Annual Report & Accounts 2011 Plc... · Engr. Yusuf N’jie Independent Non-Executive Director Appointed 20th October 2011 Ms. Amal Inyingiala Pepple, CFr Non-Executive Director Resigned

Annual Report & Accounts 2011

www.oandoplc.com

Oando PLC is the largest integratedenergy solutions group in sub-SaharanAfrica with a primary and secondarylisting on the Nigerian Stock Exchangeand JSE Limited respectively.

03Oando PLC

2011 ANNUAL REPORT

VisionTo be the premiercompany driven byexcellence

MissionTo be the leadingIntegrated energysolutions provider

DownstreamOperationsMarketing DivisionThe leading retailer of petroleumproducts. Selling and distributingpetroleum in Nigeria and West Africavia over 500 retail outlets.See page 05

Supply and TradingDivisionAfrica’s largest independent andprivately-owned oil trading companyinvolved in the export and import ofrefined petroleum products andcrude oil.See page 06

Midstream OperationsGas and Power DivisionA pioneer in fields of private sectorpipeline network construction andthe distribution of natural gas toindustrial and commercialconsumers.See page 07

Upstream OperationsEnergy Services DivisionNigeria’s foremost indigenous oilfieldservices company providingproducts and services to majorupstream companies operating inNigeria.See page 08

Exploration and Production DivisionA leading Nigerian exploration and production company with 13 oil and gas assets, OEP is the firstindigenous company with aparticipating interest in a deepoffshore oil producing asset.See page 09

+11%Gross Profit

+103%Gross Profit

+21%Gross Profit

04Oando PLC

2011 ANNUAL REPORT

OandoIntegrated EnergySolutionsWith shared values of Teamwork, Respect, Integrity,Passion and Professionalism (TRIPP), the Oando Groupcomprises of five business divisions who are leaders intheir market. The following pages will explore these further.

OperationalOverview

The company markets a widerange of petroleum productsincluding Premium Motor Spirit(PMS), Automotive Gas Oil (AGOalso known as diesel), DualPurpose Kerosene (DPK), AviationTurbine Kerosene (ATK), Low PourFuel Oil (LPFO), Lubricating Oils,Greases, Insecticides, Bitumen,and Liquefied Petroleum Gas(LPG), also known as “CookingGas”. Oando Marketing also hastailor made value adding solutionsmeeting the needs of our numerouscustomers including:

Oando Value Added Peddling:A unique service which guaranteeseffective supply of Diesel (AGO)and Lubricants to companies withmultiple operational sites across thecountry.

Oando Vendor ManagedInventory: A special customerservice initiative which ensuresregular supply of fuel andlubricants to the premises of thecustomer.

Oando Pay-As-U-Gas:An innovative solution whichinvolves on-the-spot dispensing of LPG using a pump meter intocustomers cylinder.

OandoMarketing DivisionOando Marketing PLC is Nigeria’s leading oilmarketing retailer with over 500 retail servicestations in Nigeria, Togo and Ghana and over600 industrial customers cutting across thedifferent geographical zones in Nigeria.

500+500+ Outlets - The leading oilmarketing retailer with over 500outlets in Nigeria and operationsin Ghana, Togo, Liberia andRepublic of Benin. $1m

Invested $1 million to optimiselubricant production to 100 millionlitres per annum.

05Oando PLC

2011 ANNUAL REPORT

00Oando PLC

2011 ANNUAL REPORT

In line with the leadership culture of the Oando Group, Oando Supplyand Trading is the foremostindigenous physical trader ofpetroleum products in Nigeria. The company trades large volumecargoes to the Major Oil Marketersin the country as well as toIndependent Marketers.

The company is involved in thelarge-scale export and import ofpetroleum products and is aleading supplier of petroleumproducts to Nigeria.

Oando Supply & Trading procuresand trades a broad range of refinedpetroleum products and crude oilthroughout Africa, Europe, Asia andthe Americas. The products includeJet A1, Liquified Petroleum Gas,Gasoline, Dual Purpose Kerosene,Diesel, Low/High Pour Fuel Oil,Naphtha, Base Oil and Bitumen.

Oando’s Trading BusinessOando Supply & Trading andOando Trading Limited (Bermuda)represent the products trading armof the Oando Group. Our businessactivities cover the trading of crudeand refined petroleum products torefiners, marketing and tradingcompanies respectively.

Oando Supply & Trading isresponsible for the supply ofrefined petroleum products intoNigeria, whilst Oando TradingLimited trades refined petroleumproducts and crude oil inInternational Markets. Productstraded include gasoline, gas oil,kerosene, aviation fuel, naphtha,fuel oils, bitumen, base oils andliquefied petroleum gas.

OandoSupply & TradingDivisionOando Supply & Trading is involved in large-scale export and import of petroleum productsand is a leading supplier of petroleum productsto Nigeria, with imports accounting for 18% ofcars on Nigerian roads.

06Oando PLC

2011 ANNUAL REPORT

7%7% of the Nation’sfuel requirementsupplied by Oando

$1bnAccess to trading lines inexcess of $1bn

159.5mAccess to 159.5 million litres of physicalstorage in major markets

00Oando PLC

2011 ANNUAL REPORT

Oando Gas & Power Limited isdeveloper of Nigeria’s foremostnatural gas distribution network andcaptive power solutions. Wepioneered the private sector pipingand distribution of natural gas toindustrial and commercialconsumers, successfully revivingprivate sector participation in thegas distribution business in Nigeria.

With 100km of pipes already laid inLagos State and another 128 km inprogress in Akwa Ibom and CrossRiver States, we are taking boldsteps towards building sub-Saharan Africa’s largest gaspipeline network.

Over the years, we madesignificant investments in thedevelopment of gas and powerinfrastructure that assure reliablesupply of natural gas including highpressure transmission pipelinesand gas processing facilities andour aspiration is to replicate the

success recorded in our GreaterLagos Natural Gas Distribution inother parts of Nigeria and WestAfrica whilst we strive to expandour horizon in Independent PowerGeneration to captive opportunitiesin locations where we have gasinfrastructure and Exploration &Production assets.

At Oando Gas and Power, thenature of our business pre-disposes us naturally as supportersof industrial and commercialconcerns by offering them cheapand affordable energy solutionswhich translates into significantcost advantages to theorganizations that we serve. We willcontinue to consistently demonstratecompetitive leadership in theNigerian energy market.

OandoGas & Power DivisionOando Gas & Power Division is the developer ofNigeria’s foremost natural gas distribution networkand captive power solutions. The companypioneered the distribution of natural gas tocommercial and industrial end-users via pipelinesin Nigeria, which today serves more than onehundred industries, operating in the country’seconomic nerve centres.

100KM100 km PipelineNetwork in Lagos

128KM128 km Pipeline Network inthe South East

07Oando PLC

2011 ANNUAL REPORT

Oando Energy Services Limited isan indigenous provider of oilfieldservices to operators of the oil andgas industry in Nigeria. We arecommitted to providing highquality services to our clients andensure that our operations arecarried out with strict adherence toworld standard safety procedures.

Oando Energy Services Limited(OESL) has invested over US300million in acquiring five SwampDrilling Rigs namely OES Teamwork,OES Respect, OES Integrity, OES

Professionalism and OES Passion.With these acquisitions, OESL is thelargest swamp drilling contractorin Nigeria.

We remain committed to utilisingNigerian personnel within oursystem. It is our policy to train anddevelop all our people by enrollingthem in approved trainingprogrammes as this will ensurethat we maintain a pool of talentedand motivated employees todeliver quality service to ourcustomers.

Our training programmes cover all aspects of operations such assafety, pollution prevention and job proficiency. In addition to theseprogrammes, various initiatives are in place to promote and retainour people.

We are committed to continuallyassessing the impact of ouractivities, operations and servicesand managing them in a responsiblemanner. This is carried out toensure we minimise environmentalrisks and prevent pollution as aresult of our operations.

OandoEnergy ServicesDivisionOando Energy Services (OES) is an indigenousEnergy services company that utilises industrybest practices and innovative technology indelivering safe and environmentally sound wellsite operations and high-quality support to E&Pcompanies operating in the Niger Delta.

$300mOESL has invested over US $300 million inacquiring five Swamp Drilling Rigs

08Oando PLC

2011 ANNUAL REPORT

Oando has prolific 2P reserves and 2C resources from a portfolioof Producing, Near term andExploration assets within NigerDelta, Nigeria/Sao-Tome JDZ andDRSTP EEZ. It has a 15% and 45%Working interest in OML 125 andOML 56 respectively which arecurrently producing assets.

The company is also a NigerianContent Partner with AGIP Oil onOPL 282. All assets are in differentstages of development and willsignificantly increase Nigeria’s oiland gas reserves.

Our mission is to deliversustainable value to stakeholdersby continually growing reservesthrough the exploration, developmentand acquisition of Oil and Gasresources. Our growth has

continued unabated throughout the global financial crisis due to the successful management andproduction of oil and gas reserves.

Positioned as an owner andoperator of an oil and gas assetportfolio the company will continueto pursue further investments inselected African Oil and Gasproducing basins that meet itsstrategic and financial criteria andposition it for growth criteria.

OandoExploration &Production DivisionOando holds interests in 13 licenses for theexploration, development and production of oiland gas assets located onshore, swamp, andoffshore. Our primary task is to harness optimallythe potentials of our existing portfolio.

09Oando PLC

2011 ANNUAL REPORT

13Oil and GasAssets

10Oando PLC

2011 ANNUAL REPORT

Oando Plc remains well positioned for immensegrowth in 2012 as we await key economic reformsto kick in. With our focus and strategy remainingas clear as ever, we are in prime position tosurpass our past performance to the ultimatesatisfaction of all our stakeholders.

11Oando PLC

2011 ANNUAL REPORT

Directors and Professional Advisers 12Notice of Annual General Meeting 14Financial Highlights 17Chairman’s Report 19Group Chief Executive’s Report 23Board of Directors 46Oando at a Glance 48Report of the Directors 50 - 67Report of the Audit Committee 68Financial Statements 71

12Oando PLC

2011 ANNUAL REPORT

DIrECTOrS

HrM Oba Michael A. Gbadebo, CFr(The Alake of Egbaland)Chairman, Non-Executive Director

Maj General M. Magoro (rtd.) PSC, OFr(Galadiman Zuru)Chairman, Non-Executive DirectorResigned 30, June 2011

Mr. Jubril Adewale TinubuGroup Chief Executive

Mr. Omamofe BoyoDeputy Group Chief Executive

Mr. Mobolaji OsunsanyaGroup Executive Director

Mr. Olufemi AdeyemoGroup Executive Director, Finance

Mr. Oghogho AkpataNon- Executive Director

Ms. Nana Appiah-Korang Non-Executive Director

Chief Sena AnthonyNon-Executive Director

Ammuna Lawan Ali, OONNon-Executive Director Appointed 20th October 2011

Engr. Yusuf N’jieIndependent Non-Executive Director Appointed 20th October 2011

Ms. Amal Inyingiala Pepple, CFrNon-Executive Director Resigned 22, July 2011

Directors andProfessional Advisers

Oando’s general policies are determined by a Board of Directorsdrawn from different facets of the society. The Board members arehighly successful individuals in their various fields of endeavour.The board meets regularly during the year to discuss reviews andreports on the business and plans of the Oando Group.

13Oando PLC

2011 ANNUAL REPORT

PrOFESSIONAL ADVISErS

Ayotola O. Jagun (Ms.)Chief Compliance Officer & Company Secretary

Mr. Olufemi AdeyemoChief Financial Officer

Mrs. Ngozi OkonkwoChief Legal Officer

rEGISTErED OFFICE2, Ajose-Adeogun StreetVictoria IslandLagos, Nigeria

AUDITOrSPricewaterhouseCoopers252E, Muri Okunola StreetVictoria IslandLagos, Nigeria

THE rEGISTrArS & TrANSFEr OFFICES

First registrars Nigeria LimitedPlot 2, Abebe Village Road Iganmu,Lagos, Nigeria

Computershare Investor Services(Proprietary) Limited70, Marshall StreetJohannesburg 2001PO Box 61051Marshalltown 2107South Africa

JSE LIMITED SPONSOrMacquarie First South Capital (Pty) Limited The Place, 1 Sandton DriveSouth Wing, Sandown, 2146P.O. Box 783745, Sandton 2196Johannesburg, South Africa

BANKS• Access Bank Plc• Access Bank UK• BNP Paribas• Citibank Nigeria Limited• Citibank UK• Consolidated Discount House Limited• Diamond Bank Plc• Ecobank Nigeria Plc• Fidelity Bank Plc• First Bank of Nigeria Plc• First City Monument Bank Plc• Guaranty Trust Bank (UK) Limited• Guaranty Trust Bank Plc• Keystone Bank Limited• Stanbic IBTC Bank Plc• Standard Bank Plc• Standard Chartered Bank London• Standard Chartered Bank Nigeria Limited• Sterling Bank Plc• United Bank for Africa Plc• United Bank for Africa, New York• Unity Bank Plc• Zenith Bank (UK) Limited• Zenith Bank Plc

14Oando PLC

2011 ANNUAL REPORT

1. Transacting the followingordinary business:

1.1 To present the annual financial statementsof the Company and of the group for theyear ended December 31, 2011 andReports of Directors and Auditorsthereon;

1.2 To receive the Report of the AuditCommittee;

1.3 To elect members of the Audit Committee;1.4 To re-appoint the Auditors;1.5 To authorise the Directors of the Company

to fix the remuneration of the Auditors; 1.6 To elect the following Directors appointed

to the Board of Directors of the Companywith effect from October 20, 2011 asDirectors. In accordance with Article 88 ofthe Articles of Association of theCompany (“the articles”), their termsexpire but being eligible offer themselvesfor election.

• Ammuna Lawan Ali, CFR • Engr. Yusuf N'jie 1.7 To re-elect the following Directors who in

accordance with Articles 91 and 93 of theCompany's Articles of Association, retireby rotation, but are eligible and offerthemselves for re-election:

• Mr. Oghogho Akpata• Mr. Omamofe Boyo• Mr. Mobolaji Osunsanya• Ms. Nana Appiah-Korang

2 Transacting the followingspecial business:

(i) To consider, and if approved, to pass withor without modification, the followingordinary resolution to fix the remunerationof the Non-Executive directors:

“It is hereby resolved that the feespayable to the Non-Executive directors ofthe Company remains N2,500,000.00 perannum for the Chairman andN2,000,000.00 each per annum for allother Non-Executive directors with effectfrom January 1, 2012 which fees arepayable quarterly in arrears”.

(ii) To consider, and if approved, to pass withor without modification the followingordinary resolution:

That on the recommendation of theDirectors and in accordance with Article46 of the Articles of Association of theCompany the Authorized Share Capital ofthe Company be and is hereby increasedfrom N3,000,000,000.00 (Three BillionNaira) to N5,000,000,000.00 (Five BillionNaira) by the creation and additionthereto of 4,000,000,000 (Four Billion)new ordinary shares of 50 kobo eachranking in all respects pari passu with theexisting shares of the Company and thatclause 6 of the Company's Memorandumof Association and article 3 of theCompany's Articles of Association be andare hereby amended to reflect the newAuthorised Share Capital ofN5,000,000,000.00 (Five billion Naira)divided into10,000,000,000 (Ten billion)ordinary shares of 50 kobo each.

Notice of AnnualGeneral Meeting

Ayotola Jagun (Ms.)Chief Compliance Officer &Company Secretary

NOTICE IS HErEBY GIVEN that the Thirty–Fifth AnnualGeneral Meeting of Oando PLC (the “Company”) will be heldat Shell Nigeria Hall, The Muson Centre, 8/9 Marina, Onikan,Lagos State on Friday, the 20th day of July 2012 at 10:00 a.m.for the purposes of:

15Oando PLC

2011 ANNUAL REPORT

Voting and ProxiesOn a show of hands, every member presentin person or by proxy shall have one vote,and on a poll, every member shall have onevote for each share of which he is the holder.

A member of the Company entitled to attendand vote at the Annual General Meeting (the“Meeting”) is entitled to appoint a proxy toattend, speak and vote instead of thatmember. A proxy need not be a member ofthe Company.

