The Nation Newspaper

Tag: Profit

  • Swiss Re profit rises by 14 % on lower catastrophe losses

    Swiss Re profit rises by 14 % on lower catastrophe losses

    Swiss Re, the world’s second-biggest reinsurer, said its third-quarter profit has risen by 14 per  cent after lower-than-expected losses from natural catastrophes.

    Net income rose to $1.23 billion from $1.07 billion in the year-earlier period, the Zurich-based reinsurer said in a statement. That beat the $928.6 million average estimate of 13 analysts surveyed by Bloomberg.

    Swiss Re is cutting back on catastrophe coverage and moving into new lines of business to bolster earnings growth as low interest rates and fewer natural disasters undercut prices. Munich Re, the world’s largest reinsurer, said third-quarter profit rose by 16 percent, while German rival Hannover Re reported a 21 percent increase for the period.

    Chief Financial Officer David Cole said in the statement: “I’m pleased to report that all business units have again delivered solid performance during the third quarter, contributing to an overall strong group result.

    “This performance was supported by a lower-than-expected loss burden from natural catastrophes as well as a continued improvement in the life and health operating margin.”

    Swiss Re has fallen about five percent this year, valuing the company at 29 billion Swiss francs ($29.8 billion). That compares with a 4.3 percent increase in the 32-company Bloomberg Europe 500 Insurance Index.

    Swiss Re wants to invest $3 billion of its excess capital at an 11 per cent  return on equity by next year. It does not disclose how much of the capital it holds.

    Reinsurers such as Swiss Re that help primary insurers cover the costs of damage claims from disasters like floods and hurricanes are under pressure from declining prices for their coverage and years-long slump in borrowing costs across developed countries.

  • Ecobank grows Q3 net profit by 31% to N52b

    Ecobank Transnational Incorporated (ETI) Plc recorded impressive bottom-line in the third quarter as net profit rose by 31 per cent to about N52.5 billion.

    Key extracts of the interim report and accounts of ETI for the nine-month period ended September 30, 2014 showed that the financial holding company grew its top-line by 16 per cent to N207.75 billion in third quarter 2014 while interest income rose by about 11 per cent to N187.67 billion. Profit after tax rose to N52.49 billion in 2014 as against N39.96 billion in comparable period of 2013.

    Further analysis showed that the company’s cost to income ratio reduced to 66.56 per cent in 2014 from 71.20 per cent in 2013. Additionally, net margin moved to 19.51 per cent as against 17.23 per cent in previous year. Ecobank was aggressive about lending as its loans to deposit ratio jumped to 71.63 per cent from 66.80 per cent while loans and advances were up by 16.55 per cent to N1.97 trillion in third quarter 2014 as against N1.69 trillion by third quarter 2013.

    Deposit from customers also rose by 8.69 per cent to N2.75 trillion as against N2.53 trillion in comparable period of 2013. Total assets rose by 10.69 per cent to N3.83 trillion in 2014 compared with N3.46 trillion in 2013.

    Group chief executive officer, Ecobank Transnational Incorporated (ETI) Plc, Albert Essien, said the company’s strong results for the first nine months of 2014 showed solid revenue growth and a further reduction in our cost-income ratio.

    According to him, the sustained improvement in the company’s Nigeria business, the largest of its 36 countries in Africa, and another strong treasury performance, helped to increase earnings per share by 26 percent.

    Essien noted that the company’s capital position was significantly enhanced recently, with the conversion of $75 million of loans by IFC funds in the third quarter and Nedbank’s subsequent investment of $493 million to reach a 20 per cent shareholding in ETI.

    “The management team and board remain optimistic but vigilant going into the fourth quarter given the macroeconomic and other challenges in some of our countries where we have operations.  We pay particular tribute to the dedication and professionalism of our staff in countries affected by the current Ebola epidemic as they work to serve our clients in very difficult circumstances,” Essien said.

