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TMCNet:  Equities Watch Forte Oil Sets Record With 2013 Results

[February 12, 2014]

Equities Watch Forte Oil Sets Record With 2013 Results

(AllAfrica Via Acquire Media NewsEdge) By releasing its audited results one month after the end of its financial year, Forte Oil Plc has set a record that will spur competition among listed companies.

After over three years, shareholders of Forte Oil Plc, one of the leading petroleum products marketing firm, will begin to receive dividend this month. Forte Oil, formerly known as African Petroleum Plc, two weeks ago became the first listed company, with December 31, 2013 as end of its financial year, to release its audited results.


The company did not only post impressive results, but also recommended the payment of N4 dividend for the shareholders. The dividend will be approved by the shareholders at the annual general meeting of the company coming up very soon.

But most importantly, Forte Oil has set a 50-year record on the Nigerian Stock Exchange by filing its audited December 2013 financial statements in the month of January 2014.

Many of the shareholders who endured the rough patch the company went through are now smiling as their patience is beginning to pay off. The shareholders are not going to receive only dividend, but have also seen unprecedented capital growth in their investment, given the fact the equity of Forte Oil returned over 1,000 per cent in 2013. The stock recorded the highest price gain in the market last year.

Historical Background Forte Oil came about after Zenon Petroleum, owned by Mr. Femi Otedola, acquired 28.7 per cent equity stake in African Petroleum (AP) in 2007. The AP shares were divested by Nigerian National Petroleum Corporation (NNPC), which had acquired them in a N10 billion debt swap in 2005.

Following the acquisition the name was changed after the approval of the company's shareholders. Although AP was a household name, Otedola told shareholders that the brand was tired, hence a new name. Forte Oil thereafter embarked on transformation and rebranding. Those strategic moves have started yielding positive fruits.

Mr. Akin Akinfemiwa is the Group Chief Executive Officer of Forte Oil. Julius Babatunde-Owotuga is the Group Financial Officer(CFO). Other members of board include: Mrs Grace Ekpenyong; Layi Bolodeku; Christopher Adeyemi; Philip Akinola; Korede Omolaja (directors) and Akinleye Olagbende (company secretary/legal adviser).

Forte Oil has a vision "to be the preferred energy company, delivering unbeatable benefits to our stakeholders", while its mission is "to provide quality products and services using high safety standards and global best practices while remaining profitable and socially responsible." Transformation Strategy Forte Oil posted losses from 2009 to 2011 as a result of factors such as the cut in crude oil and credit squeeze, which made fuel importers unable to source for funds to import products.

The liquidity squeeze and reluctance of banks to lend, resulting in increased inter-bank lending rates, also created difficulties in gaining access to credit facilities for business operations of many petroleum products marketing firms. However, realising the challenges, Forte had to embark on a strategy to improve its performance and deliver returns to shareholders.

Specifically, the company adopted strategies that led to improved operational efficiency. Its controls also improved across business lines, while there was stronger corporate governance as compliance was ensured at all levels. That improved compliance made the company beat others being the first to release its 2013 results.

Impressive 2013 Results Forte Oil ended 2013 with a revenue of N128 billion, up by 41 per cent from N91 billion in 2012. In the same vein, profit before tax soared by 467 per cent from N1.15 billion to N6.52 billion, while profit after tax rose by 397 per cent from N1.01 billion to N5 billion. Earnings per share grew from N0.93 to N4.32.

The company's growth in revenue is attributable to the significant increases recorded in the sales of its fuel products segment, comprising Premium Motor Spirit (PMS), Automotive Gas Oil (AGO), Aviation Turbine Kerosene (ATK), as well as increased production of chemicals, lubricants and greases.

Besides, its acquisition of one of the privatised power plants also contributed significantly to the revenue stream. On the profit side, it was enhanced by interest income earned on bank deposits, following the implementation of efficient cash management strategies.

The company recorded some major achievements in 2013. It successfully reorganised its capital to offset accumulated losses of more than N55.98 billion against share premium. It successful diversified into Nigeria's power sector with the acquisition of 414MW Geregu power plant under the Federal Government-led privatisation programme. The company equally introduced a new synthetic lubricant into the market and re-packaged of its entire lubricants range to offer customers additional value.

The firm significantly expanded its retail network to boost market share and profitability, just as it aggressively grew its industrial/commercial customer base to meet its objective of being the supplier of choice.

Impressive Results Explained Speaking on the results, Akinfemiwa said "We are very pleased with our business performance in 2013. It is indeed a true test of our commitment to our three-year strategic business transformation initiative, which commenced in 2012 aimed at repositioning the business on the solid foundations of strong corporate governance and business ethics, enhanced safety health and environmental practices, effective business controls across all business lines as well as superior customer service delivery." According to him, the implementation of transformation initiatives impacted the bottom line, saying the positive performance would continue in line with their mission of building a long-term successful company through positive actions that boost investor confidence and thus make Forte Oil the investment of choice globally.

"Our firm belief in our vision of being Nigeria's integrated energy solutions provider can be seen in the strategic acquisition of retail assets to consolidate market position and grow profitably through increased revenue, enhanced superior customer delivery and cost leadership. This is our short-term focus. Our short-to-medium term focus of planned expansion into the upstream oil and gas sectors, through participation in government bid rounds and acquisition of marginal fields from international oil companies (IOCs), remains on track.

We thank our shareholders for their firm belief in us in the course of our business transformation and also use this opportunity to assure them of better performance in the future," he said.

Speaking in the same vein, Omodayo-Owotuga said the growths are by-products of a well-executed business transformation strategy in the last 24 months covering corporate governance, risk management and controls, business revitalisation, development and expansion.

"Our 2013 PBT of N6.52 billion is a clear demonstration that Forte Oil Plc is on a clear path to dominate our primary market; the downstream petroleum marketing sector. Our capital reorganisation approved by our esteemed shareholders during the year, has also put us in a position to continually guarantee distribution to our shareholders without jeopardizing growth opportunities. We shall continue to pursue initiatives that spur business growth and efficiency, liquidity management and aggressive diversification into related high margin business that would continue to increase shareholder value and distributions on an annual basis," he said.

The CFO said the company consolidated the operations of its newly acquired power plant in the 2013 financial statement, noting that the subsidiary will be company's major growth driver going forward.

The power plant was handed over by the federal government to the Forte early this month. Forte Oil acquired the Geregu Power as part of its diversification from its primary business of petroleum products marketing.

The company said it planned to carve a niche for itself in power generation by increasing the current capacity of the plant to over 600MW in the short to medium term. The optimisation, Forte Oil said, would be a demonstration of its commitment to help bridge the current power deficit in Nigeria and help actualise the expectations that Nigerians have of the power sector.

Copyright This Day. Distributed by AllAfrica Global Media (allAfrica.com).

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