The Nation Newspaper

Tag: Forte Oil

  • Forte Oil votes $90m for Geregu plant’s overhaul

    Forte Oil votes $90m for Geregu plant’s overhaul

    • Acquires 100 new trucks

    Forte Oil Plc, the owner of the privatised Geregu Power Plant, has set aside $90 million to overhaul the plant, its Group Chief Executive Officer, Mr. Akin Akinfemiwa has said.

    Fielding questions from reporters yesterday in Lagos during the launch of 100 trucks the company acquired to boost delivery of its petroleum products and overall operations, he said the renovation of the power plant has started and the contract was awarded to Siemens. As the original builders of the power plant, the award of the overhaul contract to Siemens is considered to be apt.

    The renovation work, he said, is expected to be completed in the next 18 months and will bring the plant to work at its installed capacity of 414 megawatts (Mw). Besides contributing to the achievement of stable power supply in the country, it will boost the company’s revenue and ultimately shareholders returns, he said.

    Akinfemiwa said the company plans to acquire 200 trucks and has only taken delivery of the first batch of 100 and expects the second batch by end of the year or early next year.  He said: “The value of these trucks put together is about N2.5 billion and this is the first batch. Basically, about N5 billion will be spent on acquisition of the 200 trucks.

    He said: “We are very confident that the acquisition of these 100 world-class product delivery trucks is a very strategic investment that will substantially increase our capacity to grow our revenue, profitability and ultimately maximize value for our shareholders as we move towards our mission of building a long-term successful company; boosting investor confidence by making Forte Oil Plc the investment of choice in Nigeria and globally.”

  • Forte Oil outlines growth plan, eyes oil assets

    Forte Oil outlines growth plan, eyes oil assets

    Forte Oil Plc would combine investments in its downstream and energy businesses with prospecting for productive upstream oil assets to ensure it achieves its main goal of becoming the foremost integrated energy solution provider in Nigeria.

    Chief executive officer, Forte Oil, Mr. Akin Akinfemiwa, outlined the company’s growth plan yesterday at the presentation of the company’s underlying fundamentals at the Nigerian Stock Exchange (NSE) in Lagos.

    Akinfemiwa said the group would diligently implement the strategic initiatives under its growth plan to enhance profitability and increase shareholders value.

    He said the group was considering two options of acquiring moribund fields and bring back them to production or buy existing international oil companies (IOCs)’s assets in its plan to diversify into the upstream market adding that the group would exercise great caution by identifying the risk and getting parties to share and manage the risks.

    He pointed out that the group’s immediate strategic initiatives included strengthening its corporate governance structure, achieving market dominance through the expansion of retail infrastructure, commercial business and diversification into the upstream space through profitable acquisition of upstream assets.

    “Upstream diversification is to be managed properly, considering the level of investment required. We are into petroleum retailing and marketing but if we are going into the upstream, we would form strategic alliances so that we can share the risk together because there is no technical expertise for it now. We have identified potential partners that will go into it with us and we are going into it as producing assets not as a prospecting one,” Akinfemiwa said.

    He said the company is committed to becoming the investment of choice through positive actions that would boost investor confidence at all times.

    He outlined that the company has embarked on aggressive and strategic acquisition programme noting that it has concluded plan to site its branch network in such a way that the distance between two branches would be at the region of three kilometers with a view to expanding its retail network.

    According to him, the group’s business transformation programme was aimed at repositioning the business on the bedrock of strong corporate governance and business ethics, enhanced safety health and environment practices, effective business control across the company as well as superior customer delivery.

    “We would acquire market where we can drive up volume across Nigeria but it has to be strategic. It has to be three kilometers along densely populated areas where the market is booming. The exercise would be continuous without any time frame and we would continue to consolidate on it,” Akinfemiwa said.

    He said the company has also invested in the acquisition of 100 trucks and tankers in order to give transporters the confidence to invest in the business.

    He hinted on the prospects of further capital raising by the group noting that the company’s balance sheet for the expansion exercise would be funded through the combination of equity and debt issues.

    “Through our focused commitment to remain open, responsive, continually engaging our customers and maximizing our resources, we are confident that Forte Oil Plc will attain its vision of being the foremost integrated solutions provider in Nigeria,” Akinfemiwa assured.

  • Forte Oil grows pre-tax profit by 152% in six months

    Forte Oil Plc more than doubled its profit in the first half as the energy group continued to drive sales with aggressive consumer marketing and networking.