  • Firm misses estimates as European woes hurt profit

    Firm misses estimates as European woes hurt profit

    Holcim Ltd. (HOLN), which is merging with Lafarge SA (LG) to form the world’s largest cement maker, missed analysts’ estimates for profit and revenue as sluggish European demand and currencies effects in Latin America hurt business.

    Net income declined by 4.7 per cent to 447 million Swiss francs ($463 million) in the third quarter, missing the 452.5 million-franc analysts’ estimate. Sales of 5.2 billion francs also lagged behind analysts’ predictions.

    The profit decline highlights the need for the two cement makers to cut costs and reduce their exposure to the troubled European economy. Their $40 billion merger will couple Lafarge’s African cement plants with Holcim’s Asian assets, two regions where building is expected to boom over the next decades.

    “Europe’s economic recovery slowed down in the course of the first nine months of this year, with lower than expected growth in major economies such as Germany and France and the Ukraine crisis contributed to challenging conditions,” the company said. Its Chief Executive Officer, Bernard Fontana said the company also felt the impact of “weak emerging market currencies,” especially in Asia Pacific and Latin America.

    Holcim shares fell as much as 2.8 per cent and were down by 2.6 per cent in Zurich, valuing the company at 21.7 billion Swiss francs.

    Meanwhile,cement volumes won’t increase in Europe this year, the Jona, Switzerland-based company said. Holcim had earlier expected an increase and reiterated targets of organic growth in operating profit and a further expansion in margins in 2014. A cost-cutting plan begun by Fontana in 2012 had contributed about 200 million francs more to operating profit than originally planned by the end of the third quarter.

    Holcim and Lafarge will sell units to make sure regulators approve the planned merger. In Europe, where the largest part of cement and crushed rock divestments will take place, regulators have set a Dec. 15 deadline to either approve the deal or open a deeper investigation.

  • Cornerstone profit soars by 60 per cent

    Cornerstone Insurance Plc’s profit went up by 60 per cent in the 2013 financial year when compared to 2012.

    The financial report presented during the 22nd Annual General Meeting (AGM) of the company in Lagos showed that its gross premium grew by 15 per cent from N4.6 billion in 2012 to N5.3 billion last year.

    The company’s underwriting result, however, dipped 30 per cent from N1.2 billion in 2012 to N866 million in 2013 as a result of 15 per cent increase in reinsurance expenses, which grew from N1.6 billion in 2012 to N1.9 billion in 2013 and net claim expenses that went up by 18 per cent from N985 million in 2012 to N1.1 billion in 2013.

    A combination of robust investment performance and disciplined control of operating expenses resulted in an increase in profit after tax from N544 million to N870 million.

    Based on this performance, the company recorded 16 per cent growth in the Total Asset from N12 billion to N14 billion.

    The company’s Group Managing Director, Ganiyu Musa while speaking at the AGM stated that the company  will continue to build on the strength of its people and the commitment to core values including strong ethics and innovation that will in turn make it the insurance of choice in the country.

    The Group Chairman, Cornerstone Insurance, Adedotun Sulaiman, said the company believes strongly that insurance remains fragmented and there continues to be a need for consolidation of the industry to fast-track building scale and capacity.

    He said their efforts in this direction have continued through 2013. “We have identified a company with complimentary attributes and values and at this meeting, we therefore, ask for shareholders’ approval to proceed with the business combination,” he said.

    Consequently, the shareholders gave their nod, authorsing the board to acquire 3.3 billion ordinary shares of FIN Insurance, which will make Cornerstone 100 per cent ownership.

  • 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.

  • UACN records N5.1b profit in first half

    UACN records N5.1b profit in first half

    UAC of Nigeria (UACN) Plc recorded modest increase in earnings in the first half as the conglomerate continued to harness the opportunities from its recent acquisitions.

    Interim report and accounts of UACN for the six-month period ended June 30, 2014 showed that turnover rose by 7.8 per cent while profit after tax increased by 3.3 per cent.