Registered holders of certificated shares andholders of dematerialised shares in their ownname who are unable to attend the Meetingand who wish to be represented at theMeeting, must complete and return theattached form of proxy in accordance withthe instructions contained in the form of proxyso as to be received by the share registrars,First Registrars Nigeria Limited at Plot 2,Abebe Village Road, Iganmu, Lagos, orComputershare Investor Services(Proprietary) Limited, 70, Marshall Street,Johannesburg, 2001, South Africa, PO Box61051, Marshalltown, 2107, not less than 48hours before the time of the Meeting.

Holders of the Company's shares in SouthAfrica (whether certificated or dematerialised)through a nominee should timeously makethe necessary arrangements with thatnominee or, if applicable, Central SecuritiesDepository Participant (“CSDP”) or broker toenable them attend and vote at the Meetingor to enable their votes in respect of theirshares to be cast at the Meeting by thatnominee or a proxy.

Closure of registers of MembersThe Registers of Members and TransferBooks of the Company (Nigerian and SouthAfrican) will be closed between the 28th Juneand 29th June 2012 (both days inclusive) in accordance with the provisions of Section89 of the Companies and Allied Matters ActCap. C20 Laws of the Federation 2004 (the “Companies Act”).

Nomination for the AuditCommitteeIn accordance with Section 359 (5) of theCompanies Act, any member may nominate a shareholder as a member of the AuditCommittee, by giving notice in writing of suchnomination to the Company Secretary at least21 days before the Meeting.

Dated this 27th day of June 2012By the Order of the Board

Ayotola Jagun (Ms.)Chief Compliance Officer & Company Secretary

Registered Office:2, Ajose- Adeogun StreetVictoria Island, Lagos

16Oando PLC

2011 ANNUAL REPORT

17Oando PLC

2011 ANNUAL REPORT

Financial Highlights

2010 378,925,430

2011 586,619,034

Turnover(N’000)

586,619,034

2010 24,318,845

2011 24,553,251

Profit on ordinary activitiesbefore exceptional items andtaxes (N’000)

24,553,251

2010 14,374,966

2011 3,446,643

Profit after tax(N’000)

3,446,643

2010 14,379,066

2011 3,666,730

Attributable to group(N’000)

3,666,730

2010 8.29

2011 1.62

Basic earnings per 50k share(Naira)

1.62

2010 3.0

2011 0

Dividend per 50k share –proposed (Naira)

0

2010 51.40

2011 40.64

Net assets per 50k share(Naira)

40.64

2010 2.76

2011 0

Dividend cover(N’000)

0

Total revenues by business sector(%)

Downstream90% (N525.6bn)

Midstream3% (N19.6bn)

Upstream7% (N41.3bn)

Total revenueN586.6bn

18Oando PLC

2011 ANNUAL REPORT

We have every reason to look back at theyear with pride on the achievements of ourcompany in a year where companies allaround the world have battled to grow theirearnings. Our strategy to lay moreemphasis on the high margin upstreamproduced dividends with the sectorcontributing significantly to profitability.

Highly Esteemed Shareholders,

It is with great pleasure that I welcome you tothe 35th Annual General Meeting of yourCompany.

The year 2011 proved to be a difficult year formost developed economies as they battledwith their never-ending feud with thesovereign debt crisis and double-diprecession. Ironically, developing nations suchas Nigeria championed the cause for globalrecovery, recording impressive economicgrowth figures. Expansions in oil and gas,agriculture, wholesale and retail sectorscontributed to an impressive growth of 7.2%,making Nigeria amongst the fastest-growingeconomies globally.

We have every reason to look back at theyear with pride on the achievements of ourcompany in a year where companies allaround the world have battled to grow theirearnings. Our strategy to lay more emphasison the high margin upstream produceddividends with the sector contributingsignificantly to profitability.

Global EconomyThe long-awaited global economic recoveryput on several changing faces during theyear. 2011 had been heralded as the year to set the stage for a modest global reboundby dealing with issues bordering on brokenfinancial infrastructure, high unemployment,and huge debt overhang. However,contagious political instability in oil-richregions as well as natural disasters added to the pending downside issues experiencedglobally.

While most developed economies continuedtheir never-ending battle with recession, thecase of the Eurozone presented a moredaunting challenge, as it triggered a debtcrisis, first with its poster child, Greece, aswell as Ireland and Portugal. However, mucheffort has been put in place to strengthen theoverall framework of the region such that apost-crisis Europe would be stronger to driveglobal growth. Notwithstanding theseidentified downsides, all was not lost in 2011as emerging market economies recordedimpressive growth figures thereby cushioningthe sloth in developed economies.

This shift in balance of power was furtherevidenced by calls for China to bail Europeout of its debt crisis. There, however, remainsthe fear that a bust in any of the fast-growingeconomies arising from overheated financial,property and commodity markets, amongothers, could crystallize another round ofcontagion that the global economy will haveto grapple with. Crude oil prices stayed wellabove $100 per barrel for most of the year.

Chairman’s report

19Oando PLC

2011 ANNUAL REPORT

7.2%7.2% growth - making Nigeriaamongst the fastest-growingeconomies globally.

Oba Aremu Adedotun Chairman

20Oando PLC

2011 ANNUAL REPORT

NigeriaNigeria stands as one of the emerging marketeconomies that have shown resilience andmaintained impressive economic growthdespite the global crisis; however, “resilience”is one of those words that should be usedwith caution, given the apparent linkageswithin the global economy. As evidenced inthe 2008 financial crisis, there are downsiderisks to growth and revenues, specifically interms of weaker demand for exports.Implementation of austerity measures indeveloped markets implies reduced crude oildemand and price, posing threats to Nigeria’soil revenues, with major implications for thebudget and deficits, and consequentlygovernment spending and investments.

2011 ushered in a successful democraticelection process in Nigeria, which we believewill lay a strong foundation for the FederalGovernment to continue to implementbeneficial legislation and policies that willcontinue to promote the development of theOil & Gas sector and our economy at large.

In the economy, GDP (Gross DomesticProduct) growth was largely driven by theagricultural sector, oil and gas sector,wholesale and retail sectors. The uprising inthe MENA (Middle East and North Africa)region pushed crude oil price into triple digit

in the early part of the year. Going by theoutlook on weather conditions in majoragricultural producing nations, prospects ofan ease in food price increase remain slim inthe near term.

The year ended with the Nation’s attentionfirmly focused on the Federal Government’splan to remove petroleum subsidy in 2012.This provoked mostly negative reactions fromthe general populace on what is clearly avery sensitive topic to Nigerians. The peopleremain skeptical of the government’s plan toeliminate its largest opportunity cost to thedetriment of the average Nigerian man, in thesupposed guise of improved infrastructureand promises of a better tomorrow. However,the government’s intent on reforming our Oiland Gas industry via subsidy removal andpassage of the Petroleum Industry Bill (PIB) isgood news to us as it will bring about muchneeded positive change to our operations.

Chairman’s reportContinued

$100Crude oil prices stayed wellabove $100 per barrel for most ofthe year.

21Oando PLC

2011 ANNUAL REPORT

The BoardIn 2011, the erstwhile Chairman, GeneralMagoro (Rtd) resigned as a director havingrecently attained the age of 70 years as wellas having been elected a senator of theFederal Republic of Nigeria. We truly valuedhis leadership, commitment and valuablecontribution to the success of Oando andwish him the very best in all his futureendeavours. We have no doubt that he willcontribute positively in the legislature.

Also in 2011, Ms. Amal Pepple, CFR resignedas a Director following her appointment asMinister for Land, Housing & UrbanDevelopment of the Federal Republic ofNigeria. I wish to express our profoundgratitude and appreciation for the insightfulcontributions of Ms. Pepple during her tenure.We wish her the best in her quest to serve ourdear nation.

To ensure that the composition of the Boardof Directors complies with international bestpractices, Engr. K.J N’jie and Ammuna LawanAli, OON were appointed to the Board on 20October, 2011 in accordance with Article 88of the articles of association of the company. I am pleased to inform you that the newdirectors are vastly experienced and firmlybelieve they will make immense contributionstowards the growth and success of Oando.

Oando e-Dividend, e-report ande-Bonus CampaignTo ensure timely communication and reducechallenges associated with your investment,we have available an e-communicationinitiative where mandates and reports can bereceived electronically. I urge you all toleverage on the e-communication channelsso that together we can reduce unclaimeddividends.

The 2012 Outlook2012 for the global economy will be one ofthe most difficult years to predict due to theunexpected economic and social events thatburdened the preceding year. While globalgrowth is expected to be slower, emergingand frontier markets such as Nigeria areexpected to record impressive output growthfigures. This negative outlook is further

emphasized by the IMF’s revision of globalgrowth estimate from 4.5% to 4.0%. It wouldbe fair to say that global growth is largelyhinged on the evolution of the currentEurozone crisis and the US economy.

Economic growth in Nigeria is forecasted at7.2% for 2012, with rising domestic demand,intra-Africa trade, and infrastructuredevelopment expected to be the majorgrowth drivers. The Central Bank of Nigeriahas forecasted an exchange rate ofNGN157.89/US$ and inflation rate of 13%.

The Federal Government’s decision topartially remove petrol subsidies shouldrelease much needed funds for infrastructuredevelopment and should benefit theeconomy as a whole if properly implemented.The policy also favours major marketers suchas us as it reduces the number of receivablesdays experienced when waiting for theFederal Government to pay subsidy.Following downstream deregulation, attentionwill be firmly focused on the passage of thePetroleum Industry Bill (PIB) this year, andthere are clear indications that the bill will bepassed before the end of the first half of theyear.

The company remains well positioned forimmense growth in 2012 as we await thesekey economic reforms to kick in. With ourfocus and strategy remaining as clear asever, we are in prime position to surpass ourpast performance to the ultimate satisfactionof our esteemed shareholders.

Thank you

HrM Oba Michael A. Gbadebo, CFr Chairman

The company remains well positioned for immense growthin 2012 as we await these key economic reforms to kick in.With our focus and strategy remaining as clear as ever, weare in prime position to surpass our past performance tothe ultimate satisfaction of our esteemed shareholders.

22Oando PLC

2011 ANNUAL REPORT

In 2011, the Group witnessed growth, withan impressive 55% increase in revenues,reaching N586.6 billion. With a Profit beforetax of 24.5 billion, profit after tax washowever lower at N3.4 billion, followingnecessary write-downs of 9.6 billion whichprovide a clean slate for future growth.

Mr. Jubril Adewale TinubuGroup Chief Executive

2011 HIGHLIGHTS

A clean slate provided for futureprogressIt is with great pleasure that I give you the firstreview of Oando’s performance for 2011. It proved to be a year of continuous progressfor the Group, only hindered by necessarywrite-downs that pave the way for futuregrowth. The Group’s focus remains onbuilding and developing the higher marginMid to Upstream divisions whilst maintainingour leadership position in the Downstreamsector.

Across the globe, 2011 was a year markedwith uncertainty. The Arab spring dominatedevents for much of the year toppling longdictatorships and causing greater instabilityon oil prices. The effect of America’srecession on the rest of the world was morepronounced as consumption and tradingslowed down causing the IMF to forecast agrowth rate of 3.3% for the world economy.The European Union came close to financialdisintegration due to maturing debt crises ofsome key member states including Greece,Italy and fears of default for Spain andPortugal. All these gave rise to a liquiditysqueeze increasing the cost of borrowingand affecting the import of petroleumproducts.

In 2011, the Group witnessed growth, with an impressive 55% increase in revenues,reaching N586.6 billion. With a profit beforeexceptional items and taxes of N24.5 billion,profit after tax was however lower at N3.4billion, following necessary write-downs ofN9.6 billion which provide a clean slate forfuture growth.

The highlights for the year include:• Commenced reverse Takeover of

Canadian listed Exile Resources Inc., to create Oando Energy Resources Inc.

• Sustained production levels from Oando’sproducing assets.

• Two of Oando’s swamp rigs maintaineddrilling operations in the Niger Delta, withthe third being mobilised to commenceoperations for Shell Nigeria.

• Oando Gas and Power (OGP)commissioned its second franchise, the128km East Horizon Gas Pipeline in theSoutheast.

• OGP also commenced the operation ofCentral Horizon Gas Company (a specialpurpose vehicle set up to rehabilitate andexpand the existing gas distributionpipeline in Trans-Amadi, Rivers State).

• Maintained our leadership position in theimportation and distribution of petroleumproducts across Nigeria.

Group ChiefExecutive’s report

23Oando PLC

2011 ANNUAL REPORT

+55%In 2011, the Group witnessedgrowth, with an impressive 55%increase in revenues, reachingN586.6 billion.

500+500+ Outlets - The leading oilmarketing retailer with over 500outlets in Nigeria andoperations in Ghana, Togo,Liberia and Republic of Benin.

O-Gas - Continued investment in LPG expansion anddominance through introduction of 3kg cylinder, deploymentof the Oando Pay As U Gas initiative to additional outlets;massive cylinder expansion through various schemesincluding cylinder swaps, exchanges and convenient refills.

25Oando PLC

2011 ANNUAL REPORT

DownstreamThe Group’s operations in the downstream sector compriseits Marketing & Supply and Trading businesses. In addition,the Group has a refining & Terminaling business divisionwhich currently harbours a number of projects.

Total revenue by business segment

1. Marketing N199.5bn2. Supply and Trading N326.1bn

Total revenue

N525.6bn


1 2

review of 2011Despite negative externalities whichadversely affected our operatingenvironment, OMP recorded positive resultsin 2011. Our company grew both revenueand gross margins by 14% and 17% above2010 levels to N199.8bn and N23.5bnrespectively. Profit after tax reducedmarginally by 3% over 2010 position toN3.8bn. This performance was built on thefoundation of being the foremost productsdistribution company driven by relentlesscommitment to excellence through hard work,innovation, integrity and efficiency.

Locally, we lost over 30 business dayscompared to 2010, largely due to politicalactivities, industrial actions by different unionsas well as security and safety relatedincidents. This heavily impacted our businessas the economy grounded to a halt. Theinconsistent implementation of policies by

government and its parastatals continued tohamper the smooth running of our business.

The last 2 quarters of the year weredominated by government’s uncertainty withregards to the Petroleum Support Fund (PSF),which impacted negatively on PMS supplyacross the nation as key participants in thesupply chain employed a risk averse strategy.The above issues led to underutilization ofour operating lease facilities, thus increasingoperating costs within the period.

We also witnessed an increase in cost as aresult of additional levies imposed by newagencies in several states where we operate.Working with other members of Major OilMarketers Association of Nigeria (MOMAN),we have continued to engage with therelevant agencies and our legal teams toassess viability and to reduce these costs.

Downstream OperationsOando Marketing PLCOando Marketing PLC (OMP) is the largest petroleum productsmarketing company in Nigeria with over 500 retail outlets andindustrial customers across all major sectors; we also haveoperations in Ghana, Togo, and Liberia. OMP’s businesses spanacross sales, marketing and distribution of the major petroleumproducts including Premium Motor Spirit (PMS), Automotive GasOil (AGO), Dual Purpose Kerosene (DPK), Aviation TurbineKerosene (ATK), Low Pour Fuel Oil (LPFO), Lubricating Oils,Greases, Bitumen and Liquefied Petroleum Gas (LPG,commonly known as cooking gas).

26Oando PLC

2011 ANNUAL REPORT

Financial Highlights 2011

OMP Turnover of

N199.5bnOMP EBITDA

N8.1bnOMP PAT

N3.8bn

27Oando PLC

2011 ANNUAL REPORT

Product reviewPMS: In 2011 OMP maintained its leadershipposition as PMS sales volumes stood at1.66bn Litres (1% above prior year). This wasthe largest volume recorded in the industryby any Oil Major despite marketuncertainties. Our focus was salesoptimization via company owned stations andkey third party affiliations.

AGO volumes sold during the period was324m litres (12% higher than prior year). Thisperformance placed OMP top in the industrydespite intense price competitiveness, downtime at our Onne Terminal facility for repairworks on a damaged Pipeline and liquiditystrategy employed to reduce the size of ourcommercial credit book. Higher sales throughspecialised channels such as Value AddedPeddling (VAP), Vendor Managed Inventory(VMI) and Marine highlight our strategy ofincreasing revenue through tailored serviceswhich add significant value to our customers.