    Interim report and accounts of Forte Oil for the first half ended June 30, 2014 released at the weekend showed that turnover rose by 33 per cent while pre and post tax profits jumped by 152 per cent and 125 per cent respectively.

    Key extracts of the report showed that profit before tax leapt by 152 per cent to N4.19 billion in first half 2014 compared with N1.66 billion recorded in corresponding period of 2013. Profit after tax also rose by 125 per cent from N1.39 billion in first half of 2013 to N3.13 billion in first half 2014.

    Turnover rose to N79.61 billion compared with N59.96 billion recorded in the same period in 2013. Gross profit rose by 57 per cent from N5.73 billion to N9.0 billion while operating profit doubled by 128 per cent from N1.98 billion in first half 2013 to N4.53 billion in first half 2014. Earnings per share stood at N1.91 in first half 2014 as against N1.29 in first half 2013.

    Group chief executive officer, Forte Oil, Mr. Akin Akinfemiwa said the first half performance showed the resilience of the group’s businesses and a true test of its business transformation strategy despite the adverse impact of petroleum product scarcity experienced in the first quarter of the year.

    “We are very pleased with our audited half-year results for 2014, which exhibits consistent and sustainable growth for both revenue and profits,” Akinfemiwa said.

    According to him, the company benefitted from superior contributions from its power and upstream services divisions, which have continued to strengthen its market dominance as it strives to be the foremost energy solutions provider.

    “As we enter the final phase of our business transformation we are confident of building a long term successful company and making Forte Oil Plc the investment of choice through positive actions that boost investor confidence at all times,” Akinfemiwa said.

    He outlined that the company during the period successfully launch its newly repackaged lubricants while it also engaged in aggressive consumer activities to boost market share.

    According to him, the company continued expansion of its retail network at strategic locations to improve market dominance in addition to aggressive growth and expansion of its industrial and commercial customer base to meet its objective of being the supplier of choice.

    He added that strong performance from Geregu Power Plant also contributed to the company’s performance.

    Group chief financial officer, Forte Oil Plc, Julius Omodayo-Owotuga noted that the 152 per cent growth in profitability in the third year of transformation is a clear indication that the milestones set in the restructure programme are being met earlier than envisaged.

    “Revenue increased by 33 per cent from a growing number of retail outlets and improved commercial customer base, while keeping our costs; distribution, administrative, and finance low. The result is an indication that we are operating efficiently and are focused on our vision of being the foremost energy solutions provider,” Omodayo-Owotuga said.

  • Forte Oil, ETI make MSCI Frontier Markets 100 Index

    Forte Oil, ETI make MSCI Frontier Markets 100 Index

    Forte Oil Plc and EcoBank Transnational Incorporated (ETI) have been included in the MSCI Frontier Market Index 100, a global index for the 100 of the largest and most liquid stocks in some 26 countries generally classified as frontier markets.

    The changes were effected following inclusion of 13 securities into the MSCI Frontier Markets Index, while 30 were deleted from the index. MSCI Frontier Markets 100 Index were dominated by Kuwait, 30 per cent from 20 per cent, and Nigeria, 20 per cent from 13 per cent while Pakistan, Oman, Argentina, Kenya and Morocco are now in the range of five to seven per cent, from three to four per cent.

    Analysts said the Forte Oil and ETI in the index would lead to greater inflow of investments, with potential for more than $200 million investments in the Nigerian market.

    The MSCI Frontier Markets 100 Index is designed as the representative and more easily replicable alternative to its broader parent index, the MSCI Frontier Markets Index. With the May 2014 semi-annual review, frontier markets countries now include Argentina, Bahrain, Bangladesh, Bulgaria, Croatia, Estonia, Jordan, Kenya, Kuwait, Lebanon, Lithuania, Kazakhstan, Mauritius, Morocco, Nigeria, Oman, Pakistan, Romania, Serbia, Slovenia, Sri Lanka, Tunisia, Ukraine, and Vietnam.

    The MSCI Frontier Markets 100 Index was launched on Apr 11, 2012 and placed strong emphasis on tradability through three main features of a minimum liquidity level and proportion of shares still available to foreign investors relative to maximum allowed. The 100 largest securities are selected from the eligible universe and ranked by float adjusted market capitalization. About $8 trillion is benchmarked to MSCI indexes. The emerging markets index MSCIEF is up 2.9 percent so far this year, while the all world index has risen 2.1 percent.

