February 19, 2013/ HELEN OJI / Guardian
OANDO Nigeria Plc, yesterday, assured investors that the company has put measures in place to ensure that it generates free cash flow to pay substantial amount of the company’s earnings as dividend to shareholders.
The company, in its last financial year end, failed to pay dividend to shareholders, which according to the Managing Director of the company, Wale Tinubu impacted negatively on the bottom-line, causing sharp reduction in cash flow.
“I believed we suffered from shareholders drop as regards to the value of shares by not paying dividend in the last financial year end. It is a mistake on our part and it sent a wrong signal to the market and I think we have suffered monumentally on the reduction of our shares. The second thing we suffered is oil subsidy payment and all these put together, lead to panic sale of our shares, which impacted negatively on our shares.
Addressing stockbrokers during the company’s “Facts Behind the Figures” yesterday, Wale submitted that there is concerted efforts to move the business from low margin to high level business to enable the company reduce its overall debt and enhance profitability.
“Be rest assured that non dividend payment is now a thing of the past. There is a substantial effort to reduce the cost of capital to generate more profit. Going forward, the dividend we will pay will actually be as paying salary in the office for us to do better and move forward in the business.”
Tinubu noted that the net right issue proceeds, estimated at N52.9 billion after deducting the total cost of the Issue estimated at N1.6 billion representing 3.01 per cent of the Issue will be applied as follows: N27.78 billion or 52 per cent refinancing of upstream assets.
“In clear terms that amount will be use for the part-payment of a N60 billion syndicated loan facility championed by First City Monument Bank Plc to fund the acquisition of upstream assets and swamp drilling rigs. The sum of N23 billion representing 45 per cent is expected to be used for the purchase of Conoco Phillip’s Nigerian business assets for which an sales and purchase agreement has been signed by both parties.
According to the offering document, the forecast was prepared on the assumption that the Exploration & Production projections do not include the impact of any growth assets that the company will acquire in the future but have been limited to the current assets in its portfolio”.
Tinubu while giving highlight of the forecast includes explained that turnover is expected to grow by 11, 13 and one per cent in 2013, 2014 and 2015 respectively, while the cost of sales will increase by 8, 9, and 4 per cent simultaneously during same period.
He noted that gross profit is projected to appreciate by 37 per cent in 2013, 31, per cent in 2014, but decline by 13 per cent in 2015, due to the refurbishing of the FPSO for OML 125 leading to only partial production for the year.
Tinubu promised that shareholders of the company are expected to receive an enhance package of reward in terms of dividend payment during the period, but such payment is subject to their approval in an yearly general meeting.
2. PowerPoint: Oando Plc Facts Behind The Figures Presentation