What Oando’s Double Bill Results Are Telling Us

Oando plc

The all awaited Q1 2016 quarterly result and 2015 audited annual result from Oando has emerged with very damning figures that have rocked the company’s stock prices into a troubling region.

Here are the headlines for the Q1 2016 quarterly result.

The company’s gross revenue for Q1 2016 fell to NGN27,7 billion from NGN30,6 billion Oando recorded in 2015 within the same period. This is a 9.4% fall year on year.

However, in spite of its crashing revenue, the company’s cost of sales is still higher than last year when its revenue was up. The company spent 35.9% more to arrive at NGN22,7 billion in cost of sales for Q1 2016 compared to NGN16,7 billion in the same quarter last year.

Taking serious steps to reduce other costs such as its administrative costs. The group’s net profit for the quarter was NGN13,8 billion compared to NGN12,3 billion it made within the same quarter last year.

For its audited 2015 result, the company recorded improved gross revenue up to NGN161,4 billion compared to NGN92,9 billion. However, the company spent more than double of what it spent last year as cost of sales to generate the revenue. Cost of sales grew to NGN106,7 billion compared to NGN49,6 billion it spent in 2014. Its high cost of sales has therefore almost erased its revenue growth.

Administrative cost was one of the numbers that jittered analysts last year when Oando recorded its biggest lost in 2014. The company slashed the cost down by 54% to NGN74 billion compared to the NGN161,2 billion.

Hallmark of the result is that Oando made a comprehensive loss of NGN37,8 billion loss for the year and its current liability is more than its current assets by NGN32.8 billion. A very worrying sign that the company has gotten to the height of a rocky years ahead.

To take your attention to what EY, Oando’s auditing firm pointed out, see below and reach your own conclusions

Oando

The company has taken drastic steps to clean up its battered balance sheets. Last month, Oando rallied 9 banks to secure NGN94.6 billion as a five-year Medium Term Note, MTN borrowed at the Nigeria Interbank Offered Rate, NIBOR plus 200 basis points. At the signing ceremony, the company said it would be to meet its financial obligations in the low crude oil price environment.

Oando cannot be blamed wholly for its woes. The crash in global oil price is a dent to balance sheet of major companies including those with little or no link with oil production. However, the company needs to diversify its business from oil production and exploration.

Oando’s stock currently trades at NGN6.69 per share on The Nigerian Stock Exchange, NSE. The stock has fallen by 15% in the last 12 months.

 

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