HHK sales grew by 35% over 2010 figuresdue to improved government supply. Thispresented an opportunity for OMP toaggressively acquire the product from alldepots.

Other Products (Lubricants,Specialties)Lubricants sales volume grew by 13% when compared with 2010 volumes. For theretail business, focus was on optimizing ourprofitable channel of company ownedstations. Retail bulk lubricants sales grew by 12% over 2010 figures. We also grew thecommercial lubricants business through anability to maximize the use of credit, signingup new customers and volume growth onexisting customers. The OMP lubricantmarket share however remains steady at 17% even with stiff competition arising fromthe importation of cheap products byindependent marketers. There are ongoinginitiatives to grow Oando volumes and market share.

A lubricant promotion was carried outin Q3, 2011 as part of a long termstrategy to improve brandawareness and steady volumes forthe period. New initiatives includethe distributorship scheme, anincentive scheme for sales staff anda renewed target to increase ourindustrial customer base.

LPG: 2011 sales at 12,400MT is areduction of 8% from 2010; this is asa result of severe supply constraints.The Warri refinery was out of operationfor about half of the year due to repairwork. This, along with managementchange at the refinery, affected productsupply. However, OMP remains the marketleader in this product segment at over 50%market share among the Major Oil MarketersAssociation of Nigeria (MOMAN).

ATK volume sales in 2011 rose by 19% over2010. We signed up new customers includingAir Rwanda, Lufthansa and Airstream, grewsales to local airlines by 26% (due to acombination of bulk sales and constantproduct availability to local customers) andincreased sales to some international airlinessuch as KLM and South African Airways.New initiatives to grow figures in 2012 includebusiness expansion and specific customertargets which will provide guaranteedvolumes with secure credit lines, there willalso be focus on equipment upgrade andstock availability to ensure that all orders are met.


The OMP lubricant marketshare remains steady at 17%even with stiff competitionarising from the importationof cheap products byindependent marketers.There are ongoing initiativesto grow Oando volumes andmarket share.

+17%Grew gross margins by17% above 2010 levels

28Oando PLC

2011 ANNUAL REPORT

2012 Outlook:Government policy will remain as vital to our business in 2012. As has clearly beendemonstrated with the partial deregulation of the sector through a 49% increase in theprice of PMS, these policies will be crucial to our performance and profitability. As themodalities of the new price regime becomeclear, we will adapt operations to suit setdirectives. The president has also promised aswift passage of the PIB which will see furtherchanges to our operating environment.

Oando Marketing PLC remains bullish for thefuture. An exploding population, expandingeconomy and a gradual decline ofgovernment interference will deploy marketforces to shape the industry. As the majormarketer with the largest presence all overNigeria, Oando Marketing PLC remains firmlycommitted to take advantage of the conditionslisted to deliver consistent superior returns.Emphasis remains on creating thefoundations for sustainable growth byinvesting in innovative solutions, internalprocesses, asset upgrade and brandmanagement.

Significant 2012 initiatives include:• Massive investment in company owned

service stations for 2012 including therenovation of 20 existing stations and thepurchase of new ones. Focus is onincreasing grade “A” company ownedservice stations (COSS) within the OMPasset base.

• Grow our Vendor Managed Inventory (VMI)business with long term contracts and newcustomers to ensure product delivery at thepoints where they are used.

• Grow our lubricants business to marketdominance among MOMAN through differentinitiatives including package redesign, newproduct launches, promotions, trainings,awareness, partnerships and commercials.

• Continued investment in LPG expansion anddominance through introduction of 3kgcylinder, deployment of the Oando-Pay- As-U-Gas initiative to additional outlets; massivecylinder expansion through various schemesincluding cylinder swaps, exchanges andconvenient refills.

• Continued development of Non-FuelRevenue as a strategic growth area throughfuel support ventures such as conveniencestores, lube bays, car washes and brandingpartnerships.

• Significant attention will go to customerservice excellence through a comprehensiverewards scheme for all customer-facing retail staff.

• Deepen gains made from operations unit re-organization through further processredesign, automation and partner selection.Main focus areas will include fleet andlogistics.

• Optimize internal operations and processesto take advantage of the changing businessenvironment to be brought by completederegulation. This will include a seamlessprice change and adaptation structure, arobust database and electronic managementof field operations.

• People development by ensuring that everymember of the team is trained at least twicein the year. Our focus will be on Core andFunction Specific competencies and onDevelopmental Competencies for future rolesin the Organization

• Having recorded 3rd party contract stafffatalities in 2011, our focus for health andsafety in 2012 is to invest more in educatingevery member of the team on the hazards oftheir operating & physical environments.

Downstream OperationsOando Marketing PLCContinued

3kgContinuedinvestment in LPGexpansion anddominance throughintroduction of 3kgcylinder

29Oando PLC

2011 ANNUAL REPORT


Oando Marketing PLC remains bullish forthe future. An exploding population,expanding economy and a gradual declineof government interference will deploymarket forces to shape the industry. As themajor marketer with the largest presence allover Nigeria, Oando Marketing PLC remainsfirmly committed to take advantage of theconditions listed to deliver consistentsuperior returns.

review of 2011Prices of crude oil increased steadily from$93.69/bbl at the beginning of January,peaked at about $126.53/bbl in April butclosed at $106.51/bbl by end December2011; this had a corresponding increase onthe local prices of deregulated products.

On the economic scene, the year openedwith an exchange rate of N148.5= $1, thisrose steadily and peaked at N157.26 byNovember 2011, but closed at N156.7 at endDecember 2011. Volatility was very high inNovember, with rates vacillating by as muchas N6 within a two week period. A balance ofderivatives and other internal strategies wereadopted to alleviate the impact of the foreignexchange movements on the company’sprofitability.

In line with the company’s strategy ofstrengthening our market share of non -Gasoline product lines, there was successfulexpansion of other product lines andmargins, with AGO and Base oil contributinga significant portion of the profits.

In spite of all the foregoing, the supply &trading business made a profit of N2.8 billionin the year ended 31st December 2011.

Downstream OperationsOando Supply and Trading (OST)Oando Supply & Trading Division is a leading supplier ofrefined petroleum products into Nigeria. With a track record of100% delivery on all its supply contracts, consolidating itsexisting markets, Oando Supply and Trading has positioneditself as the supplier of choice for product supplies in the WestAfrican sub region. Oando Supply and Trading procures andtrades a broad range of refined petroleum products. Theproducts include Jet A1, Gasoline, Dual Purpose Kerosene,Automotive Gas Oil (“AGO”), Low/High Pour Fuel Oil, Base Oiland Bitumen.

30Oando PLC

2011 ANNUAL REPORT


OST Turnover of

N326.1bnOST EBITDA

N3.6bnOST PAT

N2.8bn

31Oando PLC

2011 ANNUAL REPORT

Product reviewPMS: There was significant volume growthin this product line in 2011. Volumes grewby more than 25% over 2010 volumes. Thevolume growth did not however, translate toprofitability growth as the product suffereda major setback early in the year due tooperational constraints. These constraintsled to a loss in the first quarter. There wasrecovery however in the 2nd quarter whichput gasoline back on track as the majorcontributor to profitability. The full benefit ofthe recovery in Q2 was impactednegatively by delayed release of Q4allocations by PPPRA.

AGO: There was increased profitabilityfrom this product line; profitability was inexcess of 100% over 2010 volumes. Thiswas achieved with increased operationalefficiency and contract management.

Base Oils: Volumes grew by over 200%over 2010 figures due to increasedcustomer base and geographicalexpansion. The increased volumetranslated to increased profitability from thisproduct line.

2012 OutlookThe primary market supplied by OandoSupply and Trading has grown increasinglycompetitive for all product lines. Therewould also remain the risk of any impact ofgovernment regulations on businessoperations.

Our positioning and future growth will bebuilt on four main strategies:

• Further diversification of margincontribution from predominantlygasoline to other product lines.

• Locking and creating captive sources ofsustainable supply of competitivelypriced refined products.

• Increase operational efficiency• Securing additional storage facilities for

all products because product availabilityand accessibility are critical toincreasing customer base.

Oando Supply and Trading’s strategy willleverage on its geographical spread,capabilities and strong governmentrelations developed over the years. Through upstream alliances, we willpenetrate and build our Gasoil coastalbusiness in order to extend our productscope and refocus on higher marginmarkets. We will concentrate on alliances,which offer us opportunities to leverage onsynergies with which to harness serviceand support capabilities.

By consolidating on existing markets andtapping into the growing market for otherproduct lines, we foresee a future ofincreased activity for Oando Supply andTrading.

Significant 2012 initiativesinclude• Automation of all existing manual

processes using either existingunderutilized software or new software.This would improve efficiency andturnaround time for business operations.

• Review current operational structure andcompetencies of staff across board, witha view to ensuring world class fit.

• Secure additional storage facilities forproducts because product availabilityand accessibility will be a key winningstrategy.

• Continuous monitoring of operationalprocesses to realize identified value andextract unanticipated ones.


Oando Terminals &Logistics (OTL)Oando’s Terminals & Logistics (OTL) division(formerly known as the Oando Refinery andTerminals (OR&T) division; renamed to reflecta strategic shift of the refinery plans to thelong term) is set to commence its first majorinvestment as Oando leads the way in solvingthe nation’s petroleum product importationinfrastructure deficiencies and operationalinefficiencies.

OTL, your downstream asset developmentorganisation, will quickly become a majorcash engine for the group as it progressestowards the realisation of the ApapaSubmarine Pipeline (ASP) project - a jetty inthe Lagos harbour that connects to the MajorMarketers’ storage by a half kilometre subseapipeline and a new 3km onshore linedelivering almost 3 million tonnes a year.

In Liquefied Petroleum Gas (LPG), while westill carry a fully approved LPG storageproject in our portfolio, we will also consideralternative asset solutions in the relevantoperating entities to secure marketdominance.

To focus on specific value delivery, we havepulled back from our efforts with the LagosState Government to develop the secondPhase of the Lekki Free Trade Zone and theopportunities for a refined product storagefacility targeted at relieving Lagos roads andexisting ports of the burden of processing themajority of the nation’s fuel imports. Thesehowever remain long term options in whichwe possess advantaged capabilities toexecute.

In summary, the division has refocused on theterminal and logistics segments of the valuechain where we have greater certainty tosucceed in the near and midterm. Thus, wecan go on to secure new opportunities asthey arise out of new insight, internationaloptions and the government’s recentlyrestated privatisation drive.

+200%Base Oils volumes grew by over200% over 2010 figures due toincreased customer base andgeographical expansion

120In 2011, OGP increasedthe utilization of itsnatural gas distributionnetwork in GreaterLagos and currently hasa customer base ofabout 120 off-takers.


MidstreamOando Gas and Power business is in the distribution of natural gas and power initiatives aimed at electricitygeneration and distribution in Nigerian and West Africancountries.


1. Gaslink N17.46bn2. Akute Power N1.98bn3. CHGC N0.18bn

Total revenue

N19.6bn

1

23

33Oando PLC

2011 ANNUAL REPORT

Our focus is to aggressively develop andleverage Nigeria’s domestic natural gasinfrastructure to become the leading gas andpower provider to the last-mile customer.

review of 2011In 2011, OGP increased the utilization of itsnatural gas distribution network in GreaterLagos and currently has a customer base ofabout 120 off-takers. We also completed thefeasibility study for the Greater Lagos PhaseIV Project to assess the expansion of ourpipeline network to other areas in Lagos. Our Independent Power Plant, Akute PowerLimited, continued to supply the energyrequirements of the Lagos Water Corporationthrough efficient operations. OGP alsocommenced the operation of Central HorizonGas Company (a special purpose vehicle setup to rehabilitate and expand the existinggas distribution pipeline in Trans-Amadi,

Rivers State) and currently supplies 8customers. Furthermore, we commissionedgas supply via our East Horizon GasCompany pipeline to our foundationcustomer, United Cement Company ofNigeria Limited.

In 2011, OGP commenced the process for conducting a feasibility study on thedevelopment of a Gas Transmission Pipelinein South-West Nigeria that traverses Ogun,Oyo, Osun, Ekiti and Kwara States. Weexecuted a Memorandum of Understanding(MOU) with the Nigerian National PetroleumCorporation (NNPC) for the joint feasibilitystudy of the proposed development. We alsosucceeded in receiving a grant from theUnited States Trade Development Agency(USTDA) as partial funding for the feasibilitystudy.

Midstream OperationsOando Gas & Power (OGP)Oando Gas & Power Limited (OGP) is responsible for thedevelopment, operations and management of Oando PLC’saspiration in the gas and power space. Currently, there are fouroperational assets in the entity, namely; Gaslink Nigeria Limited(GNL), Akute Power Limited (APL), Central Horizon GasCompany (CHGC) and East Horizon Gas Company (EHGC). A number of subsidiaries have been registered as specialpurpose vehicles (SPVs) in order to pursue initiatives within thegas and power industry. These will be matured in time tobecome operational assets.

34Oando PLC

2011 ANNUAL REPORT


OGP Turnover of

N19.6bnOGP EBITDA

N5.9bnOGP PAT

N3.4bn

35Oando PLC

2011 ANNUAL REPORT

The Oando-led consortium (Oando, AGIP,and NNPC) secured an award for thedevelopment of a Gas Processing Facility forthe Central Franchise Area. When completed,the Gas Processing Facility will help inmeeting the Nigerian Gas Master Plan(NGMP) aspirations for gas availability in thedomestic market. This development shouldhave an initial capacity to process up to 600million standard cubic feet of natural gas perday.

OGP retained its Quality ManagementSystem Certification and was adjudged bythe Standards Organisation of Nigeria (SON)as being compliant with the ISO 9001:2008Standard. We are resolute in our commitmentto safe practices and continue to provide therequired safety guidelines for people and theenvironment where we operate.

Natural Gas DistributionGaslink Nigeria Limited (GNL) is the flag-ship company and main operating arm ofOando Gas & Power Limited. An outstandingachievement recorded during the year underreview was the completion of the LiverpoolRiver Crossing Project, executed using theHorizontal Directional Drilling (HDD)technology. This project was designed toprovide a better assurance of gas supply to customers along the Apapa axis bycompleting the loop in the network, in linewith global best practices.

In 2011, we achieved full deployment of ourDistribution Integrity Management Programs(DIMP) and instituted emergency readinessprocedures in all our operational bases andproject locations. In the course of the year,we experienced five (5) days of sectional gasoutage along a segment of our distributionnetwork due to unscheduled maintenanceprogramme and supply restrictions by theNigerian Gas Company (NGC).

As part of ongoing efforts to optimize ourexisting assets, we continued to develop non-gas revenues through the lease of ourgas pipeline right of way for Fibre OpticDevelopment. We are currently negotiatingcontractual terms with a potential partnerfollowing a successful competitive tenderprocess.

It should be noted that some of our existingindustrial customers were unable to utilizenatural gas due to other reasons borderingon their respective business operationalchallenges.

We have recently embarked on theexpansion of our Greater Lagos pipelinenetwork (Phase IV Expansion Project) whichwould enable more customers have accessto natural gas from our distribution network.

East Horizon Gas Company (EHGC) wasestablished as a Special Purpose Vehicle(SPV) to construct 18” x 128km natural gaspipeline from NGC’s flange at Ukanafun onthe existing Obigbo North-ALSCON MainlineIntermediate Scrapper Trap, for the supply ofnatural gas to our foundation customer,United Cement Company of Nigeria Limited(UNICEM) at its Mfamosing plant in Cross-River State. This pipeline system is expectedto open up supply to other customers inCalabar and the south-east corridor ingeneral.

EHGC has secured gas supply through theGas Aggregation Company of Nigeria(GACN) for 22 million standard cubic feet perday (mmscf/day) of natural gas being theinitial volume required for the first phase ofUNICEM’s off-take.

We achieved mechanical completion of theproject and gas to flange in October 2011,while the official commissioning ceremonywas held in November 2011.