    Forte Oil had achieved strong fundamental and technical performances in 2013, a trend it has sustained in the new business year. Its share price had risen by 1164.55 per cent to emerge the best-performing stock, by share price appreciation, at the Nigerian Stock Exchange (NSE) in 2013. It has recorded a year-to-date growth of more than 70 per cent so far this year.

    Forte Oil was also the first quoted company to submit its audited report for the 2013 business year and distributed N4.32 billion as cash dividends to shareholders. Breakdown of the dividend indicated that shareholders received a dividend per share of N4. Key extracts of the audited report and accounts for the year ended December 31, 2013 showed that turnover rose from N90.98 billion in 2012 to N128.03 billion in 2013. Profit after tax also leapt from N1.01 billion in 2012 to N5.0 billion in 2013.

    In the frits quarter of this year, Forte Oil continued in its strides with significant growths in sales and profitability. Key extracts of the unaudited report and accounts of Forte Oil for the three-month period ended March 31, 2014 showed that turnover grew by 30.74 per cent while pre and post tax profits rose by 100.6 per cent and 107.8 per cent respectively.

    The report showed that turnover rose to N34.78 billion in the first quarter of 2014 as against N26.6 billion recorded in comparable period of 2013. Gross profit rose by 72.4 per cent from N2.68 billion to N4.63 billion. Profit before tax doubled from N633.07 million to N1.27 billion. After taxes, net profit stood at N1.10 billion by March 2014 as against N530.60 million recorded in corresponding period of 2013. Basic earnings per share rose from 49 kobo to 75 kobo.

     

     

     

  • Lube giants set for motor fair

    The lube giants – Mobil, Total, MRS, Forte Oil, Lubcon, Ascon Oil, Honeywell, V-Gold, Techno oil, and Pepco are set to upstage one another at the forthcoming Ninth Lagos Motor Fair/ Third Auto parts Expo, which will hold between 1 and 7 May.

    The indigenous companies are not left out as all the big names in the lubricant sector have all declared their interest to participate in this year’s event, leveraging on the outstanding success recorded in the 2013 edition.

    The event has been tagged as the ‘gathering of the heavy weights’ in the lube sector.

    The lube giants, while stating their level of preparedness, revealed that they have been working round the clock with the organising committee to ensure a great outing.

    They also highlighted that they will be at the expo with a wide range of products ranging from the Multigrade engine oil for petrol and diesel engines, Semi-Synthetic Multigrade engine oil for petrol and diesel engines, super vehicle performance engine oil, Mineral based Multigrade engine oil for petrol and diesel engines, Mineral based Mono-grade engine oil for petrol engines and other allied products

    Chairman, Organising committee and the Managing Director BKG Exhibitions, Ifeanyi Agwu, noted that exhibiting at shows of such nature provides a significant opportunity to enhance brand visibility, promote new and existing products, generate leads, and drive incremental sales.

    Agwu said: “A whole lot of the brands who started with us and are still with us can testify to this. They have moved to greater heights. That is the beauty of trade shows. They take you to another level by consistently keeping you in the minds of your target audience. And we will not relent in making the dreams of these exhibitors come true because of the faith they have put in us over the years.”

    He reiterated the need for other stakeholders in the industry to utilise the opportunities provided by the platform to further strengthen and promote the automobile and allied sectors which have the capability of contributing more than 10 per cent to the annual National GDP.

     

  • Forte Oil raises expectations on future dividends

    Forte Oil raises expectations on future dividends

    •NSE hails compliance record

    Forte Oil Plc has said it will continue to distribute the larger part of its net earnings to shareholders as the company assures shareholders that it would surpass its previous figures in the current business year.

    Chairman, Forte Oil Plc, Mr. Femi Otedola, who spoke to shareholders on the outlook of the company, said the board and management would continue to pursue initiatives that will enhance margins and ensure increase in shareholder value annually.

    He said the company’s short-medium term focus of expansion into upstream and oil and gas sectors through participation in government bids rounds and acquisition of marginal fields from the international oil companies remain on track.

    “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,” Otedola said.

    He pointed out that the company has strong future growth potential noting that the earnings from its power subsidiary, which contributed 10 per cent of group’s earnings within two months of operations, is a clear indication of what to expect in the years ahead.

