Information on Assets disposal from the FY2016 Accounts:
(a) Subsidiaries disposed and presented as discontinued operations
i. Sale of Marketing, refining and terminals and Supply & Trading Companies
On 30 June 2016, the Group concluded the sale of some selected down stream entities. Oando entered into a Share Purchase Agreement (SPA) with a consortium comprising of Helios
Investors Partners (‘‘Helios) and The Vitol Group (‘‘Vitol’’) to sell some of its equity interests in some selected Oando downstream companies in return for consideration. In order to complete
the sale transaction, the purchaser, Vitol, entered into a partnership with Helios to form HV Investments II (‘‘HV II’’). HV II is owned 50% each by both Vitol & Helios. HVII and Oando Netherlands
(‘‘herein Oando Coop.’’), created a company called Copper JV Co.
Copper JV Co thereafter acquired 100% of the voting interests in Oando Plc’s shareholding interests in some of its selected marketing and supply & trading companies. Copper JV is owned
60% by HV II and 40% by Oando Netherlands Holdings 2 Cooperative U.A. Oando Plc owns 100% of Oando Netherlands Holdings 2 Cooperative U.A. As a result of the sale, Oando Plc now
owns 40% of voting, legal and economic rights in Copper JV Co (who owns 100% of the select downstream entities sold by Oando plc).
The companies sold by Oando Plc and acquired by Copper JV Co are: Oando Marketing Ltd (‘‘Formerly OMP’’) and its subsidiaries (Oando Togo, Oando Ghana and Clean Cooking Fuels Ltd);
Oando Supply and Trading Ltd (‘‘OST’’); Apapa SPM Limited (‘‘ASPM’’); Oando Trippmart Limited (‘‘OTL’’) and Ebony Oil and Gas Limited ” (‘‘EOGL’’).
As a result of the sale, the Group lost control in the entities sold, but exerts significant influence over Copper JV. The Group accounted for its 40% interest in Copper JV as an investment in
Associate under IAS 28. The initial carrying value of the Associate was determined as the fair value of interest retained of N10.44billion.
A (loss)/gain on disposal of (N11.3billion) and N3.8billion, have been recognized in the consolidated financial statement (under profit after tax for the year from discontinued operations) and
separate financial statement respectively.
ii. Sale of Gas & Power entities
On 13 September 2016, the Group signed a Sale & Purchase Agreement (SPA) to dispose 100% shares in Oando Gas and Power Limited (OGP) to Glover BV a Special Purpose Vehicle
owned by Helios. The transaction was concluded in December 2016.
Prior to the sale, the Group restructured/reorganized the shares of the target sale companies. As a result of the restructuring, shares of the target subsidiaries (Gaslink Nigeria Limited, Central
Horizon Gas Company, Highlands LNG Limited, Gasgrid Nigeria Limited, Ajah Distribution Limited, Transit Nigeria Limited, Lekki Gardens Power Limited) previously held by Oando Plc were
transferred to OGP through a group restructuring. Consequently, OGP became the parent company, and Oando Plc, the ultimate parent of all the target subsidiaries to be sold. However, as at
year end, the OGP was sold and the receivable from the restructuring was settled by Helios the buyer of OGP and realised by the Group.
Consideration received by Oando for the sale of shares includes cash (N14.26bn), deferred consideration (N3.15bn), issue of loan note (N9.7billion) and share consideration in Glover BV
valued at N2.34billion. Following the share consideration, Oando plc now has 30% shares in Glover BV through Oando Holdco 3, a wholly owned subsidiary of Oando Plc.
As a result of the sale, the Group lost control in OGP, but however exerts significant influence over Glover BV. The Group accounted for its 30% interest in Glover BV as an investment in
Associate under IAS 28. The initial carrying value of the Associate was determined as the fair value of shares transferred to Oando plc through Oando Holdco 3. The fair value of the associate
A gain on disposal of N22billion and N28.5billion, have been recognized in the consolidated financial statement (under profit after tax for the year from discontinued operations) and separate financial statement respectively.
iii. Sale of Akute Power
On 30th October 2015, the Group signed a Sale and Purchase Agreement ("SPA") for the disposal of 100% of its equity interest in Akute Power Limited to Viathan Engineering Limited. As a
result of the reorganization of the Gas & Power enities prior to the finalization of the sale, Akute Power Limited was transfered to OGP which was owned 100% by Oando Plc, through a share
exchange agreement. The transaction was concluded on 11 March 2016 after fulfilment of all closing conditions and obligations prior to that date of sale of OGP.
As a result of the sale, the Group lost control in Akute Power and have derecognized all assets and liabilities. A loss on disposal of N1.52billion, have been recognized in these audited
consolidated financial statements (under profit after tax for the year from discontinued operations).
iv. Sale of Oando Energy Services
On 31 December 2015, a Share Purchase and Sale Agreement ("SPA") to sell the entire issued share capital of Oando Energy Services Limited ("OES") to OES Integrated Services Limited (the
buyer), a Nigerian company, under a Management Buy-out (MBO) arrangement was signed. A no objection consent was obtained by SEC on 31 March 2016. Oando Energy Services was in a
net liability position of N20.92billion and was disposed for a consideration of $1. Consequently the Group lost control and derecognized assets & liabilities of the entity.