Power GenerationAkute Power Limited (APL), our flagshipIndependent Power Plant has been inoperation since January 2010. The 12.15MWgas fired power plant has continued todeliver electric power to Lagos WaterCorporation’s main Water Works at Akute. The project is the first in the series of captivepower projects being executed by OGP andis in line with our strategy of becoming amajor player in the Nigerian ElectricityIndustry. The outlook for the company ispositive with the guaranteed cash flowexpected from the plant operations.

In the year under review, we optimizedbusiness operations through efficientfinancing programmes.

Outlook for 2012Oando Gas & Power will continue to grow itsbusiness portfolio and establish itself as aforce to reckon with in the gas & powerspace in Nigeria. OGP’s revenue target in2012 is premised on the following:

• Efficient and safe operation of existingassets/businesses thereby deliveringon growth targets

• East Horizon Gas Company (Calabarregion in Cross River State)

• Central Horizon Gas Company (PortHarcourt region in Rivers State)

• Gaslink Nigeria Limited (Greater Lagosarea in Lagos State)

• Akute Power Limited

• Progress on maturation of projects:• Completion of Compressed Natural Gas

Plant in Lagos (Gas Network ServicesLimited).

• Commencement of an independent powerplant for Lagos State’s secretariat campusat Alausa.

• Studies and Engineering Designs inrespect of Gaslink Phase IV, CPF, EIIJ.

• Submission of bids in respect of ongoingprivatization programme of the PHCN forassets of interest.

In conclusion, 2012 offers enormouschallenges and opportunities for OGP toimplement its vision of being the leading andmost innovative energy company in ourchosen markets.

We expect 2012 to also mark the inflexionpoint in our history as a division, as we lay the foundation for significant growth andexpansion in the coming years.


+110%The drilling fluids businessreaped the benefits of itsmarketing efforts in 2011 withrevenue growing by 110%.

37Oando PLC

2011 ANNUAL REPORT


UpstreamOando holds interests in 13 licenses for the exploration,development and production of oil and gas assets locatedonshore, swamp, and offshore, our primary task is toharness optimally the potentials of our existing portfolio.


1. Energy Services N14.4bn2. Exploration and Production N26.9bn

Total revenue

N41.3bn1 2

Swamp Drilling rigsThe year commenced with OES Integritycontinuing its obligation under a 6-monthfarm-out agreement to the Shell PetroleumDevelopment Company of Nigeria Limited /Nigerian National Petroleum Corporation(“SPDC/NNPC”) Joint Venture whichcommenced in August 2010. During theperiod, the rig drilled 3 wells and carried outworkover operations on a handful of wells inaccordance with our clients drilling program.

Following the successful 6-month drillingcampaign, OES Integrity returned to NigerianAgip Oil Company Limited (“NAOC”) in Mayto complete the primary term of its 2 yearmain contract. On returning to NAOC, the rigcompleted a further 4 wells prior to the end ofthe primary term of the contract in December.Operational efficiency of OES Integrity for theyear was 98%, resulting from properplanning, strict adherence to scheduled

maintenance programs and experienced rigand shore based staff. In demonstration ofNAOC’s satisfaction in the performance of therig, the company exercised its right to extendthe contract for an additional year under thesame terms and conditions thus renewing thecontract until December 2012.

Following the end of the interim contract withthe NAOC/NNPC Joint Venture for theutilization of OES Teamwork and ahead of thecommencement of the two year maincontract; the rig underwent a 4-monthextensive refurbishment work. During thiscrucial shutdown period, major equipmentrepairs and maintenance were undertakensuch as the replacement of bearings for themain Electro-Motive Drive (EMD) engines,overhaul of deadline anchor, mud pump,swivel and installation of tandem booster onthe BOP. In addition, annual inspection of drillpipe, preventive maintenance of mud pumps,

38Oando PLC

2011 ANNUAL REPORT


OES Turnover of

N14.4bnOES EBITDA

N6.2bnOES PAT

N399m

Downstream OperationsOANDO ENErGY SErVICES (OES)Despite some concerns that an election year will give rise toincreased levels of instability in the Niger Delta, 2011 proved tobe a relatively peaceful year. As a result, Oando Energy ServicesLimited (“OESL”) businesses experienced little disruption to ouroperations, enabling us deliver services to our clients all yearround. While oil prices dropped from a high of US$116/bbl inMay 2011, oil prices averaged US$111/bbl, representing a 39%increase over 2010. This thereby encouraged an increase in the level of drilling activities despite the disappointment of thenon-passage of the Petroleum Industry Bill.

39Oando PLC

2011 ANNUAL REPORT

5-yearly overhaul of the travelling block, crownblock, swivel, dead anchor and 10-yearlyoverhaul of Draw-works were carried out inorder to take full advantage of the shutdown.Despite the extended out-of-service time, therig carried out work-over activities on 4 wellsand drilled its first well (Timpa-A) before theclose of the year. Excluding the shutdown,operational efficiency of the rig as at year endwas 98.5%.

The refurbishment of OES Passion went into full swing at the start of the year. With the maincontractors (CPD Oilwell) onboard, the firststep was to further define the work scope forthe refurbishment based on a detailedinspection of equipment. A series ofdisappointing events such as the increase inwork scope, increased lead times for partsordered from original equipment manufacturers(OEM’s) due to an increase in drilling activity aswell as a change in the project main contractorresulted in delays to the agreed projectcompletion date. By working closely with theclient OESL was able to complete 95% of therefurbishment which was inspected by anindependent inspection company AberdeenDrilling Consultants in December 2011.Following the completion of final checks, therig has mobilized to the client’s first welllocation where onsite acceptance is beingcarried out by an inspection company selectedby the SPDC/NNPC JV ahead of contractcommencement.

In line with our plan to have four rigs workingby the end of 2012, OES continued to pursueopportunities for its fourth rig, OES Respect.The rig which was moved from Nigerdock toKris Oil Jetty in Apapa back in February 2011has generated interest from many marginalfields, independents and internationaloperators alike. Earmarked for a 2-yearcontract with one of the majors, OESLcommenced its reactivation plan in Septemberby engaging a host of local companies toundertake the necessary activities ahead ofexporting the rig to the Beacon MaritimeShipyard in Orange, Texas for refurbishment.With a team made up of individuals whoworked on the original rig design andconstruction, Beacon Maritime brings a wealthof knowledge to the extensive refurbishmentproject which will see the addition of a third

mud pump, replacement of the main caterpillar(CAT) engine, increasing the capacity of theelectrical system and refurbishment of thecranes. The agreed work scope which is in linewith OESL’s proposed client’s requirements isestimated to take 6-months. Following theacceptance of the rig by OESL’s technicalinspection team in Orange, the rig isscheduled to return to Nigeria at the end ofQ3 2012.

Drill BitsDespite a lower number of active drill bitscontracts in 2011 compared to 2010, there wasa significant increase in sales in 2011. The63% revenue increase witnessed over 2010 isattributed to OESL’s focus on service deliveryas well as an increase in customerengagement through rigorous marketing effortssuch as lunch & learn meetings and customerfeedback forums. In 2011, Mobil ProducingNigeria Limited was responsible for 80% ofOESL’s drill bit sales, primarily due to theoutstanding performance of OESL’s Halliburtonbits which achieved many records such asdrilling the longest footage by a single drill bitat remarkable speeds.

Though contracts with SPDC and Shell NigeriaExploration and Production Company Limited(“SNEPCo”) ended during the year, drill bitswere delivered to both clients via interimcontracts which were put in place pending themain contract award. The end of GSF Monitor’scontract with Total E&P Nigeria Limited (“Total”)in September and the structural issues facedby Seawolf Oritsetmeyin resulted in lower thanexpected activity by Total in the year, thusdespite a lucrative contract which was signedin 2010, sales were not as expected.

The award of contracts at the end of the yearby Nigerian Agip Exploration Limited (“NAE”),Esso Exploration & Production Nigeria Limited(“ESSO”), Energia Limited and Pillar Oil Limitedto OESL to supply bits for their 1 to 2 welldrilling programmes is expected to have apositive impact on sales performance in Q1 2012.


98.5%Operational efficiency of rigsas at year end was 98.5%

40Oando PLC

2011 ANNUAL REPORT

Drilling Fluids The drilling fluids business reaped thebenefits of its marketing efforts in 2011 withthe provision of services to Chevron onboardthe long awaited jack-up rig, the KSEndeavour. Despite the end of OESL’songoing contract with ExxonMobil, servicescontinued through the year to long standingclients such as NAOC, Chevron deepwaterand SNEPCo. Numerous challenges wereexperienced during the year whichthreatened the profitability of this businessincluding the increase in price of mudproducts which was passed on by partnersas well as product availability issues, inparticular barite. Nevertheless, compared to2010, revenue grew by 110%.

The strategic decision to include productionchemical solutions to our basket of serviceswas well received by major oil companiesand contributed positively to the revenuegrowth of the business. The trusted alliancewith world leader Champion Technologiesprovided the much needed confidence whilethe successful application of profferedsolutions during field trials was a truetestament to extensive R&D support availableto OESL via the alliance. Orders werereceived from both Total and SNEPCo duringthe year for a range of products includingcorrosion inhibitor (CK-368) and calciumnaphthanate (CN 1007).

The successful commencement of solidscontrol services on OES Integrity in 2010established OESL as a major player in thisfield. This paved the way for a secondcontract to be executed with NAOC and arequest for services by a second operator.

Outlook for 2012Following the total loss of NRG 101, a land rigoperating for Waltersmith Petroman Oil, andtaking from some of the lessons highlighted inthe BP Macondo investigation report, there isclearly a need to place more emphasis onstrict adherence to policies and procedures.This will drive the ISO 9001:2008 certificationwhich OESL intends to attain before the endof the year.

With the OES Passion commencing its 2-yearcontract with SPDC in February 2012, OESwill have three rigs under contract. Our focuswill therefore be on ensuring that our 3operating assets are properly maintained and

adequately staffed in order to minimizedisruptions to daily rig operations, therebyreducing Non-Productive Time (NPT) andmaximizing revenue. Revenue will also bemaximized by strict adherence to anyplanned out of service time such as theshutdown of OES Teamwork which isexpected to take 60 days and is scheduledfor Q4 2012.

Timely and cost effective project executionwill be achieved through a close monitoringof all ongoing projects including therefurbishment of OES Respect in Orange. In order to remain on course to achieve ourrig deployment plan, it is critical that therefurbishment is concluded and the rigreturns to Nigeria by the end of Q3 ahead ofa likely Q4 contract commencement.

Positioned to take advantage of land rigopportunities, we will continue to activelyparticipate in this area and look forward to theconclusion of some of the ongoing tenderingactivities which will possibly lead to OESL’sexecuting its first land rig contract in thecourse of the year.

The extension of contracts and the award ofnew contracts by companies such as EnergiaLimited, Pillar Oil Limited, ESSO and NAE areexpected to contribute significantly torevenue. We remain determined to eliminatemany of the challenges faced in the fluidsbusiness, specifically product availabilityissues. This has resulted in OESL exploringnew alliances with suppliers of chemicals atthe end of 2011 and we anticipate that thebenefits of these relationships will be realizedin 2012.

Focus will be placed on developing theexisting production chemicals business andincreasing market share from 1.2% to 2.4%through a gradual penetration into Chevronand increasing product sales to Total andSNEPCo.

The drill bits business is no doubt in thegrowth phase of its lifecycle. The superiorperformance of the bits backed by bespokeapplications engineering will continue toincrease demand with existing customers.The gradual increase in OESL’s marginal fieldand independent operators’ customer baseclearly shows that our product awarenessmarketing drive is yielding fruit. This isexpected to continue through 2012.

Upstream OperationsOANDO ENErGYSErVICES (OES)Continued

41Oando PLC

2011 ANNUAL REPORT

The company remains well positioned forimmense growth in 2012 as we await thesekey economic reforms to kick in. With ourfocus and strategy remaining as clear asever, we are in prime position to surpassour past performance to the ultimatesatisfaction of our esteemed shareholders.

Nigeria’s oil industry remains stifled with thePetroleum Industry Bill still not signed intolaw. The major upstream players continue tofocus deeper offshore and there remains anabundance of potential opportunities forOEPL before, and especially after the PIB isresolved.

In 2011 we achieved a gradual but sustainedincrease in average daily production from4,500bpd in 2010 to just under 5,000bpd in2011 despite recurrent production disruptionsdue to theft and vandalism on OML 56. Theproduction gains were mainly due to wellstimulation efforts. A successful refinancing ofbank facilities significantly improved ourworking capital position.

Given these achievements as an indigenousplayer, our ambition going forward is tocontinue to optimize our asset portfolio in as value-accretive a manner as feasible. We anticipate a number of new productionopportunities will come on stream in 2012and positively impact our daily production.We also intend to continue to optimize ourcapital structure and free up resources tocapitalize on opportunities the ongoingreforms in the industry should present upon their eventual conclusion.

ASSET PrOFILES

OML 125 and OML134Oando OML 125 and OML 134 Ltd acquireda 15% working interest in OMLs 125 and 134in 2008. These blocks are operated byNigeria Agip Exploration (“NAE”) and arelocated in Nigeria’s deep offshore segmentwith acreage size of 1,220 Km2 (OML 125)and 1,187 Km2 (OML 134) respectively.

Production from the Abo field within OML 125averaged 28,000 bpd in 2011, exceeding ourexpectations, as the anticipated decline wasprevented by a successful well stimulationprogramme in the third quarter of 2011. Thereare plans in 2012 to improve the reserve baseof this asset by completing and working-oversome of the current wells on the asset.

In OML 134, tendering and contracting forseismic processing is currently underway.Seismic processing and interpretation of the asset data will commence as soon as a competent seismic processing contractorhas been identified.

Obodeti/Obodugwa Field Area(OML 56)Oando Production and DevelopmentCompany before (OPDC) acquired a 45%participatory interest in the Obodeti/Obodugwafield area from the government during themarginal field allocation round in 2003. Thisacquisition was made pursuant to a marginalfield farm out agreement between NNPC, ElfPetroleum, Energia and Unipetrol Productionand Development Company Limited.

Further to the unitization agreement betweenthe Group, Energia and Pillar Oil in April2004, the combined working interest of theGroup and Energia in the oil production fromthe Obodugwa 3 well, which is located in anadjacent concession operated by Pillar Oil, is 30%. Four wells had been drilled in theObodeti/Obodugwa field area by Elf (nowTotal).

Upstream OperationsOando Exploration &Production (OEPL)2011 was another tumultuous year for the global economy. Oil prices were over $100/bbl for most of the year, driven by the instability caused by the popular uprising in the MiddleEast / North Africa region. The demand outlook for oil howeverremains positive and is expected to be driven by fast growingemerging economies. This has supported a significant rise incapital spending in the exploration & production business, aswell as an evolution in the technology, as seen in theproliferation of hydraulic fracturing of shale gas.

42Oando PLC

2011 ANNUAL REPORT


OEPL Turnover of

N26.9bnOEPL EBITDA

N18.03bnOEPL Loss after Tax

N934m

43Oando PLC

2011 ANNUAL REPORT

Following production tests in October 2009,the Obodeti/Obodugwa field commenced oilproduction operations in December 2009.Evacuation of the crude was initially donethrough a trucking system. However, an 8kmpipeline has been completed and wascommissioned in August 2010 with a LeaseAutomated Custody Transfer (“LACT”) unitinstalled at the facility. Production from thisfield averaged 1,400bpd over 2011 andaveraged 1,700bpd in the last quarter of2011 as ongoing optimization efforts resultedin sustained gradual increases in productionover the year. Work is in progress to achieve3,500bpd by the end of 2012 uponcompletion of our drilling program for thisyear in addition to further optimization efforts.

Akepo Field (OML 90)Oando Akepo Ltd entered into a farm-inagreement with Exile, following which theGroup acquired a 30% participatory interestin a Marginal Fields Farm-out Agreement withrespect to the Akepo field - Under the JointOperating Agreement (JOA) between thefield’s original concession owners, Sogenaland Exile. Sogenal is currently the operator ofthe field whilst Oando and Exile entered intoa Financing, Technical and ManagementServices agreement ("FTMSA") in 2008 whichprovided for Oando to assume theresponsibilities of Exile as Technical Partnerto recover its costs expended in that respectfrom Exile under allocations of proceedsreceived from the Field. The Akepo field islocated in shallow water in the Niger Delta, onan area of 25.7 Km2 within OML 90.

