Facts Behind the Figures

1
Facts Behind the Figures
Wale Tinubu Group Chief Executive, Oando
Plc Nigerian Stock Exchange 1st June 2007
NSE Quoted Company of the Year 2003, 2004
2
Oandothe future
Gas (Pipeline Transmission of Natural Gas)
Power
Marketing
Supply Trading
Exploration Production
Energy Services
Refining

• Dominant local player
• Expansion into other West African Markets

• Offering Product service lines through strategic
  alliances (e.g. Baroid, Halliburton)

• The dominant player in gas supply powering
  Nigeria's manufacturing base

• No. 1 marketer of Petroleum Products

• A Significant Opportunity for Oando

• Evolving into a leading player in the upstream

• Seeking opportunities to ensure product
  availability

exploiting synergies between subsidiaries
3
Contents

• 2006 Performance
• Q1 2007 Performance
• Corporate Restructuring
• Questions

4
Overview of the 2006 financial year

• Strong revenue growth
• Strong contribution across the subsidiaries
• Tight rein on expenses
• Improved profitability
• Stronger balance sheet
• Boost in Earnings per share
• Boost in Dividends
• Increase in market share in the downstream company

Overall increasing value delivery to shareholders
5
PBT and exceptional items up by more than 20
improvement in virtually all the line items
6
And over 80 improvement in after tax earnings
Enabling value creation for shareholders
7
2006 performance merely reflects the trend of the
last 5 years
5 year Revenue trend - Nbn
5 year PBT trend - Nm
45 CAGR
167 CAGR
8
Shareholders funds have also grown appreciably
over the same period
5 year trend in shareholders funds - Nbn
38 CAGR
9
In terms of revenue marketing and trading have
been the main contributors
100 N3.08bn
100 N296bn
Marketing
Marketing
Trading
Gas
Energy services
Trading
Gas
Energy services
2006 Revenues
2006 PAT
In profitability, gas also delivered
Higher than the consolidated numbers due to
intercompany transactions
10
Operational highlights 1/2
Gas (Pipeline Transmission of Natural Gas)
Power
Marketing
Supply Trading
Exploration Production
Energy Services
Refining

• The Good
• Introduction of the Petroleum subsidy fund
• Implementation of branch structure
• Better cost control
• the not so good
• Increasing dependence on imported products
• Gradual breakdown of infrastructure
• Delay in receiving PSF claims from the relevant
  authorities
• Product shortages

• The Good
• Power sector reform kick started
• the not so good
• Progress is still slow

• The Good
• Acquisition of additional acreage OPL 236
• Significant progress towards first oil
• the not so good
• Community issues slow to resolve

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Operational highlights 2/2
Gas (Pipeline Transmission of Natural Gas)
Power
Marketing
Supply Trading
Exploration Production
Energy Services
Refining

• The Good
• Greenfield feasibility approved
• the not so good
• PHRC privatization yet to completed

• The Good
• Becoming a leading local content player
• Identified promising acquisition targets
• the not so good
• Upstream players do not seem to be on target to
  meet local content targets

• The Good
• Increasing market share
• Ability to compete against the international
  traders
• the not so good
• Gradual breakdown of infrastructure
• Product shortages

• The Good
• Progress towards completion of greater Lagos
  expansion
• Successful bidding for the eastern flank
  expansion
• the not so good
• Worrying signals on the stability of gas supply

completed subsequent to year end
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2007 has started on a good note
over 25 improvement in PBT
13
Almost 40 improvement in attributable earnings
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Contents

• 2006 Performance
• Q1 2007 Performance
• Corporate Restructuring
• Questions

15
2007 has started well
Nbn
Q1 2006
Q1 2007
14
8
Revenues
Gross Margins
10
67
EBITDA
PAT
Q1 Numbers
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In terms of revenue marketing and trading
continue to be the main contributors
100 N1.07bn
100 N64.35bn
Trading
Marketing
Marketing
Trading
Gas
Energy services
Energy services
Gas
Q1 2007 Revenues
Q1 2007 PAT
As well as in profitability
Higher than the consolidated numbers due to
intercompany transactions
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The new year has started well

• Good things have happened
• PSF operating better debt repaid
• Lower working capital requirement
• Lower interest costs compared to last quarter
• Rigorous control of operating expenses
• Better product availability
• but there is still more to be done
• Continued high dependence on imported products
• Intermittent gas supply issues
• Inadequate infrastructure to support the
  downstream

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Contents

• 2006 Performance
• Q1 2007 Performance
• Corporate Restructuring
• Questions

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Last year we spoke about our proposed corporate
restructuring
The marketing business is not a separate entity
Oando Plc
FROM
54
51
51
51
51
Gaslink
Energy services
Supply and trading
Oando Production and development
Oando Exploration and production
Oando Plc
TO
94
100
100
100
95
100
Gaslink
Oando Energy services
Oando Supply and trading
Oando Production and development
Oando Exploration and production
Oando Marketing
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Once again the rationale

• To align the interests of the investors in the
  subsidiary companies with those of shareholders
  of Oando Plc
• To promote transparency in the performance of the
  companies
• To avoid the possibility of value transfer and/or
  cross subsidisation
• To enable like for like comparison
• To enable better accountability for managers

How this will happen For most of the
shareholders, a share swap has been proposed
they give up their shares in the subsidiaries for
shares in Oando plc Some shareholders in Gaslink
have opted to sell some of their shares in the
company for cash Oando marketing will become a
full subsidiary of Oando plc just like the other
businesses
This is expected to be approved at the
forthcoming EGM in June
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At the proposed exchange ratios this does not
dilute earnings

• Using Q1 2007 figures

Pre restructuring
Post restructuring
Number of shares in issue
572.3
754.1
Attributable earnings
837
1073
Indicative per share earnings
1.46
1.42
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Finally, what can we look forward to this year

• Corporate
• Marketing
• Supply and Trading
• Energy Services
• Gas
• Exploration and

• Conclude the ongoing corporate restructuring
• Continue to seek ways to enter the refining space
  in the aftermath of the sale of the Port Harcourt
  refinery
• Seek to optimize the fallout from the recent
  product price adjustment
• Continue the ongoing cost operating and capital
  - containment
• Continue the ongoing drive to be the supplier of
  choice to petroleum marketers in the country
  majors and independents
• Bring another product service line rigs on
  stream
• Seek additional alliances that will enable the
  exploitation of the local content factor in the
  upstream
• Complete the ongoing greater Lagos pipeline
  expansion resulting in 300 increase in capacity
• Commence construction of the eastern flank
• Bring the marginal oil field OPL 56 to
  production
• Advance monetization efforts on the other assets

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• Thank you
• Questions?