A gain/(loss) on disposal of N21.4billion and (N46.97billion), have been recognized in the consolidated financial statement and separate financial statement respectively.
(b) Liquidation of subsidiaries
During the year under review, the Company employed the services of Mr. Olajide Oyewole to voluntarily liquidate 3 dormant entities namely Oando Port-Harcourt Refinery Limited, Oando Lekki
Refinery Limited and Oando Property Limited. The liquidation process which commenced sometime ago, was successfully completed. Consequently, the companies have been dissolved. The
liquidation was as a result of dormancy for several years. All creditors/payables have been duly settled and assets realized with the exception of the amount due to the parent company, Oando
Consequently, the investment in the subsidiaries have been written off in the separate financial statement and a loss of N5.2 million recognized in the statement of profit or loss being the
carrying value of the investments before liquidation. Also the net receivable of N435million due from the the entities have also been written off.
As a result of cessation of business, control was lost and the subsidiaries are excluded from these consolidated financial statements. A gain on deemed disposal of N420.38million and loss of
N5.25 million was recognized in the consolidated (under profit after tax for the year from discontinued operations) and separate statement of profit or loss. The gain on disposal arose due to the
net liability position of Oando Lekki Refinery and Oando Property Limited from amount payable to Oando Plc.
(c) Subsidiaries classified as held for sale
i. Planned sale of OML 125 & 134
In December 2015, the Group signed a Sale and Purchase Agreement (SPA), with Nigerian Agip Exploration Limited ‚NAE‛ for the sale of its non-operated interests in OMLs 125 and 134. As a
result of this, the associated assets and liabilities were classified as held for sale as at December 31, 2015. The transaction was expected to be completed in 2016 subject to the receipt of
consent from the Lenders and Minister of Petroleum Resources in Nigeria. As at 31 December 2016, the consent of the lenders have been secured, while the Group is still pursuing the
approval from the Minister of Petroleum Resources which is required to finalize the transactions.
As at date, the Group has a firm purchase commitment from NAE as the SPA has been signed, and is confident the consent from the minister will be obtained in 2017 to conclude the
transaction. The Group still classifies OML 125 &134 as held for sale because it has been assessed in line with IFRS 5 and all criteria are still met.
The carrying amount of the property, plant and equipment was in excess of the agreed amount as at December 31, 2016 and as such an impairment loss of N16 billion ($61.1 million) has been
recognized in the statement of profit or loss under adminstrative expenses. As part of the arrangement with NAE, the Group retains its rights to the N22.2billion ($72.7million) award for amounts
overlifted by NNPC (See Note 21) and has therefore not been included in the disposal group.
(d) Subsidiaries classified as held for sale and presented as discontinued operations
ii. Alausa Power Limited
On 28th September 2016, the board of Oando Plc passed a resolution to dispose 100% of the issued shares of Alausa Power Ltd
In accordance with IFRS 5, the assets and liabilities held for sale were recognised at the carrying amount, which is lower than the fair value less cost to sell. This is a non-recurring fair value which has been measured using observable inputs, being the prices for recent sale of similar businesses.
(e) Subsidiary previously held for sale now reclassified as continuing operations
i. Oando Trading Bermuda
The Group changed its plan to dispose a subsidiary, Oando Trading Bermuda (OTB) in 2016 previously classified as held for sale in the statement of financial position and discontinued
operations in the consolidated statement of profit or loss for the year ended 31 December 2015.
This has been reclassified from held for sale to normal assets and liabilities of the Group represented as part of continuing operations in 2016. The change in plan to sell which occurred in
2016, was at the instance of the buyer, who wanted to prevent competition between OTB and its existing trading company.
The non-current assets of OTB have been measured at its carrying amount before the asset (or disposal group) was classified as held for sale, adjusted for any depreciation, amortisation or
revaluations that would have been recognised had the asset (or disposal group) not been classified as held for sale.
The change in plan has led to an additional loss of N1.47billion and profit of N1.63billion in the profit or loss from continuing operations for the year ended 31 December 2016 and 31 December
The good news (while searching for positives) for some of those who still hold out hope in the company is that some of the assets were not completely sold with Oando retaining 40% and 30% stake in the more high valued assets, that they will be more transparently managed for profitability and growth by the likes of Helios and Vitol, also that Ocean and Oil will be less inclined to steal from itself now that it owns almost 60% of Oando.
But seriously, if Oando didn't have these assets, it would have gone the way of Afren for sure.
Hopefully, the Asset disposal Tsunami will now ebb with Oil prices staying above $50 per barrell and less millitancy in the ND.
Furthermore, a.(iv), the sale of OES looks kind of dodgy, SEC should really scrutinize that deal.
Last edited by duduspace; 12th April 2017 at 05:38 PM.