Akepo is currently in the final stages ofdevelopment. Detailed engineering designwas undertaken in 2011 and constructionwork on the production and evacuationfacilities is ongoing. Production is anticipatedto commence in Q4, 2012.

OPL 236OEPL was awarded this block in May 2007and the Production Sharing Contract wassigned with NNPC in February, 2008. Thisconferred OEPL with a 95% working interestand operatorship of the block. RFO Venturesis the local content vehicle (LCV) with a 5%participatory interest. The block is locatedonshore Akwa-Ibom State with a totalacreage of 1,650 Km2. A GlobalMemorandum of Understanding (GMOU) was signed with the Ukana community inAugust 2008.

OPL 236 is currently in the exploration stagewith estimated 2C reserves of 33.6bcf (RPSreport). In 2010, 2D seismic data for OPL 236was purchased and digitized. Regionalinterpretation of the seismic data began atthe end of Q3, which resulted in a delineatedfootprint for targeted acquisition of 3Dseismic data on the block.

Work is ongoing on a development programaimed at harnessing the gas reserves in linewith the proposed industry gas master planand delivering the much needed cleanenergy for the growing energy needs of theutilities and power industry within the region.

OPL 278In January 2006, OEPL acquired a 60%working interest pursuant to a ProductionSharing Contract (PSC) among the Group,CAMAC, Allied Energy and First Axis and theNNPC, in respect of OPL 278. OPL 278 isoperated by OEPL under a JOA madebetween OEPL, CAMAC, Allied Energy andFirst Axis. OPL 278 is located offshore ofRivers State in a transition zone (swamp toshallow marine) on an area of 91.9Km2.Three prospects have been identified in OPL278, which are Ke, Prospect A and ProspectB. The blocks exploration phase has beenextended to 2015 by The FederalGovernment of Nigeria.


5,000bpdWe achieved a gradual but sustained increase inaverage daily production to just under 5,000bpdin 2011 on OML 56.

44Oando PLC

2011 ANNUAL REPORT

OPL 282On 8 August 2006, OEPL acquired a 4%working interest in the PSC between NAOC,Alliance Oil Producing Nigeria (AOPN)Limited and NNPC, in respect of OPL 282(the “OPL 282 PSC”). NAOC holds a 90%working interest in the OPL 282 PSC, whileAOPN, which represents the local contentvehicle in OPL 282, holds the remaining 10%working interest. The Group holds 40% of theshares in AOPN, while ARC Oil and GasNigeria Limited holds the remaining 60%.OPL 282 is operated by NAOC under a JOAmade between NAOC and AOPN. OPL 282 is located in a transition zone (onshore toshallow marine) in Bayelsa State, on an areaof 695 Km2. This block is currently in theexploration phase. An exploratory drillingcampaign in the block was kicked off with the Tinpa-1 Dir well, which spudded in thefourth quarter of 2011.

The Equator AssetsOando PLC owns 81.5% of EquatorExploration Limited (‘Equator’), most of whichwas acquired in 2009 by the conversion ofloans made to Equator into shares and by thepurchase of shares on the open market. In2011, Oando PLC continued to increase itsinterest in Equator by buying minority sharesas opportunities arose. In 2012, Oando PLCwill seek to acquire the remainder of Equator.

Nigeria – OPL 323 and OPL 321Equator holds a 30% participating interest in each of deep water blocks, OPL 321 andOPL 323, awarded in the Nigerian 2005licensing round.

During 2011, the Federal Government ofNigeria continued to appeal a high courtjudgment in favour of the operator, the Korean National Oil Corporation (‘KNOC’).The judgment, granted in August 2009, hadruled that the government had actedunlawfully in January 2009 when it voided the allocations of OPL 321 and OPL 323 to KNOC (but not to Equator), nearly threeyears after the PSC’s had been executed.

Despite requesting and receiving an interimrefund of its share of the signature bonuses of US$ 161.7 million in September 2009pending the outcome of the litigation, Equatorvigorously maintains its interests in the twoblocks. In 2011, Oando/Equator campaignedfor a settlement among the government and

industry stakeholders. These efforts continuewith the aim of achieving a resumption ofexploration activities on these highlyprospective blocks by end 2012. A highquality 3D seismic survey has already beenused to evaluate a number of large prospectsand to select the well locations. Netherland,Sewell and Associates have independentlyassessed the Best Estimate of the GrossUnrisked Recoverable Oil Resources to be 1.6 billion barrels for the two blockscombined. Drilling could start on the fourcommitment exploration wells within twoyears of the resumption of operational activity.

Blocks 5 & 12, EEZ of São Tomé & PríncipeIn February 2010, in accordance withagreements signed in 2001 and 2003, thegovernment of São Tomé & Príncipe awardedEquator Blocks 5 and 12, its first two choicesfrom all of the blocks within the country’slarge Exclusive Economic Zone (‘EEZ’).Negotiations of satisfactory ProductionSharing Contracts (‘PSCs’) with thegovernment were completed during 2011.The agreements are expected to be signed in H1 2012, triggering payment of signaturesbonuses and commitment to a four year workprogramme of 2D and 3D seismic acquisition.

During 2011, existing 2D seismic surveyswere used to complete the evaluation of theblocks and identify a number of prospects. In order to manage the exposure to the risksof high cost exploration in a frontier provincein ultra deep water, the Company isconsidering farm outs. A number of worldclass oil companies have visited the dataroom in order to assess the opportunity.

Upstream OperationsOando Exploration &Production (OEPL)Continued

45Oando PLC

2011 ANNUAL REPORT

Bilabri & Owanare (OML 122)In April 2005, Equator signed a Finance andService Agreement with Peak PetroleumIndustries Nigeria Limited (‘Peak’), the leaseholder of OML 122, an offshore indigenousblock. In return for providing funds andsupplying technical services, Equatorbecame entitled to a share of any oil and gasproduction from the Bilabri and Owanarediscoveries and from any discovery made bya selected exploration well.

Four attacks by militants, three involving thetaking of hostages, forced the suspension ofoffshore operations a number of monthsbefore production was due to commencefrom Bilabri. The termination of contracts withsuppliers resulted in major financial penaltiesto Equator. To relieve these, Equator enteredinto the Bilabri Settlement Agreement (‘BSA’)with Peak in 2007 whereby Peak assumedresponsibility for existing debts and forfunding the future development in exchangefor Equator accepting significant reductionsin its shares of oil and gas production. Peakbreached this agreement and Equator wasawarded US$123 million plus interest in anarbitration tribunal in May 2008.

In 2011, Peak continued to be unable to meetits obligations under the BSA. Consequently,Oando/Equator pursued winding upproceedings against Peak in the courts ofNigeria. A court has issued a final order forthe winding up of Peak and has appointed afinal liquidator. Our lawyers advise that anappeal by Peak has little merit.

In the meantime, Oando/Equator also offeredPeak a settlement in which Oando/Equatorwould resume the funding and operations ofthe Bilabri Oil Field Development in return foran increased participating interest in the oilproduction and for an assignment of a directinterest in Oil Mining Lease 122 with thegovernment. An independent evaluation byNetherland, Sewell and Associates assessesthe Gross Proved plus Probable Reserves forthe Bilabri Field to be 13.2 million barrels. The estimate for Gross Proved plus ProbableContingent Gas Resources is 501 billionstandard cubic feet for Bilabri and a newdiscovery, Owanare, combined.

JDZ Block 2Equator has a 9% interest in this block,awarded in the 2004 licensing round for theJoint Development Zone between Nigeriaand São Tomé & Príncipe. The ‘Bomu 1’exploration well, drilled in the second half of 2009, was completed under budget and discovered dry gas in a number offormations. The Joint Development Authority(‘JDA’) has awarded three extensions,amounting to a total of two years, to theparticipants for them to complete theevaluation of the results from ‘Bomu 1’,including a reassessment of the prospectivityof the remainder of the block.

In early 2011, Sinopec, the operator, reportedthe results of the evaluation. It was confirmedthat the ‘Bomu’ gas discovery was too smallto be economic in deep water in currentconditions and that the rest of the block hadinsufficient prospectivity to justify entering thePhase 2 Exploration Period with its obligatorywell. Sinopec has notified the otherparticipants that it will not continue.

Outlook for 2012Despite the challenges faced in 2011, wehave a positive outlook on 2012, especiallywith the expected additional productionstreams anticipated in the year. Furthermore,we are cautiously optimistic towards aresolution to the current impasse with themuch anticipated passage of the PIB by theNational Assembly. The PIB as well as theNigerian Content Act, which was passed in2010, are expected to increase our footprintas an indigenous integrated oil and gascompany in the industry. We expect that it willpresent more opportunities for us to acquireacreage from the International Oil Companies(IOC’s) and farm-in to under-performingassets that have near-term productionprofiles. Furthermore, we shall continue toposition ourselves as the preferred partner of choice to companies seeking to gain entryinto the oil industry in Nigeria and the Gulf of Guinea.

Our mid-term focus is to increase currentdaily production to 10,000bpd/daily,dynamically optimize our capital structure todevelopment and acquisition opportunitiesgoing forward, maintaining our health andsafety record, and growing our reservesaccordingly to deliver increased value to ourstakeholders - both local and international.

ConclusionFollowing our write-downs in 2011, weanticipate a robust performance in 2012,having dealt with all costs that couldnegatively impact future performance. We look forward to providing superior valuefor our shareholders in 2012 as new projectscome aboard and key government policiestake effect to the benefit of indigenousplayers in the industry.

Mr. J.A. TinubuGroup Chief Executive


We have a positive outlook on 2012, especially with theexpected additional production streams anticipated inthe year. Furthermore, we are cautiously optimistictowards a resolution to the current impasse with themuch anticipated passage of the Petroleum IndustryBill (PIB) by the National Assembly.

46Oando PLC

2011 ANNUAL REPORT

Board of Directors

HrM M.A Gbadebo, CFr

HRM Michael Adedotun Gbadebo, CFR,is the Alake (King) of Egbaland inNigeria and Chairman of the Board.

He was appointed as a Non-ExecutiveDirector of the Company on 10 April2006. Prior to his coronation as theAlake of Egbaland in 2005, HRM had asuccessful career in the Nigerian Armyculminating in his appointment as thePrincipal Staff Officer to the Chief ofStaff, Supreme Headquarters fromJanuary 1984 - September 1985.

He was also awarded military honourssuch as the Forces Service Star and theDefence Service Medal. HRM Gbadeboobtained a Bachelor of Arts degree fromthe University of Ibadan, Nigeria in1969. He graduated from the StaffCollege of the Nigerian Armed Forces in1979 and has served on the boards ofseveral companies including: Oceanand Oil Services Limited. HRMGbadebo currently serves on the boardsof Global Haulage Resources Limitedand Dolphin Travels Limited.

Mr. Jubril Adewale Tinubu

Wale Tinubu is the Group ChiefExecutive of Oando PLC, Africa’sleading indigenous energy solutionsprovider listed on the Nigerian andJohannesburg Stock Exchanges. He serves on the board of various blue-chip companies as Chairman andDirector. In 2007, he was named aGlobal Young Leader by the WorldEconomic Forum, Geneva, inrecognition of his achievements as oneof the leading executives under 41.

In 2010, Wale won the Africa’s‘Business Leader of the Year’ award bythe African Business Magazine and theCommonwealth Business Council onthe basis of his contributions to thedevelopment of the African Oil and Gasindustry. In 2011, he was awarded the‘African Business Leader of the Year’ byAfrica Investor. He obtained a Bachelorof Laws (LLB) from the University ofLiverpool, England in 1988 and Mastersof Law (LLM) from the London School ofEconomics, United Kingdom, in 1989where he specialised in InternationalFinance and Shipping.

1

2

1 2

43

5 6

7 8

9

1. HrM M.A Gbadebo, CFr3. Mr. Omamofe Boyo5. Ms. Nana Afoah Appiah-Korang7. Mr. Olufemi Adeyemo9. Engr. Yusuf K.J N'jie

2. Mr. Jubril Adewale Tinubu4. Mr. Bolaji Osunsanya6. Mr. Oghogho Akpata8. Chief Sena Anthony10. Ammuna Lawan Ali, OON

10

Mr. Omamofe Boyo

Mr. Omamofe Boyo is the DeputyGroup Chief Executive of the company,having been appointed to this positionin 2006. Prior to his appointment, Mr. Boyo was Executive Director,Marketing of the Company from 2000to 2002 and the Deputy ManagingDirector/Chief Operating Officer from2002 to 2006.

Mr. Boyo serves on the boards ofseveral companies in the groupincluding Gaslink, Oando Explorationand Production Limited, OandoMarketing PLC and Oando Supply andTrading Limited.

Mr. Boyo is currently a director of OOH,OOIM, OOIN, OOHN, Indumines Ltd,Midwestern Oil & Gas Ltd, QuantumVoice Systems Ltd, I2I Nigeria Ltd andLagos Preparatory School Ltd. Prior tohis appointment as Executive Directorof the Company in1999, Mr. Boyo wasan Executive Director of Ocean and OilServices Limited from 1994 to 1999.

Mr. Boyo started his career with ChiefRotimi Williams’ Chambers, a NigerianLaw firm where he specialized inshipping and oil services and workedon several joint venture transactionsbetween the Nigerian NationalPetroleum Corporation and majorinternational oil companies. Mr. Boyoobtained a Bachelor of Laws degreefrom Kings College, University ofLondon in 1989.

Mr. Bolaji Osunsanya

Mr. Mobolaji Olatunbosun Osunsanyawas appointed as an Executive Directorof the Company on 27 June 2007. Mr. Osunsanya has been the ChiefExecutive Officer of Oando Gas andPower Limited since January 2004.Prior to his appointment as the ChiefExecutive Officer of Gaslink Nigeria, he was the Chief Marketing Officer -Commercial of Oando Marketing PLC.Prior to joining the company in August2001. Mr. Osunsanya was an executivedirector at Access Bank Plc fromNovember 1998 to March 2001 and anAssistant General Manager atGuaranty Trust Bank Plc from 1992 to1998. From 1988 to 1992, Mr Osunsanya worked as a consultantwith Arthur Andersen, Nigeria (nowKPMG professional services) gainingexperience in the banking, oil and gasand manufacturing industries.

Mr. Osunsanya obtained a BachelorsDegree in Economics from theUniversity of Ife, Nigeria in 1985 and aMasters degree in Economics from theUniversity of Lagos, Nigeria, in 1987.

Ms. Nana Afoah Appiah-Korang

Ms. Nana Afoah Appiah-Korang wasappointed as a Non-Executive Directorof the Company on 11 November,2010. She is a Director of EmergingCapital Partners (ECP). With sevenfunds and over $1.8 billion undermanagement, ECP is a leading privateequity manager focused exclusively onAfrica. Headquartered in WashingtonDC, ECP has six offices across Africaand a ten year track record ofsuccessful investment in companiesoperating in over 40 countries on thecontinent. She is involved in dealsourcing, investment appraisal,execution and value creation. She hasalso played a key role in implementingexit strategies for ECP's investments inboth Africa Fund I and Africa Fund II.She currently serves on the board ofContinental Reinsurance Plc, theleading local reinsurer in Nigeria whereshe sits on the establishment andstatutory audit subcommittees. Prior tojoining ECP, Ms. Appiah-Korang servedas an Investment Officer for ECPGlobal, having joined in 2002.

Before her employment with ECPGlobal, Ms. Appiah-Korang worked forthe Real Estate Principal InvestmentGroup of Goldman, Sachs & Co. inNew York where she executed realestate private equity transactions in theUS and played an active role in themarketing of the Whitehall XII funds topotential investors in the US, Europeand Asia. Ms. Appiah-Koranggraduated from Mount Holyoke Collegewith a Bachelor's degree inMathematics and a minor inEconomics.