    The conglomerate recorded a turnover of N40.26 billion in first half of 2014 as against N37.35 billion recorded in comparable period of 2013. Profit before tax stood at N5.06 billion in 2014 as against N5.11 billion recorded in 2013. Profit after tax inched up from N3.37 billion to N3.48 billion. Earnings per share increased from 84 kobo to N1.03.

    The first-half report came on the heels of distribution of N3.36 billion to shareholders as cash dividends for the 2013 business year. This implied a dividend per share of N1.75 in 2013 as against N1.60 paid for in 2012 when it distributed N2.56 billion to shareholders.

    Audited report and accounts of UACN for the year ended December 31, 2014 had shown considerable improvements in actual profit and loss items and underlying profitability indices. Group turnover rose by 13 per cent from N69.63 billion to N78.71 billion. Profit before tax rose by 30 per cent from N10.75 billion to N14.01 billion. Profit after tax also leapt by 39 per cent from N7.10 billion to N9.90 billion.

    Beyond the surface, the intrinsic profit-making capacity of the company improved in 2013. While gross profit margin dipped from 27 per cent to 24 per cent, pre-tax profit margin rose from 15.4 per cent to 17.8 per cent. Underlying returns were also better with return on total assets of 11.2 per cent in 2013 as against 8.7 per cent in 2012. Return on equity also rose from 11.7 per cent to 13.9 per cent. On Per share basis, basic earnings per share improved by 14.4 per cent from N2.57 to N2.94.

    Chairman, UAC of Nigeria (UACN) Plc, Senator Udoma Udo Udoma, recently assured shareholders that recent acquisitions, ongoing investments and strategic alliances and initiatives have placed the conglomerate on the path of sustained growth and better returns to shareholders.

    According to him, the growth prospects of the conglomerate in the medium term is encouraging as it continues to integrate the two newly acquired businesses – Livestock Feeds Plc and Portland Paints and Products Nigeria Plc into the group. UACN had acquired majority equity stakes in Livestock Feeds and Portland Paints in 2013.

    “The future of UAC is indeed bright as we are poised to reap the benefits of the investments we are currently making as well as the capacity upgrades we are undertaking in our various businesses, “ Udoma said.

    He added that the conglomerate would continue to build on the synergies created by its various strategic alliances with other industry leaders.

    He outlined that as the group continues to align its businesses to deliver good returns to shareholders, directors of the conglomerate have taken other strategic initiatives geared towards minimizing business risk and exposure including on-going implementation of Enterprise-wide Risk Management framework and the deployment of Systems, Applications, and Products in Data Processing (SAP) as its Enterprise Resource Planning software.

    He noted that the improved performance of the conglomerate in 2013 was made possible by the innovative and proactive responses to market dynamics and competitive pressures by management while the company also built on its strategy of working with partners who bring value to its businesses.

    “We have strategic partners in Tiger Brands Limited for UAC Foods Limited, Imperial Logistics for MDS Logistics Limited and Famous Brands for our UAC Restaurants Limited businesses. These bold initiatives have repositioned our group for sustainable growth and improved performance in the years ahead,” Udoma said.

     

  • Global commodity resurgence boosts Presco’s profit

    Presco Plc gained more than N1 billion from improvement in global commodity prices to boost its first-half profit by 84 per cent.

    A management report on the operations of the company for the six-month period ended June 30, 2014 indicated that the palm oil-plantation and processing company recorded a gain of N1.29 billion from revaluation of its biological assets in line with the global commodity prices for the period. It had recorded a paltry N37.48 million as gains on similar revaluation in the first half of 2013.

    The revaluation by the end of the first half restored the company’s margin, which was earlier depressed by relatively higher cost of sales.

    The International Financial Reporting Standard (IaFRS) requires commodity-based companies such as Presco to revalue their biological assets on the basis of the international price of the assets as at the end of the reporting period.

    Chairman, Presco Plc, Mr. Pierre Vandebeeck, had blamed similar revaluation at the end of the audited year ended December 31, 2013 for the steep decline in the performance of the company in 2013.

