Background
Forte Oil PLC (formerly African Petroleum) was incorporated on December 11, 1964. After 14 years in operation, the company changed its status from a private limited liability company to a public liability company.
Forte Oil is an indigenous petroleum marketing company with structured operations.
The company offers a wide range of products from the oil value chain: PMS, diesel, aviation fuel, kerosene, commercial gas and a wide range of lubricants for various automobiles and machines.
The company has subsidiaries such as AP Oil Field Limited; AP Oil and Gas Limited; and Amperion Power Distribution Company Limited.
The company has 1.08 billion shares outstanding, with shareholder funds standing at N42.3 billion at the end of December 2013.
Financial Performance for December 2013
Forte oil, the first company to announce its audited financial statement for the year ended December 2013 grew revenue by 40.7 percent to N128.03 billion from N90.8 billion recorded in the corresponding period Q3 of 2012.
The company in the last quarter of 2013 rose its gross profits by 24.7 percent to N12.62 billion as against N10.14 billion recorded last year; however, gross profit margin reduced marginally to 10 percent from 10 percent last year.
Forte oil 2013 audited results showed the company’s profits before tax surging by 467.45 percent to N6.52 billion compared with N1.15 billion recorded in the corresponding period of 2012. Hence, profit margin increased to 6.5 percent from 0.03 percent Q4:2012.
Profit after tax (PAT) in the last quarter of last year spiked by 400 percent to N5 billion (432K per share) from N1 billion (93k per share).
The remarkable performance in Fort oil’s profitability was fuelled by finance income which grew by 1578.55 percent to N2.13 billion and this culminated in net finance income of N254 million wiping out last year’s interest expense of N1.72 billion.
Administrative and distribution expenses for the twelve months to December 2013 increased by 62.5 percent to N12.7 billion, while income tax shrank by 968.9 percent to N1.52 billion in from N142 million recorded last year.
The company’s expansion and accumulation of assets such as new trucks and the 414MW Geregu power generating plant in Kogi may have enabled Forte oil enjoy tax relief in form of capital allowance.
This explains the reduction in tax rate, spike in after tax profit and increase in total assets by 146.23 percent to N104.67 from N42.51billion recorded last year.
The company’s current ratio increased to 1.06 in Q4 2013 from 0.75 last year, while asset turnover dipped marginally to 1.22 from 2.11 last year.
The Return on Equity ROE dipped to 11.8 percent from 13 percent for Q4 2013, while Return on Assets ROA rose to 4.8 percent from 2.38 percent in the current period.
Share Performance and Outlook
Focus strategy is yielding positive results as the value of shareholders are magnified with share price rising by 486.60 percent (capital gains) to close at N102.89 on the floor of the Nigeria Stock Exchange on February 4, 2014.
The company, one of the most capitalized by asset in the downstream sector had a market capitalization of N111.1 billion.
With a price to sales ratio of 0.93 makes its sales relatively cheap compared to other firms within the same industry.
The company was able through re-organization, to offset accumulated losses of more than N55.98 billion against share premium.
Forte oil is poised towards giving back to the owners of the business with a superlative declaration of a dividend of N4 to shareholders based on its impressive results.
By: BALA AUGIE