Mr. Oghogho Akpata

Mr. Oghogho Akpata was appointed asan Independent Non-Executive Directorof the Company in November, 2010. MrOghogho is also the Managing Partnerand Head of the Energy and ProjectsGroup at Templars Barristers &Solicitors. Oghogho possesses 20years of experience in the transactionaldispute resolution aspects of theNigerian oil and gas sector and advisesa broad range of clients includinginternational oil companies, oil servicecontractors and a number ofmultinationals operating in Nigeria.Oghogho has been listed among theleading energy and natural resourceslawyers in Nigeria by Chambers Globalguide to the legal profession from 2005to date.

Mr. Akpata obtained a Bachelor degreein Law from the University of Benin in1990 and was called to the NigerianBar in 1991. Mr. Akpata is also adirector of FMC Technologies Limited,BlueWater Offshore ProductionSystems Limited, Choice FarmsLimited and was in 2006, the Directorof International Bar Association Sectionon Energy, Environment, NaturalResources and Infrastructure LawConference.

Mr. Olufemi Adeyemo

Mr. Olufemi Adeyemo was appointedas Group Executive Director on 30 July2009 and as the Chief Financial Officerof the Company in October 2005. Mr.Adeyemo is also an IndependentDirector of Easy Fuel Limited. Prior tojoining the Company, Mr. Adeyemo wasa Management Consultant at McKinsey& Co. from 1998 to 2005 and hasextensive experience in strategicconsulting, especially in the areas ofmergers and acquisitions, operationsreviews, strategy development andimplementation as well as organizationredesign and financial management.Before joining McKinsey& Co., Mr.Adeyemo was the Financial Controllerand Head of Operations from 1994 to1997 at First Securities Discount HouseLimited, a leading investment house inNigeria.

Mr. Adeyemo worked as an auditor withPWC from 1988 to 1992. He has beena member of the Institute of CharteredAccountants of Nigeria for 14 years. Heobtained a Master of Science degree inFinance from the London BusinessSchool, UK, in 1988, a Master ofScience degree in MechanicalEngineering from the University ofLagos, Nigeria, in 1988 and a Bachelorof Science in Mechanical Engineeringfrom the University of Ibadan, Nigeria in1987.

Chief Sena Anthony

Chief Sena Anthony was appointed asan Independent Non- ExecutiveDirector of the Company in January2010. Prior to her appointment, ChiefAnthony worked with the FederalMinistry of Justice before joining theNigerian National PetroleumCorporation (the “NNPC”) in 1978. Shewas appointed Group GeneralManager, Corporate Secretariat andLegal Division, as well as the Secretaryto the NNPC in July 1999 and waspromoted to the level of GroupExecutive Director on 6 May 2007.

Chief Anthony was the first female tobe appointed to such a position in theNNPC. She retired in January 2009 asthe Coordinator (Group ExecutiveDirector Level) Corporate Secretariatand Legal Division as well as theSecretary to the Corporation and Boardof the NNPC after working for theNNPC for 31 continuous years. ChiefAnthony was also a director of NapoilLimited, a crude oil and petroleumproducts trading company owned bythe NNPC, a director of Brass LNGCompany and General Manager Legaland secretary to the board of NigerianLNG Limited. Chief Anthony obtained aBachelors degree in Law from theUniversity of Lagos in 1973 and wascalled to the Nigerian Bar in 1974.

Engr. Yusuf K.J N'jie

Engr. Yusuf N'jie has workedextensively in the Oil industry for overthirty (30) years with companies likeOtis Engineering Corporation, SEDCO(a drilling/pipeline company) andTexaco Overseas (Nigeria) PetroleumCompany Unlimited where he alsoserved as a member of the board ofdirectors and from where he retiredafter over twenty three (23) years ofservice. He spent nine years at theOptimum Petroleum DevelopmentCompany as the ManagingDirector/Chief Executive Officer.

Engr. N'jie is currently the Chairman ofNiya Holdings Nigeria Limited and amember of the boards of variousorganisations. He is a MechanicalEngineering and graduate of theSouthern Methodist University, (SMU)Dallas, a fellow at the Nigerian Societyof Engineers, and a member of thesociety of Petroleum Engineers.

Ammuna Lawan Ali, OON

Ammuna Lawan Ali, a retired FederalPermanent Secretary commenced herCivil Service career in 1977 as aPlanning Officer in the Borno StateMinistry of Lands and Survey,Maiduguri, where she rose to theposition of Permanent Secretary. In thatcapacity, she served in the Ministries ofEducation, Women Affairs, Commerce,Industries and Tourism.

In 1995, Ammuna Lawan Ali transferredher services to the Federal Civil Serviceas a director and served in the Ministryof Women Affairs and SocialDevelopment and that of Finance.

In January 2001, Ammuna Lawan Aliwas appointed a Permanent Secretaryand served in various Ministries,including those of Commerce,Petroleum Resources, Transportation,Works, Environment, Housing andUrban Development, and briefly in theoffice of Civil Service and the Ministryof Information and Communications.She retired from service in December2009.

Ammuna Lawan Ali is a recipient ofNational Honor (OON), a member ofthe National Institute of Policy andStrategic Studies (NIPSS) Kuru, andholds a BA (Hons) Degree and MastersDegree in Public Administration.

7

4

5

6

9

10

3

8

47Oando PLC

2011 ANNUAL REPORT

48Oando PLC

2011 ANNUAL REPORT

Bermuda Nigeria

UK

Benin republic

Ghana

Togo

Where we operateOando operates in thefollowing countries and islisted on the JohannesburgStock Exchange in SouthAfrica.

Oando at a Glance

49Oando PLC

2011 ANNUAL REPORT

Our Group Structure (showing major subsidiaries)

50Oando PLC

2011 ANNUAL REPORT

report of the Directors

In accordance with the provisions of theCompanies and Allied Matters Act, CapC20, LFN 2004, the Directors of OandoPLC hereby presents to the members ofthe Company the audited consolidatedfinancial statements for the year ending 31 December 2011.

The preparation of annual financialstatements is the responsibility of the Board,and it should give a true and fair view of thestate of affairs of the Company.

The Directors declare that nothing has cometo their attention to indicate that the Companywill not remain a going concern for at leasttwelve months from the date of this report.

Legal FormThe Company commenced operations in1956 as a petroleum-marketing company inNigeria under the name ESSO West AfricaInc., a subsidiary of Exxon Corporation(“Exxon”), and was incorporated underNigerian Law as Esso Standard NigeriaLimited (“Esso”) in 1969. In 1976, the FederalGovernment acquired Exxon’s interest inEsso; Esso was nationalised and rebrandedas Unipetrol Nigeria Limited (“Unipetrol”). Aprocess of privatisation began in 1991 whenthe Federal Government divested 60% of itsshareholding in Unipetrol to the public.Unipetrol’s shares were listed on the NigerianStock Exchange (the “NSE”) in February1992, quoted as Unipetrol Nigeria PLC.Under the second phase of the privatisationprocess, the Federal Government sold itsremaining shareholding in Unipetrol. Oceanand Oil Investments (Nigeria) Limited(“OOIN”), the Company’s major shareholderin 2000, acquired 30% in Unipetrol from theFederal Government. The residual 10% stakeheld by the Federal Government was sold tothe public in 2001.

In August 2002, Unipetrol acquired a 60%stake in Agip Nigeria Plc (“Agip”) from AgipPetroli International. The remaining 40% ofthe shares in Agip was acquired by Unipetrolby way of a share swap under a scheme ofmerger. The combined entity that resultedfrom the merger of Unipetrol and Agip wasrebranded as Oando PLC in December 2003.

In 1999, Unipetrol had acquired a 40% stakein Gaslink Nigeria Limited (“Gaslink”); thisstake was subsequently increased to 51% in2001.The Company’s Gas and Power divisionemerged as a result of the consolidation ofGaslink’s gas distribution franchise and theCompany’s customer base in 2004.

On 25 November 2005, the Company waslisted on the main board of the JSE Limitedand thereby became the first Africancompany to achieve a cross border inwardlisting.

In June 2007, the Company entered into ascheme of arrangement (the “Scheme”) withcertain minority shareholders of Gaslink andwith OOIN. Under the Scheme, the minorityshareholders of Gaslink transferred theirequity holdings in Gaslink to the Company inconsideration for ordinary shares in theCompany. In addition, OOIN transferred itsinterests in Oando Supply and TradingLimited, Oando Trading (Bermuda) Limited,Oando Production and DevelopmentCompany Limited, Oando Energy ServicesLimited and Oando Exploration andProduction Company Limited to the Companyin consideration for ordinary shares in theCompany.

Description of OperationsOando’s business is organised into sixbusiness divisions. These divisions are:i. Exploration and Productionii. Energy Services iii. Gas and Power iv. Marketing v. Supply and Trading:vi. Refining and Terminals

Business review The Company is required by the Companiesand Allied Matters Act (2004) to set out in thisreport a fair review of the business of theGroup during the financial year endedDecember 31, 2011 and of the position of theGroup at the end of the year and adescription of the principal risks anduncertainties facing the Group (“BusinessReview”).The information that fulfils theserequirements can be found within theChairman’s and Chief Executive’s Statement,review of operations.

DIrECTOrSThe BoardThe composition of the Board of Directorswas strengthened with the appointment oftwo independent Non-Executive Directors,Engr. Yusuf N’jie, and Ammuna Ali, CFReffective, October 20, 2011 pursuant toArticle 88 of the Articles of Association of theCompany. In accordance with the said Article88, their terms expire but being eligible offersthemselves for election at the generalmeeting.

In accordance with Section 259 (1) and (2) ofthe Companies & Allied Matters Act (CAMA),2004 and Articles 92 & 93 of the Company’sarticles of association, the following Directors,who are longest in office are retiring byrotation and will present themselves for re-election at this meeting:

• Mr. Oghogho Akpata• Mr. Omamofe Boyo• Mr. Mobolaji Osunsanya• Ms. Nana Appiah-Korang

The names of Directors who held officeduring the year and at the date of this reportare as follows:

Non-Executive Directors1. Major-General Mohammed Magoro

(Rtd.), PSC, OFR, USAWC, Galadiman Zuru*

2. HRM Michael Adedotun Gbadebo, The Alake of Egbaland

3. Mr. Ogogho Akpata ‡ 4. Ms. Nana Appiah- Korang5. Chief Sena Anthony ‡ 6. Ammuna Lawan Ali, OON ‡7. Engr. Yusuf Njie ‡8. Ms. Amal Pepple, CFR*

‡ Independent Non Executive* Resigned

Executive Directors9. Jubril Adewale Tinubu 10. Omamofe Boyo11. Mobolaji Osunsanya12. Olufemi Adeyemo

51Oando PLC

2011 ANNUAL REPORT

Corporate Governance &Statement of Compliance The Company is dedicated to the protectionand promotion of shareholders’ interests. TheCompany recognises the importance of theadoption of superior management principles,its valuable contribution to long term businessprosperity and accountability to itsshareholders.

The Company complies with the requirementsof the Nigerian corporate governancestandards through its compliance with theprinciples under the Securities and ExchangeCommission’s Code of Corporate Governancefor Public Companies in Nigeria (the “Code”).The Code prescribes guidelines for bestpractices to be followed by public quotedcompanies and for all other companies withmultiple stakeholders registered in Nigeria.Although it is not an enforceable statute, publiccompanies and other companies with multiplestakeholders are encouraged to comply with itsprinciples with a view to aligning theiroperations with international best practices.

The Company meets the requirements of theNigerian corporate governance standards bycomplying with the principles under the Code.For example, according to the Code, thecomposition of the Board of Directors shouldensure diversity of experience withoutcompromising compatibility, integrity,availability and independence, and it shouldconsist of a mix of not more than 15 Executiveand Non-Executive Directors headed by aChairman. In addition, the positions of theChairman and the Chief Executive Officershould be held by different persons, in order toavoid undue concentration of power. TheCompany complies with all these principles.

The Company has adopted a Code ofBusiness Conduct & Ethics which defines theCompany’s mission within a corporategovernance framework. The Code wasapproved by the Board in December 2007 andis applicable to all employees (includingcontract staff and third party personnelseconded to the Company), managers as wellas directors and business partners of theCompany. It also requires all Directors andemployees to be trained and annually certifiedon the salient provisions of the Company’sCode of Business Conduct & Ethics. Thetraining is conducted using a web basedtraining facility and is part of the induction andon-boarding process for new staff members.

Governance Office Initiativesrecertification Exercise: In the year 2011, theGovernance Office conducted the annualRecertification Exercise on the Code ofBusiness Conduct & Ethics and other companypolicies for all staff. A total of 977 staff acrossAfrica were trained, certified and re-certifiedusing a web-based training facility. Oandomaintains its fervent commitment to bestbusiness practice culture in line with thehighest international standards.

Training for Business Partners on the Codeof Business Conduct & Ethics: TheGovernance Office conducted trainingsessions on the Code of Business Conduct &Ethics for Business Partners of the Marketing,Supply & Trading, Exploration & Production,Gas & Power and Energy Services divisions aswell as the Human Resources ServiceProviders to ensure that they imbibe theCompany’s core values and the importance ofimplementing the core values and companypolicies in carrying out their business withOando.

Web-based Compliance Itinerary VideoTrainings: The Governance Office developeda 5 day web-based compliance video to trainall staff of the group on compliance and ethicalissues that range from sexual harassment tocorrupt practices. In our bid to provide andensure continuous education of all staff onethical and compliance matters, the videosstreamed from the intranet with a new videoplaying each day for a whole week.

In addition to utilizing the web-basedcompliance training tools, a total of 535employees were trained using in-person/classroom compliance training in the year under review.

New Directors’ Induction Programme andDirectors Training: In line with internationalbest practices, the Company conducted a2day Induction Programme on 24th & 25thFebruary 2011 for the newly appointeddirectors of Oando Group. The new directorswere educated on the group wide activities ofthe Company and its subsidiaries, as well astheir responsibility under the Code of BusinessConduct & Ethics, company policies andrelevant laws/regulations in Nigeria and SouthAfrica (CAMA, NSE/JSE Rules). The Office alsoco-facilitated a 1 day intensive training withMIS Training Institute (A division of EuromoneyTraining Limited) on Enterprise riskManagement on February 21st 2011 for alldirectors group wide.

In the year under review, members of the AuditCommittee on 9th-11th August attended theAnnual Audit Committee Conference jointlyorganised by the Nigerian AccountingStandards Board (NASB) and Audit CommitteeInstitute, Nigeria (ACI). The Conference wasthemed “Shareholder Value Assurance: A shared Governance Responsibility”.

Service Stations and Facilities Spot checksAs part of our efforts to ensure globalcompliance and uniformity in our standard ofservice delivery, the Governance Officeconducted spot checks at random Oandoservice stations in Ghana, Togo and Lagos,Nigeria. Spot checks were also conducted atthe Oando Apapa Terminal 1 & 2 and AboveGround Installation (AGI) plant in Ikeja.

Compliance Week: In our bid to create groundbreaking awareness on the essence andimportance of compliance and ethics to everyaspect of Oando’s operations and stakeholderinvolvement, the Governance Officecoordinated the first Compliance Week on 5thto 9th December, 2011 with the theme“Compliance….a way of life!”

World Anti-corruption day: In line with itscommitments to the principles of the UnitedNations Global Compact, the Companycommemorated the 10th International Anti-Corruption Day on December 9, 2011 byconducting the inaugural Compliance Forum.The Forum was attended by all stakeholders ofthe Company with presentations delivered byboth local and international speakers.

Ethics Watch Publications: The GovernanceOffice continues to publish a monthly bulletincalled the “Ethics Watch” to sensitize staff onthe importance of ethical conduct andcorporate governance.

In furtherance of corporate objectives, theGovernance Office conducted a half yearsurvey in the year to obtain feedback from staffon its policies, processes and service. Thesurvey questions were designed to focus onmethods for improving the Company’s policiesand the internal compliance processes. It isnoteworthy that 71% of the respondents gavethe Governance Office’s overall quality ofservice a good rating.