    Group Chief Executive Officer, Forte Oil, Mr. Akin Akinfemiwa, said the decision of the company to pay more than 85 per cent of its net earnings for the 2013 business year as dividends to shareholders was to compensate shareholders, who had waited patiently for the past five years without dividends.

    “Dividend decisions going forward, like we did this year, will be driven by our earnings, liquidity and growth needs,” Akinfemiwa said.

    According to him, the group will continue to review its processes and use technology as a driver for talent, business efficiency, cost reduction and improvement in profitability.

    “We remain very confident of not only a sustainable but an improved business performance in 2014,” Akinfemiwa said.

    Forte Oil set the ball rolling for this earnings season at the weekend with the announcement of gross dividend of N4.32 billion for the immediate past year ended December 31, 2013. Forte Oil’s dividend recommendation and audited report is the first to be announced by quoted companies, which operate the Gregorian calendar as their normal business year.

    Breakdown of the dividend recommendation indicated that shareholders would receive a dividend per share of N4, a dividend yield of 4.4 per cent on Forte Oil’s market consideration of N90.20 by the close of market yesterday.

    Key extracts of the audited report and accounts for the year ended December 31, 2013 showed that turnover rose from N90.98 billion in 2012 to N128.03 billion in 2013. Profit before tax increased to N6.52 billion compared with N1.15 billion recorded in 2012. Profit after tax also leapt from N1.01 billion in 2012 to N5.0 billion in 2013. With these, earnings per share jumped to N4.32 in 2013 as against 93 kobo in 2012.

    Meanwhile, the Nigerian Stock Exchange (NSE) has commended Forte Oil Plc for its timely compliance with listing requirements, especially the release of its interim and audited results.

    In an investors’ notice, NSE stated that Forte Oil has continued to exceed NSE’s operating requirements through its corporate actions.

    According to NSE, with the release of Forte Oil’s 2013 audited report in January 2014, the company has become the first listed corporate entity since the establishment of the NSE, to announce its full year audited financial reports within 31 days of the end of its fiscal year in January.

    “Listed companies are expected to announce their audited financial statement within ninety days after the close of the fiscal year. Forte Oil has also added to that feat by being the first public company to host its annual general meeting (AGM) with its shareholders within the first quarter of 2014,” NSE said. Forte Oil was scheduled to host its AGM last Friday.

    Akinfemiwa said the timely compliance is a testament to the company’s unflinching commitment to financial and business disclosures.

    He added that the company is committed to creating value to the ultimate benefit of its shareholders and the entire investment community in general.

    Forte Oil operates over 500 retail outlets in Nigeria and Ghana. It diversified into power generation with the recent acquisition of the 414MW Geregu Power Plant. The company also supplies well production chemicals and drilling/completion fluids to the Nigeria upstream sector.

  • Forte Oil rebrands lubricant

    Nigeria’s energy solution provider, Forte Oil Plc has rebranded its new VISCO 2000.

    The launch, coincided with the unveiling of Tiwa Savage as the company’s new Ambassador in Lagos, was one of the company’s innovative ways of enhancing performance.

    Speaking at the event, the Company’s Group Chief Executive Officer, Akin Akinfemiwa said the lubricant was produced to offer automobile and generator’ users quality services.

    He said the processes and formulations of the lubricant was of high standards, adding that the company would take advantage of its over 500 retail outlets and authorised lubricant distributors nationwide to grow the product.

    He said the company was spurred by the need to promote local content initiatives, as evident by the production and marketing of its range of energy-solution products and services. He said Nigerians have important roles to play in driving the local content policy by patronizing products and services coming from the oil and gas sector.

    According to him, the company takes local content value into consideration when producing energy solution products, urging Nigerian to assist the growth of indigenous oil and gas operators.

    He said the company has metamorphosed from British Petroleum (AP) to African Petroleum to Forte Oil, adding that its evolution has been historical and challenging.

    The company, he said, has experienced transformation in areas such as philosophy and processes, adding that the development has endeared its services to people in Nigeria and beyond.

    He said: “At Forte we are committed to excellence and quality, we do our things in a peculiar way that make us stand out as a brand. Our core values are being committed, openness, responsiveness and respect as seen in our activities at both the downstream and upstream segment of the sector.’’

    Also, the Company’s Head Product Marketing, Bayo Akinwunmi said Forte Oil has rebranded its processes and philosophy to achieve growth.

