Some might say an impairment of asset (s) and the devaluation of naira. 1)An impairment charge was not recorded in the General and Administrative (G&A) line item. If u look closely, that charge was recorded on a separate line item. 2) Devaluation of currency does not immediately affect cash. It only comes into play when an entity has to pay its vendors for goods and services provided prior to the devaluation . Hence you record a foreign exchange loss which is not in the G&A line item.

    It’s irresponsible for a public corporation to release its prior year (2014) financial statement 10 months after its year end. Also, management has some explaining to do.

    • ElessarisEllendil

      October 24, 2015 at 8:22 am

      “I thought Bella Naija readers were intelligent”

      ??????

      Take a deep breath, sit down, this might shock you! But I’m afraid I have to inform you that most of us have different areas of expertise, plus you know even expert opinions always differ.

      If it makes you feel better though, keep assuming a differing opinion is stupid, that mindset won’t ever backfire……….ever! s/

    • Leah

      October 25, 2015 at 10:43 pm

      Honestly! Such a stupid stupid opening statement by the high horse riding Biola.

      Lord knows what you’re like in real life. I’m sure you’re one of those who never gets reinvited to the party, before you bore everybody with your fraud of superiority.

      Gerrahere!

    • Kayode

      October 24, 2015 at 9:09 am

      If you are such an expert, how do you not understand after looking at their financials that their administrative expenses are made up by a very high percentage of their recorded losses, which were due to the non-cash impairments.
      Everybody wants to come to Bella Naija to be an expert, please take several seats!

    • nneka

      October 24, 2015 at 12:46 pm

      irresponsible you say? Do you know that a public listed company that I work for, has not presented 2013 accounts to the shareholders, neither have they finalised 2014 accounts?? Besides, you start counting time after the end of march. so in essence, oando was actually about 7 months late, which in my opinion, is permissible.

  23. Adedamola

    October 24, 2015 at 10:42 am

    Biola let’s be practical? do you run a business ? Imagine you bought an investment with quasi-equity for $2b even if you are Buffet extraordinaire do you breakeven in 1 year? A distressed volatile year in a baba go sloooooooooooooooooooooooooooooooooooow regime? Talk less of making profit.? I didn’t think you did. To be honest they are genius for making that much in revenues with significant growth and even genius for not posting more losses. I was expecting much more blood as they have dramatically described.

    This noise is overrated abeg except it’s just for noise purposes. It’s common sense, hence why it’s rookies so far blabbing about it.

    • jackson

      October 24, 2015 at 10:31 pm

      Obviously you are not a student of finance. You should turn a profit or marginal loss (if your financing structure is bad) when buying a producing asset with very healthy cash flows. Where is the risk?

  24. okechukwu ofili

    October 24, 2015 at 5:39 pm

    I love watching intelligent Nigerians discussing with facts and figures rather than with religion and ethnicity. #TheEND

  25. Mr Chibz

    October 24, 2015 at 7:22 pm

    Ok for all you voltrons. Lets assume this is a financial management and analysis class and instead of Oando you had Coy C and other organisations in the same industry were provided Mobil – Coy A and Forte- Coy D, how would you answer a profitability or investment advisory questions given the statements on massive increases in administrative costs in Coy C, delays in releasing annual financial results and massive losses. Would you advise your investors or invest your funds in Coy C, would you be worried about your investments in Coy C, what comments would you make. I am deliberately making this theoretical as several people here have decided to focus on issues such as ethnicity, politics or individuals in assessing this. While i am not casting doubts on Mr Tinubu’s managerial abilities or saying Oando is going down, remember organisations back with individuals with bigger reputations in better regulated climes have gone bust eg. Enron. Lets not besmirch peoples reputations by hiding behind keyboards, lets be smart and act smart too

  26. nnenne

    October 24, 2015 at 7:33 pm

    Right. At least Nigerians now know GEJ was not the next controlling oil prices!

  27. nnenne

    October 24, 2015 at 7:34 pm

    Right. At least Nigerians now know GEJ, was not the one controlling oil prices!

    • Leah

      October 25, 2015 at 10:45 pm

      ^^ Daft comment alert! Nnenne go play outside abeg.

  28. akin

    October 24, 2015 at 8:37 pm

    So I hear wale Tinubu will be on Africa’s first 24 soft sell business news channel at 8.30AM on Monday. I just have an issue with the fact that cnbc, afriCA version never drills any ceo. So not looking forward to watching, but ya’ll can to know where the money disappeared to.

  29. jackson

    October 24, 2015 at 10:27 pm

    Let’s be real .These guys appeared political. That was obvious. Any analyst knows what’s going on is that these 2 guys will eventually be rewarded for not taking Oando apart .They were subtly biased.

    • Mr Chibz

      October 25, 2015 at 5:48 pm

      when admin costs increase 5 fold and you declare the equivalent of a billion dollar loss, your eyes tend to bulge out and say huh. Theses guys are raising the obvious and in my opinion have been professional enough to state that they require additional info to understand the context of these expenses. its unfortunate that instead of checking up of their past excellent reputations, you choose to rubbish them for your own funny reasons. you dont need to agree with them just move on

  30. whatwillbewillbe

    October 25, 2015 at 9:37 am

    Numbers are sexy, I’m sorry I have nothing else to add. This is all the way out of my league.

  31. Oyo

    October 26, 2015 at 5:52 pm

    Only in Nigeria will a company declare around an 8 billion Naira gain half year and declare 171 billion Naira lost at end of year. Management sees the low oil prices and devaluation of the Naira as their last chance to steal all they can. Where are the owners? should they not be making press rounds explaining what happened to the public’s money? They are no where to be found…no explanation. In the US the IRS, FBI, Bank and many more will be after these guys trying to locate where the money was funneled to. Dear Buhari, President Agent of change….THe entire management of Oando should be sacked!

  32. Abiola

    October 26, 2015 at 9:52 pm

    Most big companies in Nigeria are now going for expatriate CEOs(and even Finance Directors);Nigerian CEOs are prone to shenanigans/chicanery and local iniquities to turn a company zombie.

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