Oando Plc
By Victory Oghene
Minority shareholders in Oando Plc one of Nigeria’s largest indigenous integrated energy companies have called for the institution of a proper governance structure to manage the delisting notice issued by the company, and in the interim, steps to look at gaps in the regulatory governance that allows for an indeterminate period for delisting, minority shareholder protection and oversight on the company to ensure its viability remains sustainable while decisions are awaited.
Speaking with our field market team on the state of the company and recent developments, Mr. Iseoluwa Abiodun-Johnson, a lawyer and advocate for the minority shareholders represented that they believe it was time for Oando Plc’s management to review their processes, and lead the transition phase in an inclusive manner, one that respects the rights of the minority shareholders.
Iseoluwa Johnson recalled that in 2019, the Securities and Exchange Commission, SEC, asked the Board of Oando Plc to resign over developments the shareholders represent they were not carried along over. While this issue has since been resolved through a negotiated settlement; the cost to the company, borne equally by the minority shareholders remains unaddressed.
Proshare News sought to know how the minority shareholders expected this to be done in a free entry/exit market; and he offered perspectives from their viewpoint which they expect the company to pay attention to. Specifically, he decried that the minority shareholders have been shortchanged by the majority shareholders at the expense of the company. According to them:
“For about ten or eleven or twelve years, the majority shareholders were collecting 9% of the company gross profit as management and technical fee, while they are the directors in Oando. Until these people are discharged, there is nothing like price discovery.”
Speaking further, he stressed that ahead of the next Annual General Meeting, the minority shareholders will make demands from the management. “It is necessary to admit that the company made a big mistake. It is unacceptable that the majority shareholder is making the company lose money.”
“We do not have the audited accounts for 2023; we have quarterly financials. Let me tell you: The reason behind the audited account is that minority shareholders want to know what is happening. If it is audited, why is it hidden?!” he added.
Mr. Robert Adinuba Ibekwe, another minority shareholder expressed disappointment with Oando Plc’s board and management in the manner of approach to the issues of minority shareholders.
He raised concerns that despite the reality and understanding of how information drives the business of capital market and shareholding, there has been no positive news or information from Oando even though their share price rally even without fundamentals.
“After the court case was concluded and many years of no dividend, nothing short of good dividends – interim, special or final is expected from the company but with the approach of the board and management, expecting to extract liquid from the rock is just an effort in futility.”
“In addition, remember that the bane of any company is the management. Oando is or may be a good company doing good business and making profit but only what is declared that is made known to the investing public. If others in the same space and sector are making it and paying good dividends what stops Oando from being among them, leading from the front? Nothing was said or heard about the huge special income that accrued to the company after the sales of all it’s outlets to NNPCL. This is just to mention one aspect among many other failings of the Board and Management.”
Mr. Boniface Okezie, another minority shareholder group leader in his intervention observed that the Oando Plc share price is rising because it is still a going concern company doing business in oil and gas up stream industry.
He added, “On the management, we are still yet to hear from those leading the day-to-day activities, regarding the financials for 2022 and 2023, and the accounts which is yet to be made public. We are still hopeful that they will bring the accounts to shareholders for discussion and any time it is ready they will communicate to their shareholders and fix the AGM to x-ray the accounts. I know they are doing well as a company despite the challenging economic environment facing every company in Nigeria.”
Recall that on Saturday, April 27th, 2024, Proshare issued a coverage report on Oando Plc titled: Oando Consolidated Accounts and Lessons in Post-Regulatory Action – A Flashback on the Future wherein we stated that “If Nigeria’s stock market is to transform into a financial market infrastructure (FMI) of global significance, both regulators and regulated entities must adhere to governance templates that ensure equity, transparency, and credibility. Regulators cannot govern based on emotions; corporations cannot operate with recklessness. The cornerstone of the market contract between parties, a principle of utmost importance, is mutual respect and commitment to the rules of engagement. “
A lot has happened since then that offers a positive outlook at a ‘meeting-of-minds’ between the company and its minority shareholders, or so it seems.
Recent Developments
On October 24th, 2024, Proshare reported that Oando Plc The Nigerian Exchange Group (NGX) in a bulletin issued by the NGX Regco, notified Stockbrokers and the investing public of the suspension of trading in Oando Plc shares due to its failure to submit its Audited Financial Statements for the year ending December 31, 2023.
In response to the development, the Chief Financial Officer of Oando Plc Mr. Adeola Ogunsemi in a public statement on October 26th, 2024, stated that the delay was occasioned by need to resolve materiality issues arising from the company’s recently completed acquisition of Nigeria Agip Oil Company. The Chief Financial Officer further added that there will be an additional seven-day delay in publishing the 2023 audited financial statement by one week from the initial proposed date of October 23rd, 2024, anticipating a release in the first week of November (or thereabout).
Since then, the following has happened:
1. Oando Plc published its 2023 FY results with the following highlights:
Revenue grew by 42.73% from N1.99trn to N2.85trn;
Profit before tax stood at N102.98bn;
Profit after tax stood at N60.28bn; and
Share price on this date was N89.65k.
2. Following the announcement of the 2023 audited financial statement on the NGX, Oando Plc announced a resumption of the trading of its shares on November 5th, 2024
In the following weeks, our Economic & Market Intelligence Unit (EMI) anticipates traction in discussions between the regulators and Oando Plc on how to proceed with clarity on its initial plans, new thoughts, and next steps for engaging the market; considering the concerns over the market discovery ‘lacuna’ this has thrown up about what an indeterminate notice of delisting represents, not just for minority shareholders, but for the capital market, as a whole.
Credit: Proshare