    ‘’Our heritage is with the British Petroleum. We are still blending our products under BP. We have fact Standard Organisation of Nigeria (SON) certification which tallies with the International Standard organization (ISO) certification. This has enhanced the company’s profitability,” he added.

  • Forte Oil: Rewarding performance

    Forte Oil: Rewarding performance

    Forte Oil Plc consolidated its recovery last year with impressive growth in turnover and profitability as the downstream oil-marketing company intensified its diversification into the allied power and energy sector.

    For the first time in five years, shareholders of Forte Oil will receive dividend and also lock back substantial values in reassurance that the payment could continue in the years ahead.

    Audited report and accounts of Forte Oil for the year ended December 31, 2013 showed that turnover rose by about 41 per cent while pre and post tax profits jumped by 467 per cent and 396 per cent. With 292 per cent increase in pre-tax profit margin and a double in return on total assets, the underlying improvement in profitability and return in 2013 was underpinned by the diversification of income stream and improvement in its core downstream business.

    Total balance sheet size doubled by 146 per cent while total equity funds leapt by about 459 per cent. Besides, the balance sheet structure became more supportive and stable in 2013. With significant reduction in financial leverage, increased equity funding, improved liquidity and positive working capital, the balance sheet structure was evidently in a better stead.

    As earnings per share rose from 93 kobo to N4.32, the board of directors has recommended distribution of a dividend per share of N4 to shareholders, totaling N4.32 billion. Besides, net assets per share increased by 458 per cent from N7.03 to N39.25.

    However, the performance of the core downstream business was still tepid. With negative operating profit, the midline performance was buoyed largely by the impetus from the new power business and efficient financial management. This was evident in the decline in gross margin and the increase in cost of business relative to turnover.

     

    Financing structure

    Forte Oil’s group paid up share capital remained unchanged at N539 million. Total equity funds meanwhile rose from N7.58 billion in 2012 to N42.35 billion. The improvement in equity funds was due to increase in primary equity funds attributable to shareholders of the company, which rose from N7.58 billion to N13.04 billion, and special equity funds of N29.31 billion. Total assets rose from N42.51 billion to N104.68 billion while total liabilities increased from N34.93 billion to N62.33 billion.

    The financing structure was generally positive. The proportion of equity funds to total assets increased from about 18 per cent in 2012 to about 41 per cent in 2013. The rooftop gearing ratio of 130 per cent in 2012 dropped to 12 per cent in 2013 as immediate bank loans halved from N9.9 billion to N4.9 billion. Current liabilities/total assets ratio improved from 77 per cent to 44.6 per cent while long-term liabilities/total assets ratio was relatively better at 15 per cent in 2013 as against 5.1 per cent in 2012.

     

    Efficiency

    Average cost efficiency declined during the year underlining the low margin in the downstream business and notable increase in administrative expenses. Average cost of sale per unit of sale increased in 2013 and this was compounded by substantial increase in operating expenses. Total cost of business, excluding finance charges, inched up to 100.1 per cent in 2013 as against 97.5 per cent in 2012. However, there were no data to determine actual productivity level in relation to average cost per human capital.

     

    Profitability

    Both outward and underlying performance indices showed impressive outlook in 2013 as Forte Oil mitigated initial top-line cost with efficient midline cost management. Group turnover rose from N90.98 billion in 2012 to N128.03 billion in 2013. Cost of sales however rose by 43 per cent to N115.4 billion as against N80.84 billion. Gross profit thus increased by 24.5 per cent from N10.15 billion to N12.63 billion. Total operating expenses stood at N12.77 billion in 2013, about 62 per cent above N7.89 billion in 2012. Administrative expenses had jumped from N5.01 billion to N9.81 billion while distribution expenses increased from N2.87 billion to N2.94 billion. Non-core business incomes-including finance incomes; however leapt by 1,055 per cent from N738 million to N8.52 billion. Finance expense was moderated at N1.88 billion in 2013 compared with N1.85 billion in 2012. These boosted the bottom-line with pre-tax profit rising from N1.15 billion to N6.53 billion. Profit after tax also quadrupled from N1.01 billion in 2012 to N5.0 billion in 2013. With these, basic earnings per share increased from 93 kobo to N4.32. The board of the company has recommended payment of nearly the entire net earnings to shareholders at a ratio of N4 per share.