    According to him, while there were no decline in the price of oils in Nigeria by the year-end, there was a decrease in the world market price of biological assets and oils, which led to a revaluation loss of about N1 billion.

    The first-half report gained from the positive change in the global commodity prices. The six-month report showed that sales rose marginally by 3.6 per cent from N3.92 billion in first half of 2013 to N4.06 billion in first half of 2014. Gross profit however dropped from N1.37 billion to N1.27 billion. The revaluation gain of N1.29 billion in first half of 2014 meanwhile boosted operating profit to N1.84 billion compared with N995.91 million in corresponding period of 2013. Profit before tax thus increased from N791.68 million to N1.69 billion. After taxes, net profit stood at N1.09 billion by June 2014 as against N591.83 million by June 2013. This implied earnings per share of N1.09 in first half 2014 as against 55 kobo in first half of 2013.

    Presco primarily engages in the development of oil palm plantations, palm oil milling, palm kernel processing and vegetable oil refining. The main products of the company included refined bleached and deodorized palm oil, palm olein, palm stearin, palm fatty acid distillate, palm kernel oil (crude and refined) and palm kernel cake.

    Presco is expected to leverage on its first half results to encourage shareholders to support its impending rights issue.

    The company might raise about N3.5 billion from existing shareholders through a rights issue. At the annual general meeting last month, shareholders had approved the increase in the authorised share capital of the company from N500 million to N550 million through the creation of 100 million ordinary shares of 50 kobo each.

    The rights issue will be pre-allotted to shareholders on the register of the company as at July 4, 2014 on the basis of one new share for every 10 shares held as at the qualification date. Directors of the company had earlier indicated the rights would be offered at N35 per share.

    However, in the event of under-subscription of the rights issue, shareholders will not have any pre-emptive right, paving the way for other investors to acquire the unsubscribed shares. The underwriter to the rights issue will be able to acquire the unsubscribed shares, subject to the approval of the regulatory authorities.

    Presco will use the net proceeds of its equity issue to offset foreign loans and growing overdraft. Latest audit of Presco showed that it has outstanding foreign loan of N2.02 billion obtained from its majority shareholder, Siat sa. Besides, the company also obtained N1.07 billion loan from Stanbic IBTC Holdings under the Central Bank of Nigeria (CBN)’s Power and Airline Intervention Fund (PAIF). It also has about N221.9 million outstanding as import finance facility from Zenith Bank and another N845.55 million from United Bank for Africa (UBA) under the CBN’s Commercial Agriculture Credit Scheme (CACS). Bank overdraft has jumped by 1,015 per cent from N63.06 million in previous audit to N702.9 million in the latest audit.

    Presco’s interest expense on overdrafts also leapt by 608 per cent from N28.4 million in 2012 to N201.4 million in 2013. Interest expense on overdraft represented about 52 per cent of the total interest expense of N390.4 million in the latest audit. The audited report and accounts for the year ended December 31, 2013 showed that net profit dropped by 62 per cent, which partly accounted for 90 per cent slash in cash dividend to shareholders.

    The additional capital, according to the resolutions, would be used to eliminate the loans with foreign exchange exposure risk, accrued interest on these loans and overdraft.

    Sa Siat nv, which holds 60 per cent majority equity stake in Presco, will provide nearly two-thirds of the rights funds. First Inland Bank/Fidelity Finance Company (TRDG), which holds 8.0 per cent equity stake, is expected to provide the second largest chunk of the funds. Presco has some 9,415 shareholders with the largest group of shareholders holding small units within the range of 1000 to 10,000 shares.

  • Infrastructure Bank 2013 profit before tax hits N875m

    Infrastructure Bank 2013 profit before tax hits N875m

    The Infrastructure Bank Plc,  recorded a profit before tax (PBT) of N875 million in 2013 compared with N82 million achieved in 2012.

    This is an increase of  N793 million, according to the  Chairman of the bank, Alhaji Lamis Dikko.