52Oando PLC

2011 ANNUAL REPORT

report of the DirectorsContinued

Board of Directors’ GovernanceStructureThe Board of Directors of the Company isresponsible for setting the strategic directionof the Company and for overseeing andmonitoring its business affairs. The Boardensures that the Company is fully aware of itsresponsibility to all relevant stakeholders inthe conduct of its operations. The Board isresponsible for the development andimplementation of sustainable policies, whichreflect the company’s recognition of itsresponsibility to all stakeholders who areaffected by the Company in the performanceof its operations which include, customers,employees, shareholders, communities andthe environment.

The Oando Board of Directors recognises theimportance of best corporate governanceprinciples, its valuable contribution to longterm business prosperity and accountabilityto its shareholders.

The Board’s AuthorityThe Board of Directors scope of authority are set forth in the Company’s Delegation of Authority in conformity with relevantlegislation and best practicerecommendations.

There is a formal schedule of mattersreserved for the decision of the Board, which is reviewed regularly. This includes(inter alia):

• strategy and objectives; • business plans and budgets; • changes in capital and corporate

structure; • accounting policies and financial

reporting; • internal controls; • major contracts; • capital projects; • acquisitions and disposals; • communications with shareholders; and • board membership.

Board’s Composition andIndependenceThe Board of Directors has a broad range ofexpertise that covers the oil sector, theCompany’s main business and thegeographical areas. Each individual Directorhas experience, knowledge, qualifications,expertise and integrity necessary toeffectively discharge the duties of the Boardof Directors.

The Company believes that experiencedDirectors with diverse industry backgroundare essential for the provision of a succesfulstrategic direction for the Company. Thecomposition, competencies and mix of skillsare adequate for its oversight duties and thedevelopment of the corporate vision andstrategy.

The Board of Directors through itsGovernance & Nominations Committeeestablishes which members are independentand it also recommends the appropriate sizeof the board. The size of the Board ispredetermined by Article 78 of theCompany’s Articles of Association.

re- election of DirectorsA maximum of one third of the Directors, whoare the longest in office since their lastappointment are required to retire by rotationand are eligible for re-election.

Board’s Duties & responsibilityDirectors act in good faith, with due care andin the best interests of the Company and allits shareholders – and not in the interests ofany particular shareholder – on the basis ofrelevant information. Each Director isexpected to attend all Board of Directorsmeetings and applicable committeemeetings.

The Company does not prohibit its Directorsfrom serving on other Boards as Directors.Directors are however, expected to ensurethat other commitments do not interfere withthe discharge of their duties. Directors shallnot divulge or use confidential or insiderinformation about the Company.

The Board in discharging its duties adoptsthe best practice principles, some of whichare highlighted thus:

• The Company believes that the Chairman of the Board should be a Non-Executive Director.

• To maintain balance of interest and ensure transparency and impartiality, a number of the Directors are independent.The independent Directors are those whohave no material relationship with theCompany beyond their Directorship.

• Directors abstain from action that may lead to conflict of interest and are to ensure they shall comply with the Company’s Policy on Related Party Transactions.

Board Appointment Process In its bid to ensure the highest standards ofgood corporate governance, the Companyhas formulated the Board AppointmentProcess as a guide in the appointment of anyof its directors (executive or non-executive).This is in line with the corporate laws, rules,regulations, Codes of Corporate Governance,International best practices as well as theCompany’s Memorandum and Articles ofAssociation.

The Governance & Nomination Committeehas the overall responsibility for the processsubject to the approval of the Board.

The fundamental principles of the processinclude the evaluation of the balance of skills,knowledge and experience on the Boardbefore making any appointments so as toensure that the identified skills gaps are filled.Consideration is also given to the leadershipneeds of the Company, succession planning,other commitments of the candidate andhis/her ability to meet the duties andobligations expected of him/her.

Appointments must give regard to merit andother objective criteria. The appointmentprocedure thus includes searching for theright candidates (based on the principles,legal and ethical checks), selection, voting,recommendation, approval by the Board andratification by the shareholders.

53Oando PLC

2011 ANNUAL REPORT

Training and access to AdvisersThe Company has a set inductionprogramme for new directors on theCompany’s business and other informationthat will assist them in discharging theirduties effectively. The Company believes in and provides continuous training andprofessional education to its Directors. The Board of Directors and BoardCommittees have the ability to retain external counsel to advice on matters, as they deem necessary.

Working Procedures The Board of Directors meets according to a fixed schedule, set at the beginning of eachyear, which enables it to properly dischargeits duties. As a rule, the Board of Directorsmeets at least five (5) times a year. Non-Executive Directors are required to meetseparately from executive members at leastonce a year.

All Directors are expected to be providedwith a concise but comprehensive set ofinformation by the Company Secretary in atimely manner, concurrently with the notice ofthe Board meeting, no less than fourteen (14)days before each meeting. This set ofdocuments is to include:

• an agenda; • minutes of the prior Board meeting; • key performance indicators, including

relevant financial information prepared bymanagement, and clearrecommendations for action.

The Board of Directors through the CompanySecretary keeps detailed minutes of itsmeetings that adequately reflect Boarddiscussions, signed by the Chairman anddisclosing voting results on an individualbasis where decisions are not unanimous.The Company keeps recordings of importantBoard decisions, such as the approval ofextraordinary transactions.

remuneration The remuneration of Non-Executive Directorsis competitive and is comprised of an annualfee and a meeting attendance allowance.The remuneration package shall, however,not jeopardize a Director’s independence.Executive Directors are not paid fees beyondtheir executive remuneration package. The Board of Directors shall through itsremuneration committee, periodically reviewthe remuneration paid to Directors. TheCompany publicly discloses the remunerationof each Director on an individual basis. TheCompany will not provide personal loans orcredits to its Directors. Further, the Companyshall not provide stock options to its Non-Executive Directors unless approved byshareholders in general meeting.

The Company Secretary is responsible to the Board, and is also available to individualDirectors for advice and services.

54Oando PLC

2011 ANNUAL REPORT


Director Audit Governance & Risk, Environment, StrategicNominations Health, Safety Planning &

& Security FinanceM. Magoro, OFR # - - - -

HRM M.A. Gbadebo, CFR √ √ √ -

J. A. Tinubu - - - -

O. Boyo - - - -

M. Osunsanya - - - -

O. Adeyemo - - - -

O. Akpata √ √ √ √

Ammuna Lawan Ali, OON * - - - -

Chief Sena Anthony √ √ √ √

Ms. Nana Afoah Appiah-Korang - - √ √

Engr. K. J. N’jie * - - - -

Ms. A. Pepple, CFR # - √ √ √# Resigned - M. Magoro OFR resigned 30/06/2011, Ms. A Pepple CFR 22/07/2011* Appointed - Ammuna Lawan Ali appointed on 20/10/2011, Engr. N’ije appointed on 20/10/2011

Attendance at meetings during the year ended 31st December 2011Names Board Governance & Strategic Risk Audit

Nominations Planning & Environment,Executive Directors Finance Health & SafetyJ.A. Tinubu 5⁄6

O.Boyo 6⁄6

M. Osunsanya 6⁄6

O. Adeyemo 6⁄6

Non-Executive DirectorsM. Magoro OFR 3⁄6

H.R.M M.A. Gbadebo 6⁄6 1⁄2 1⁄2 2⁄4

Ammuna lawan Ali 2⁄6

O. Akpata 6⁄6 2⁄2 5⁄5 1⁄2 2⁄4

Chief Sena Anthony 6⁄6 1⁄2 5⁄5 1⁄2 4⁄4

Nana Appiah-Korang 6⁄6 5⁄5 2⁄2

Engr. Yusuf N’jie 2⁄6

Ms. A Pepple CFR 3⁄6 1⁄2 2⁄5 1⁄2 2⁄4

Shareholder Members of the Audit CommitteeK.B Sarumi 4⁄4

P. Eyanuku 4⁄4

J. Onwughara 4⁄4

Date of Board/Committee meetings held in 2011Board Meetings: 30/03/2011, 12/05/2011, 29/06/2011, 22/07/2011, 20/10/2011,16/12/2011

Audit Committee: 28/03/2011, 11/05/2011, 21/07/2011, 19/10/2011, 25/10/2011

Strategic Planning & Finance Committee: 28/03/2011, 11/05/2011, 21/07/2011,19/10/2011

Governance & Nominations Committee: 03/02/2011, 29/03/2011, 05/09/2011, 16/09/2011

risk, EHSSQ Committee: 29/03/2011, 18/10/2011

55Oando PLC

2011 ANNUAL REPORT

Board Committees Under the Articles, the Directors may appointCommittees consisting of members of theBoard and such other persons as they thinkfit and may delegate any of their powers tosuch Committees. The Committees arerequired to use their delegated powers toconform to the regulations laid down by theBoard. Committee members are expected toattend each Committee meeting, unlessexceptional circumstances prevent them fromdoing so. All the Committees have terms ofreference which guides them in the executionof their duties. Each Committee reports to theBoard of Directors. Each Committee providesdraft recommendations to the Board onmatters that fall within the Board’s ambit. Thefollowing Committees are currently operatingat the Board level:

• Audit Committee (a Statutory Committeewith shareholder members);

• Strategic Planning and FinanceCommittee;

• Governance and Nominations Committee;and

• Risk, Environmental Health Safety,Security and Quality Committee.

Strategic Planning and FinanceCommitteeThe Strategic Planning and FinanceCommittee assists the Board of Directors in performing its guidance and oversightfunctions effectively and efficiently, byspecifically defining the Company’s strategicobjectives, determining its financial andoperational priorities, making recommendationsregarding the Company’s dividend policy and evaluating the long term productivity of the Company’s operations. In 2011, theStrategic Planning and Finance Committeemet five times.

The Strategic Planning and FinanceCommittee of the Company is chaired byChief Sena Anthony.

The members of the Strategic Planning andFinance Committee are currently as follows:

• Chief Sena Anthony• Ammuna Lawan Ali, OON• Engr. Yusuf N’jie• Ms. Nana Appiah-Korang

Board of Directors

Audit Committee

Strategic Planning& Finance Committee

Governance and Nominations Committee

Risk, Environmental Health, Safety, Security andQuality Committee

The Company’s Board Committee structure is as follows:

56Oando PLC

2011 ANNUAL REPORT


Governance and NominationsCommitteeThe Governance and NominationsCommittee is responsible for thedevelopment of compliance with andperiodic review of the Company’s corporategovernance policies and practices, thereview and monitoring of policies concerningshareholder rights, conflict resolution, ethics,disclosure and transparency, evaluation ofthe Company’s internal documents(organisation and process), the review andsetting of the By laws of all of the BoardCommittees, identifying qualified directorsand senior executives and ensuring that theCompany’s policies support the successfulrecruitment, development and retention ofdirectors and managers and ensuring thatthe Company’s remuneration policies andpractices support the successful recruitment,development and retention of directors andmanagers.

The Governance and NominationsCommittee is chaired by Mr. OghoghoAkpata and held three meetings in 2011.

The members of the Governance &Nominations Committee are currently as follows:

• Mr. Oghogho Akpata• Chief Sena Anthony• Ammuna Lawan Ali

Environment, Health, Safety,Security and Quality CommitteeThe Environment, Health, Safety, Security andQuality Committee is responsible forreviewing the policies and processesestablished by management which aredesigned to implement the risk,environmental, health and safety qualitypolicy of the Company and ensuring theCompany’s compliance with internationalstandards of risk, environmental, health andsafety quality. The committee is chaired byMs. Appiah-Korang and met twice in 2011.

The members of the Environment, Health,Safety, Security and Quality Committee arecurrently as follows:

• Ms. Nana Appiah-Korang• Mr. Oghogho Akpata• Engr. Yusuf N’jie

Statutory Committee Audit CommitteeThe Audit Committee was established incompliance with Section 359(3) of the CAMA,which requires every listed company to havean audit committee. In accordance withSections 359(3) and (4) of the CAMA, theAudit Committee is made up of six members,three Non-Executive Directors and threeshareholders of the Company, who areelected at the Annual General Meeting.

The members of the Audit Committee are notrequired to be independent. The AuditCommittee members meet at least threetimes a year, and the meetings are attendedby the appropriate executives of theCompany, including the Group ChiefFinancial Officer, the Head, Internal Controland Audit and Head, Risk & Control.

The Audit Committee’s duties includekeeping under review the scope and resultsof the external audit, as well as theindependence and objectivity of the auditors.The Committee also keeps under reviewinternal financial controls, compliance withlaws and regulations and the safeguarding ofassets and the adequacy of the plan of theinternal audit and reviews its audit reports.The Committee held four meetings in 2011.

The members of the Audit Committee arecurrently as follows:

• Mr. Oghogho AkpataNon-Executive Director (Chairman)

• Chief Sena AnthonyNon-Executive Director

• Ammuna Lawan Ali, OONNon-Executive Director

• Mr. K.B. SarunmiShareholder

• Mr. J. OnwugharaShareholder

• Mr. P. EyanukuShareholder

Please refer to page 47 for a briefCurriculum Vitae of the Non-ExecutiveDirector members of the Audit Committee.

Mr. Kabir Babatunde Sarumi- ShareholderMemberKabir Babatunde Sarumi holds a Bachelor ofSciences degree in Accounting from theUniversity of Lagos, Nigeria and a Diploma inBusiness and Industrial Law from the sameInstitution. He is a member of the NigerianInstitute of Internal Auditors and has authoredseveral business guide books and manuals.He joined Nigerian Airways Limited in 1977as a Revenue/Expenditure Accounting officerand retired meritoriously in 2002 as theDeputy Chief Accountant of the Company. Mr. Sarumi is currently the Managing Directorand Chief Executive Officer of Kabeer SarumiNigerian Company Limited.

Mr. Job Onwughara- Shareholder Member Mr. Onwughara holds a Master of Sciencedegree in Banking and Finance from theUniversity of Ibadan, Nigeria. He is a fellow ofthe Chartered Institute of Bankers,London/Nigeria, an Associate of the Instituteof Credit Management, London and Memberof the British Institute of Management. He hasserved at various Managerial levels atSavannah Bank and Crown Flour Mill Limited.

Mr. Peter Eyanuku- Shareholder Member Mr. Peter Eyanuku studied MechanicalEngineering and has served in variousorganizations in different capacities and hasalso served with the National Directorate ofEmployment, Lagos as well as the LagosState Health Management Board. He was aMember of the Audit Committee of the UnitedBank for Africa PLC and is presently also aMember of the Audit Committee of AirlineServices & Logistics PLC.

The committee held four meetings in thefinancial year ended December 31, 2011.The Companies and Allied Matters Act, 2004requires that every public company have anaudit committee and stipulates that a numberof shareholders equal to the directormembers of this committee must bemembers of the audit committee.

The day-to-day operational management ofthe Group’s activities is delegated to theGroup Chief Executive, who has directresponsibility for all operations and activities.He is supported in this by the Deputy GroupChief Executive and the Group Leadership

57Oando PLC

2011 ANNUAL REPORT

Council which comprises, in addition tothem, the Chief Executive Officers of theoperating subsidiaries, plus the ChiefFinancial Officer, Chief Human ResourcesOfficer, the Chief Compliance Officer &Company Secretary, the Chief Legal Officer,Chief Engineering and Technology Officer,Chief Environment, Health, Safety, Security,Quality, State and Community Affairs Officer,Chief Information Officer and the ChiefCorporate Services Officer.

Directors’ declarationsNone of the directors have:

• ever been convicted of an offenceresulting from dishonesty, fraud orembezzlement;

• ever been declared bankrupt orsequestrated in any jurisdiction;

• at any time been a party to a scheme ofarrangement or made any other form ofcompromise with their creditors;

• ever been found guilty in disciplinaryproceedings by an employer orregulatory body, due to dishonestactivities;

• ever been involved in any receiverships,compulsory liquidations or creditorsvoluntary liquidations;

• ever been barred from entry into aprofession or occupation; or

• ever been convicted in any jurisdiction ofany criminal offence or an offence underany Nigerian or South African legislation.