    Beyond the surface, underlying indices showed improvements in profitability and returns. While gross profit margin decreased from 11.2 per cent in 2012 to 9.9 per cent, average pre-tax profit margin increased substantially from 1.3 per cent in 2012 to 5.1 per cent in 2013. Return on total assets doubled from 2.7 per cent to 6.2 per cent while dividend cover stood at 1.08 times. However, return on equity declined marginally from 13.3 per cent to 11.8 per cent.

     

    Liquidity

    Forte Oil’s liquidity position improved significantly during the period with positive working capital and increased financial agility. Current ratio, which measures the financial readiness of a company by relating current assets to relative liabilities, crossed the thresholds to 1.06 times in 2013 as against 0.75 times. Working capital/turnover ratio improved from -8.9 per cent in 2012 to positive 2.1 per cent in 2013. Debtors/creditors ratio closed 2013 at 87 per cent compared with 60.6 per cent in 2012.

     

    Governance and structures

    Forte Oil, formerly known as African Petroleum (AP), is a major downstream company quoted on the Nigerian Stock Exchange (NSE). The Forte Oil Group includes a foreign subsidiary, AP Oil and Gas Ghana Limited (APOG), which operates some eight retail outlets in Ghana; an indigenous upstream services company, AP Oilfields Services Limited (APOS) and its new power plant subsidiary, which owns the 414-megawatts Geregu Power Plant.

    Forte Oil has more than 500 retail outlets spread across the country, a fuel storage facility at Apapa and aviation joint users hydrant in Ikeja, Lagos. It also operates another large storage depot at Onne, Rivers State as well as joint aviation depots in Abuja, Port Harcourt and Kano. With 1.08 billion ordinary shares of 50 kobo each, Forte Oil currently has market capitalisation of N110.42 billion, ranking as the 22nd most capitalised company on the NSE.

    The board and management of the company remain stable. Mr Olufemi Otedola, the core investor in the company, chairs the group’s Board of Directors while Mr Akin Akinfemiwa leads the executive management team as Group Chief Executive Officer. On the basis of available information, the company has largely complied with extant codes of corporate governance and best practices.

     

    Analyst’s opinion

    The overall performance outlook of Forte Oil reassures on the continuing success of its business development programme, especially the landmark diversification into the electric power business. Two years into its three-year strategic business transformation initiative which started in 2012, immediate past year further evidenced the continuing solidification of the business.

    With the steady success of the immediate initiative, the company can transit into its medium-to-long term corporate plans, which entails expansion into the upstream oil and gas sectors. Obviously, the new power business will continue to be a major driver for group performance in the years ahead.

    Notwithstanding, Forte Oil needs to strengthen its capital base to support its business expansion. It also needs to strengthen its downstream marketing business to increase its complement to the group performance.

     

  • Forte Oil promises to sustain dividend payout

    Forte Oil promises to sustain dividend payout

    Amidst the euphoria of its first dividend in five years and its trail-blazing record of being the first company to sustain audited report and accounts for the 2013 business year, the management of Forte Oil has assured that the company has been put in a good stead to sustain its dividend payout and continuously grow opportunities for all stakeholders.

    Forte Oil set the ball rolling for this earnings season at the weekend with the announcement of gross dividend of N4.32 billion for the immediate past year ended December 31, 2013. Forte Oil’s dividend recommendation and audited report is the first to be announced by quoted companies, which operate the Gregorian calendar as their normal business year.

    Breakdown of the dividend recommendation indicated that shareholders would receive a dividend per share of N4, a dividend yield of 4.4 per cent on Forte Oil’s market consideration of N90.20 by the close of market yesterday.

    Key extracts of the audited report and accounts for the year ended December 31, 2013 showed that turnover rose from N90.98 billion in 2012 to N128.03 billion in 2013. Profit before tax increased to N6.52 billion compared with N1.15 billion recorded in 2012. Profit after tax also leapt from N1.01 billion in 2012 to N5.0 billion in 2013. With these, earnings per share jumped to N4.32 in 2013 as against 93 kobo in 2012.

    Commenting on the performance of the company during the year, group chief executive officer, Forte Oil Plc, Mr. Akin Akinfemiwa, said the performance was a true reflection of board and management’s commitment to the company’s three-year strategic business transformation initiative which commenced in 2012.

    According to him, Forte Oil’s strategic growth agenda aims 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.

    “The implementation of these without a doubt has impacted the bottom line and this is expected to continue in line with our 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,” Akinfemiwa said.