    Speaking   at the bank’s 3rd Annual General Meeting (AGM)  in Lagos, Dikko said that the bank’s total expenses in 2013 stood at N757million as against the N586 million recorded in 2012.

    He attributed the growth to the bank’s strength of transaction advisory offering; ‘one-off capital cost’ and well-managed operational cost.

    According to him, the bank remained optimistic on the economic outlook, adding that all the indicators projected continuous growth trend of the past decade.

    Dikko also said that Nigeria had continued to attract high level of foreign Direct Investment (FDI) in spite of the nation’s security challenges.

    He  was optimistic  that the Federal Government’s reforms and investment in the energy, agriculture and manufacturing sector would lead to significant job creation in the country.

    He also added that the key enabler for the growth was the provision of improved and increased infrastructure.

    Dikko said that the mandate to act as an advisor and fund arranger to the Federal Government showcased the bank’s potential in serving as a partner of choice for both the public and private sectors.

    Also speaking, the bank’s  Managing Director, Mr. Adekunle Oyinloye, said its  profit impacted positively in its current earnings per share of 54 kobo in 2013, compared with 20 kobo recorded in 2012.

    Oyinloye said that a key highlight of the year under review was the increase momentum in the transaction advisory and fund arranging business that represented tangible evidence of the bank competitive advantages.

    He also said that the continued demand for infrastructure assets nationwide and the need for the delivery though alternative financing method through its project opportunities, supports the belief that the current trend was sustainable.

    “The micro economy environment remains stable and promising.”

  • Wema Bank records N1.7b profit

    Wema Bank records N1.7b profit

    Wema Bank Plc yesterday announced its half year 2014 unaudited financial results, with a 266 per cent increase in Profit Before Tax (PBT) to N1.7 billion.

    This, the lender said, demonstrates  the impact of efficiency gains it achieved in the last six months.

    Speaking in Lagos,  the bank’s Managing Director/CEO, Segun Oloketuyi,   said: “We are pleased to announce that WEMA Bank continuedto demonstrate strong improvements in profitability and balance sheet efficiency in the first half of 2014.

    Our Profit Before Tax leapt 266 per cent to N1.7 billion and the Bank’s Net Interest Margin has improved to 7.7 per cent reflecting a more efficient restructuring of our deposit mix in favour of cheaper funds. We continued the process of redeploying our resources into higher yielding assets while keeping a close eye on operating expenses. Loans and advances grew by 17 per cent from December 2013 whilst our cost of funds continues to reduce.

    He said the lender had secured trade lines from foreign correspondent banks and development finance institutions to support our trade finance, the real estate sector and SME lending.

    Oloketuyi said the Project LEAP, is the lender’s strategic transformation agenda, and has continued to provide it with efficiency gains.

    These, he added, have led to  improvements throughout the second half of the year putting the bank on course to produce better performance and commensurate returns to shareholders by the end of the year.

    “The goal is to continue our organic expansion programme and establish presence in areas that have significant growth potential, while making significant investments in alternative channels and diversifying the Bank’s product offerings.“

  • Forte Oil:Growing profit

    Forte Oil:Growing profit

    Forte Oil Plc continued in its strides in the first quarter 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 made available by the Nigerian Stock Exchange (NSE) yesterday 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.

    The first quarter report came on the heels of distribution of N4.32 billion as cash dividends to shareholders for the immediate past year ended December 31, 2013. Breakdown of the dividend indicated that shareholders received a dividend per share of N4. Forte Oil had consolidated its recovery in 2013 with impressive growth in turnover and profitability as the downstream oil-marketing company intensified its diversification into the allied power and energy sector.

    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 respectively. 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 company paid 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

     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.

    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.

    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.

    Profitability

    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.

    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.

    Liquidity

     The company’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). 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. 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.

    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 outlook for Forte Oil is reassuring. The performance over the 15-month period reinforces 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.

    Forte Oil was recently added to 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 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.

    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.