    He attributed the company’s performance to significant increase 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 production chemicals; lubricant and greases adding that the newly acquired power plant also contributed significantly to the revenue stream. Forte Oil had emerged the winner of the bids for the 414-megawatts Geregu Power Plant under the government power privatization in 2013.

    He pointed out that the company’s 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-medium term focus of planned expansion into the upstream oil and gas sectors through participation in government bids rounds and acquisition of marginal fields from international oil companies 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,” Akinfemiwa assured.

    The Group Chief Financial Officer, Forte Oil, Mr. Julius Omodayo-Owotuga, said the 2013 bottom-line was a clear demonstration that the company is on a clear path to dominate its primary downstream petroleum marketing sector.

    He noted that the capital reorganisation recently approved by shareholders has put the company in a position to continually guarantee distribution to shareholders without jeopardising 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,” Omodayo-Owotuga said.

    He explained that the group consolidated the operations of its newly acquired power plant in the 2013 financial statement adding that the new subsidiary is expected to be a major growth driver going forward.

     

  • What premium for Transcorp?

    What premium for Transcorp?

    Transnational Corporation of Nigeria (Transcorp) Plc has sustained impressive uptrend as the most active and fastest rising stock at the stock market in recent weeks. Now with the second highest average year-to-date return at the stock market, Capital Market Editor, Taofik Salako reports that while demand suggests strong prospects of further appreciation, the next earnings period may be decisive for the conglomerate.

    Transnational Corporation of Nigeria (Transcorp) Plc appears to be the toast of investors at the stock market. With the largest volume of activities and the highest capital appreciation week-on-week, it has sustained enviable position atop the activity chart at the stock market. Average year-to-date return at the stock market, as measured by the All Share Index (ASI) of the Nigerian Stock Exchange (NSE), opens today at 39.77 per cent. Transcorp meanwhile opens with a year-to-date return of 459.05 per cent, trailing behind the Forte Oil, which opens with average year-to-date return of 1,321.22 per cent. Forte Oil, previously the fastest rising stock, had been slowed down in recent weeks by profit-taking transactions, with investors taking profit and relocking their gains into other stocks.

    For Transcorp, the recent share price rally and scramble started with the confirmation and, subsequently, the handover of its new acquisition- a power plant. As news made the round that Transcorp, alongside other bidders, had completed the acquisition of unbundled power plants, investors rushed shares of Transcorp, the only quoted company and publicly available window to participate in the privatisation of the power sector. Transcorp, through its subsidiary, Transcorp Ugheli Power Limited (TUPL), had in August completed acquisition of Ugheli power plant with the payment of $225 million to complete the $300 million bid price for the power plant. Transcorp had earlier made initial payment of $75 million, being required 25 per cent initial payment by bid winner. Transcorp then started a gradual rise, which fervour has continued to increase with the passing of every week. From a share price range of N1.33 in late August, Transcorp’s share price opens today t year-to-date high of N5.87 per share. This represents an increase of 341.4 per cent in the past three months.

    A rush for power

     

    Transcorp is the anchor company in the Transcorp consortium, which included companies such as Wood Rock; Symbion Power LLC, USA; Medea Development; PSL Engineering and Control and Thomassen Services and Contracting Company. With installed capacity of 972 megawatts, current generating capacity of 300 megawatts and potential output of 1070 megawatts, the Ugheli power plant thickens the basket of the conglomerate’s businesses in strategic sectors including Transcorp Hilton Hotel, Abuja; Transcorp Hotels, Calabar; Teragro Commodities Limited and Transcorp Energy Limited, operator of OPL 281. Power, upstream oil, hospitality and agriculture; the combination of businesses and sectors appear to make for a robust outlook, given the synergies in these fastest growing and dominant sectors of the Nigerian economy. Often cited in relation to the boom in the telecommunications sector, most analysts perceive the power firms as cash cows that would not only generate power but significant returns for investors. The monopolistic nature of the system and centrality of the success of the privatization to government’s transformation agenda confer enormous advantages on the power companies.  But such enthusiasm is not reflecting on the market consideration of the conglomerate at the stock market, the best indicator to gauge public perception. This is more evident given that Transcorp holds the distinction as the only publicly quoted company with a pie of the power sector.

     

    Growing conglomerate

    Besides the acquisition of the Ugheli power plant, Transcorp has recently undertaken several strategic initiatives to enable stable growth. Transcorp recently concluded a rights issue of 12.91 billion ordinary shares of 50 kobo each at N1 per share. The net proceeds of the rights issue estimated at N12.52 billion was scheduled mainly to refinance the loan taken to acquire the Ughelli power plant. About 79 per cent of the net proceeds amounting to N9.84 billion would be used to refinance Ughelli Power. The conglomerate would use N1.63 billion, 13 per cent of net proceeds, for exploration and development of its oil block, Oil Prospecting Licence (OPL) 281. The balance of N1.05 billion, representing 8.0 per cent of net proceeds, would be used to develop new hotels Port Harcourt and Lagos; in order to boost the conglomerate’s hospitality business in the South-South and South-West of Nigeria.

    Transcorp is also pushing for growth on other frontiers. It had revised the terms of partnership in its Oil Processing License 281 (OPL 281) in Nigeria. The revised terms were said to be as a result of a change of control in Transcorp as the conglomerate sought to fully take responsibility for the operation of the block in its bid to become a leading Nigerian indigenous oil and gas upstream company with production. It recently signed a new deal with Hilton Worldwide to build a new premier hotel in the up-market suburb of Ikoyi, Lagos. The proposed Transcorp Hilton Lagos, a full service, 350-room hotel on Glover Road, Ikoyi, will be the Hilton Group’s second hotel in Nigeria by Transcorp, following the award-winning Transcorp Hilton Hotel Abuja, which is one of the leaders in Hilton’s global network. The new hotel will be jointly owned by Transnational Hotels and Tourism Services Ltd, the hospitality subsidiary of Transcorp and Tony Elumelu’s Heirs Holdings.

    Speaking at the official signing of the management contract, Chairman, Transnational Corporation of Nigeria, Mr. Tony Elumelu said the agreement marked another milestone in the long-standing partnership with Hilton Worldwide.  According to him, the Ikoyi development, along with the extensive refurbishment and upgrade of the group’s existing hotels in Calabar and Abuja, demonstrated the conglomerate’s commitment to driving growth in real estate and hospitality, a strategic sector for Nigeria’s economic development.

    “The new Transcorp Hilton Lagos will not only present an additional world-class venue for the increasing numbers of investors, businessmen and tourists to Nigeria, but is creating much-needed jobs for our citizens, enabling their social and economic development,” Elumelu, who doubles as chairman of Heirs Holdings, said.

    Managing Director, Transnational Hotels and Tourism Services Limited, Valentine Ozigbo said the Transcorp Hilton Lagos will grant the many Hilton Honors customers their desire to see a world-class establishment under their preferred brand in the Lagos.

    He said the full construction works for the new hotel will commence early 2014 pointing out that the hotel will boast of full conference facilities, meeting rooms, gym and spa, and a swimming pool in an iconic design that will certainly add verve to the Lagos landscape.

    For the board of Transcorp, its expanding business lines will deliver both shareholders’ values and social values. According to Elumelu, the conglomerate’s power business would create long-term social and economic values for all stakeholders as it would leverage on the successful acquisition of Ugheli to consolidate its growth strategy in Nigeria’s power sector.

    “We can now embark fully on our strategy to contribute to the development of Nigeria’s power sector, whilst creating long term economic and social value for our stakeholders and the greater community. We fully expect our engagement on this world-class project to improve the living standards of all Nigerians as well as impact positively on our country’s GDP,” Elumelu said.

    President, Transnational Corporation of Nigeria (Transcorp) Plc, Mr. Obinna Ufudo said TUPL has extensive worldwide power sector experience in Africa, Europe and the Middle East which underscores its unquestionable capacity to effectively manage the plant profitably in line with international standards.

    According to him, the conglomerate plans to increase the power generation of the plant from 300 megawatts to more than 1070 megawatts over the next five years. Chief executive officer, Transcorp Ughelli Power Limited (TUPL), Adeoye Fadeyibi added that the company plans to deliver on capacity targets and sustain the momentum using highly efficient people and resources to achieve operational excellence.

    Obviously, Transcorp is riding on the momentum of the power business and the new hotel deals. Besides, investors appear to see a more coordinated and determined approach to the growth of the conglomerate. But beyond the immediate enthusiasm, emerging corporate earnings of the conglomerate and steadiness of its business development strategy will determine the medium to long-term relativity of the share pricing trend. With its troubled background still casting doubts in the minds of several investors, Transcorp needs to deliver tangible and demonstrable returns to sustain growing investors’ confidence.