Directors’ shareholdingsThe holdings of ordinary shares by the directors of Oando as at 31 December 2011 being the end of Oando’s immediately preceding financialyear, are set out in the table below:

Shareholding Percent OwnershipName (Number of Shares) Direct Indirect (% Shareholding)HRM Oba A. Gbadebo,CFR 37,500 Nil 0.0016

Mr. Adewale Tinubu Nil 3,670,995 0.1614

Mr. Omamofe Boyo Nil 2,354,713 0.1035

Mr. Mobolaji Osunsanya 67,497 1,190,398 0.0553

Mr. Olufemi Adeyemo 75,000 1,423,898 0.0659

Chief Sena Anthony 99,711 Nil 0.0044

Mr. Oghogho Akpata Nil Nil Nil

Ammuna Lawan Ali Nil Nil Nil

Engr. Yusuf K.J N’jie Nil Nil Nil

Ms Nana Afoah Appiah-Korang Nil 37,500,000 1.6270

58Oando PLC

2011 ANNUAL REPORT


Interests of Oando’s Directors interms of the equity incentiveschemeThe Executive Directors stand to benefit fromthe Oando Employee Equity IncentiveScheme. See paragraph titled Staff equityparticipation scheme on page 66 for details ofthe scheme.

Directors’ interests in transactionsNone of the directors had a direct materialinterest in any transactions that were effectedby Oando during:• the current or immediately preceding

financial year; or• any preceding financial year and remain in

any respect outstanding or unperformed.

However, some of the directors holddirectorships in other companies or arepartners in firms with which Oando hadmaterial transactions during the currentfinancial year, as summarised below:Ocean and Oil Holdings (Nigeria) Limited(“OOH”). OOH is a diversified principalinvestment holding company with an indirectcontrolling stake in Oando held throughOcean and Oil Investments Limited. Oando’sdirectors who are also directors of OOH areMr. Jubril Adewale Tinubu and Mr. OmamofeBoyo.

Internal control and risk The Directors have overall responsibility forensuring that the Group maintains a soundsystem of internal controls to provide themwith reasonable assurance that all informationused within the business and for externalpublication is adequate, including financial,operational, compliance, control and riskmanagement and for ensuring that assets aresafeguarded and therefore that shareholders’investment is protected. There are limitationsin any system of internal control and,accordingly, even the most effective systemcan provide only reasonable, and notabsolute, assurance against materialmisstatement or loss.

In line with good practice, the Company hasan Internal Audit unit that carries out routineand random checks on the company’soperations, including fixed assets and stocks.The unit is also responsible for investigatingfrauds and misuse or misappropriation of theCompany’s assets.

The Company also has an Internal ControlUnit, which lays down and tests the controlsand processes to ensure that the assets of the company are safeguarded. The Unit iscurrently headed by a manager with vastcontrol and processes experience.

The key procedures that the Board hasestablished and which are designed toprovide effective internal control for the Group are:

• The Board sets out the Group delegationof authority procedures which are adoptedby all the subsidiary companies.

• The issue of a Group accounting andprocedures manual which sets out theGroup’s accounting practices, revenuerecognition rules, accounting underNigerian Accounting Standard Board(NASB) and International FinancialReporting Standard (IFRS) and bidapproval processes.

• The application of a rigorous annualbudgeting process following a detailedentity and Group strategy review. Allbudgets are subject to approval at Board level.

• The Group Leadership Council isresponsible for reviewing the operationalresults, communicating and applying theseresults, the Group-wide Policies andprocedures and strategy on operationalmatters to the Board and down to theoperating units.

• The formal monthly operational review bythe Executive Directors together with thedivisional management teams to assessthe financial and operating performanceand discuss the on-going development ofeach business unit and the comparison ofdetailed monthly management reportsagainst budgets, forecasts and prior years.In addition the Group Chief Executive andChief Financial Officer prepare a quarterlyreport for the Board on key developments,performance and issues in the business.

• The identification and mitigation of majorbusiness risks is the responsibility ofcompany management. Each operatingcompany maintains internal controls andprocedures appropriate to its structure andbusiness environment, whilst complyingwith Group policies, standards andguidelines.

• Insurance cover is maintained to insure allthe major risk areas of the Group based onthe scale of the risk and the availability ofcover in the external market.

• The use of external professional advisersto carry out due diligence reviews ofpotential acquisitions.

Enterprise risk Management The global financial crisis continued in theyear 2011 with problems spreading toEuropean Debt markets, affecting countries in the Euro zone and by extension investmentdecisions in African countries such as Nigeria.This has contributed to reviews of corporategovernance requirements in various countriesincluding Nigeria. In light of thesedevelopments, and in compliance withinternational best practices, we haveimproved on our risk management strategy.We strongly believe that the effectivemanagement of material risk is central to thesuccess of the group.

We have integrated the execution of our riskmanagement strategy within an EnterpriseRisk Management Framework. Thefundamental objective of this framework is for the group to take a holistic approach to proactively identify, communicate andmanage risk by increasing the role ofmanagement and the board in the process, as well as to review risk from a corporateperspective that allows us to test the longterm viability of our corporate objectives.

The risk management process also guides usin communicating and reporting our key riskand opportunities to all stakeholders. As partof the implementation of the framework, weseparated the Internal Controls functions fromour internal audit function during the year and,we created a combined Risk Managementand Internal Control unit within the Oandogroup. The added value that this split bringsto the leadership team is the assurance of asingle point of accountability and ownershipfor internal controls at the group level and aconsistency in approach that will generatetime and cost savings.

The risk management function was created as part of our strategy to enhance corporategovernance standards and also in line withinternational best practices. The unit providescentral coordination and oversight of all riskmanagement activities within Oando Group. It reports to the Chief Financial Officer, who in turn reports risk related issues to the RiskCommittee of the Board.

During the year, the Risk Management andControls unit updated key processes andpolicies across the group and highlighted allprocess risks and controls inherent in each ofthe key processes; we have created a riskmatrix that embeds all these process risksand controls. We have gone a step further toreview each of these controls with a view to

59Oando PLC

2011 ANNUAL REPORT

ensuring that they effectively address theprocess or business risks. We have rolled outrisk registers to our subsidiaries and haveheld workshops during the year withsubsidiaries to identify assess and mitigatecontrollable risks within the variousbusinesses. We believe that the developmentof a robust risk culture is an importantelement of the group’s risk managementprocess. We are continuously embeddingthis risk culture in our staff members throughnewsletters, workshops and training on riskmanagement. We conducted training andworkshops for directors and staff memberson Risk management and Internal controlsduring the year.

We created a Group Risk ManagementCommittee (GRMC) composed of carefullyselected Management staff drawn from thedifferent business and group units with arange of skills and knowledge covering riskmanagement, Health and Safety, finance,audit, corporate governance and law. TheGRMC serves as a management functionwith direct responsibility for providingindependent risk oversight, coordination,facilitation, monitoring and challenge of theeffectiveness and integrity of the Group’s riskmanagement processes. It reports theGroup’s risk exposure to the board throughthe Strategic Planning & Finance Committeeand the Risk, Environment, Health and safetyCommittee of the Board.

The effectiveness of Oando’s expansionprograms involves large projects beingsuccessfully executed at the same timeacross the different entities. The group hasstrengthened its project risk managementcapabilities with the introduction of theOando Opportunity Realisation Process. This is a process designed to ensure that any material perceived business opportunityis matured to its possible realization in astepwise manner, such that the trigger toproceed to the next stage is dependent ondemonstration of business value at thepreceding step. This process assures that allparameters are considered and all projectrisks are identified and properly controlled.

We have created Environmental Health,Safety, Security and Quality (EHSSQ)standards that assure management thatoperational risks in the downstream,midstream and upstream businesses are fullyidentified and mitigated.

In order to sustain our growth strategy, we would continuously improve on ourprocesses to ensure we work effectively andefficiently, improve on our risk managementmethodology and ensure we work within theboundaries that we set for the company.

relations with Shareholders Communications The Board considers effective communicationwith its investors, whether institutional, retailor employee shareholders, to be of uttermostimportance.

The Company reports formally toshareholders throughout the year, with thequarterly results announcement and thepreliminary announcement of the full-yearresults. Shareholders are issued with the full-year Report and Accounts. These reports areposted on the website.

The Company also makes otherannouncements from time to time, which canbe found on the website.

Management meet with institutional investorson a regular basis, providing an opportunityto discuss, in the context of publicly availableinformation, the progress of the business.Institutional investors and analysts are alsoinvited to attend briefings by the Companyfollowing the announcements of the full andquarterly results. Copies of the presentationsgiven at these briefings are posted on thewebsite.

Oando PLC hosted quarterly conferencecalls in 2011, giving investors an opportunityto interact with senior management and askany questions they have with regards to therunning of the business. The investorrelations team also attended numerousconferences and organized roadshows withinand outside Nigeria in an attempt to reachout to existing and potential investorsglobally.

Oando PLC values the importance and roleour investors have played in the Company’sprogress and therefore makes a consciouseffort to keep them updated on thecompany’s activities and also getconstructive feedback. We plan to continue inthis light in 2012.

Constructive use of the AnnualGeneral MeetingThe notice of meeting is sent to shareholdersat least 21 working days before the AGM. The Directors encourage the participation ofshareholders at the AGM, and are available,both formally during the meeting andinformally afterwards, for questions. TheChairmen of the Audit and Governance andNomination Committees are all available toanswer questions at the AGM.

Compliance statement

The Company has met the requirements ofthe SEC Code of Corporate Governance forthe financial year ended 31 December 2011.Late submission of Audited Accounts to theNigerian Stock Exchange for the year ended31 December 2011 were filed in default of21days after due date, although the NigerianStock Exchange had earlier extended thetime for submission of the accounts to 30April 2012. The sum of N500,000.00 was paidas penalty.

The Board will ensure maximum compliancein the coming year.

60Oando PLC

2011 ANNUAL REPORT


Shareholder Analysis Tablesregister date: 30 December 2011 (based on the Nigerian register) Issued Share Capital: 2,274,118,138 shares

SHAREHOLDER SPREAD No of Holders % of Holders No of Shares % Holding

1 - 1000 168,436 63.96 62,026,381 2.73 1,001 - 5,000 73,118 27.76 149,867,546 6.59 5,001 - 10,000 10,376 3.94 73,186,851 3.22 10,001 - 50,000 9,172 3.48 190,197,969 8.36 50,001 - 100,000 1,068 0.41 75,619,577 3.33 100,001 - 500,000 923 0.35 186,875,913 8.22 500,001 - 1,000,000 111 0.04 78,941,581 3.47 1,000,001 - 5,000,000 105 0.04 220,986,752 9.72 5,000,001 - 10,000,000 19 0.01 140,994,616 6.20 10,000,001 - 50,000,000 23 0.01 488,425,846 21.48 50,000,001 or more 4 0.00 606,995,106 26.69Total 263,355 100 2,274,118,138 100

SHAREHOLDER SPREAD No of Holders % of Holders No of Shares % Holding

Banks/Insurance 219 0.08 34,990,452 1.54Brokers 507 0.19 48,049,847 2.11 Endowment Funds 284 0.11 4,940,275 0.22 Individuals 257,093 97.62 632,858,680 27.83 Investment Companies 140 0.05 8,403,296 0.37 Medical Aid Schemes 8 0.00 30,076 0.00 Mutual Funds 124 0.05 101,043,145 4.44 Nominees/Trust Companies 1,519 0.58 375,812,663 16.53 Other Corporations 559 0.21 52,703,998 2.32 Pension Funds 215 0.08 441,698,342 19.42 Private Companies 2,672 1.01 512,150,598 22.52 Public Companies 15 0.01 61,436,766 2.70Total 263,355 100 2,274,118,138 100

Major ShareholdersAccording to the register of members, the following shareholders of the Company hold more than 5% of the issued ordinary share capital of theCompany.

Name Units Percentage %

Ocean & Oil Investments Limited 284,037,647 12.49STANBIC NOMINEES NIG. LTD - TRADING A/C 149,626,626 6.58

61Oando PLC

2011 ANNUAL REPORT

report of the Directors2011 Corporate SocialResponsibility Report

Over the years, Oando PLC has made a significantimpact in the oil and gas industry, especially in thedownstream sector, and has grown from one entity toseven. Through this transition our interest has maturedfrom core business operations to include issuesrelating to Corporate Social Responsibility.

Oando is at the forefront of pioneering asustainable and replicable model for youthempowerment and community developmentthrough education. At Oando, we believe thatprimary education is the paramount pillar tofoster the next generation of our nation’sworkforce. To this end, in 2007, we initiatedthe Adopt-A-School Programme, oursignature Education Programme, with theoverall aim of increasing access to qualitybasic education in Nigeria. We work closelywith representatives of States and the FederalGovernment to:

• Enhance educational infrastructure andimprove the learning environment inpublic primary schools

• Provide teacher’s training, educationalresources and teaching aids for effectivelearning in public primary schools

• Create a pool of Oando Scholars throughscholarship support for the academicallygifted

Currently, we have adopted 28 Governmentowned primary schools in Akwa Ibom,Bauchi, Cross River, Delta, Katsina, Lagos,Kaduna, Ogun, and River States. In 2011, we completed the renovation of 16 of ourschools. In 2012, we plan to launch atechnology driven teachers/studentsempowered programme for 17,292 studentsand 399 teachers of our adopted primaryschools nationwide.

Scholarships Oando, as part of its set agenda of promotingeducation for youths in Nigeria, awardedscholarships to 118 students. The grants aredesigned to relieve the financial burden of theless privileged children in the society whohave either dropped out of school or wouldotherwise have limited opportunities to formalbasic education.

The beneficiaries were:• 80 indigent children from communities

where Gaslink Nigeria Limited operates inLagos sponsored under the Back-to-School Scholarship Programme.

• 38 members of the Xplicit Dance Group,an entertainment enterprise made up ofmostly orphans and indigent children, whowere awarded tuition fees and providedwith computer equipment. 25 of thebeneficiaries are currently in University, 10in secondary school and 3 in primaryschool.

Sustainable CommunityDevelopment ProgrammeSocial Development: Oando is activelyinvolved in the provision of social amenitiesand improving the quality of life in our hostcommunities through projects andsustainable social investments. We touch allour stakeholders’ economic, social andcultural aspirations through projects that areinnovative and impactful. A major project inthe year under review was the construction ofa 3km Access Road linking Ikot Efanga,Akpabuyo community to the highway leadingto the Akwa Ibom State Capital.

Economic EmpowermentOando’s policy is to empower individualswithin the communities to be financially stableand gainfully employed. Our staffing policy isto empower host communities by recruitingskilled, semi-skilled and unskilled labour to fillsuitable positions. The Group alsoencourages our joint venture partners andcontractors to fill suitable positions from hostcommunities as a form of empowerment. In2011, 10,188 skilled and semi-skilled workerswere meaningfully engaged within our hostcommunities.

Oando FoundationOando is committed to sustaining itscontributions to societal development overand above the implementation of communityprojects directly related to the Company’score business operations.

In 2011, The Group established the OandoFoundation as an independent non profitorganisation to spearhead projects acrossNigeria with the purpose of achieving accessto universal basic education and economicempowerment. The Group is committed tofunding the Foundation through annualdonations of 1.5% of its pre-tax profits in thefirst year and 1% in subsequent years. TheGroup will also support the Foundation within-kind donations to cover administrative andoperational costs. The Foundation is currentlybeing registered in the UK and US with aninternationally recognized Board of trusteesand will seek partnerships and funds globallyto further its cause.

62Oando PLC

2011 ANNUAL REPORT

report of the Directors2011 Corporate Social Responsibility Report

63Oando PLC

2011 ANNUAL REPORT

DonationsThe Group donated to laudable causes and charitable concerns including orphanages, retirement homes and special needs schools acrossNigeria, as listed below:

S/N DESCrIPTION AMOUNT (N)1 Fund raising for St. Savior’s School, Lagos 20,000,000

2 Back-to-School Scholarship for 90 Children 3,725,280

3 Donation of 2,016 copies of exercise book to Federation of Women Lawyers, to support select primary schools in Makoko 220,500

4 Donation of 3,600 Litres of AGO to Heritage Homes 576,000

5 Donation of 3,600 Litres of AGO to Little Saints Orphanage 576,000

6 Donation to offset the medical bills of Festus Akanbi 200,000

7 Donation to offset medical bills for Heart surgery for Kemi Adio 200,000

8 Donation towards Children’s Day Celebration 752,758.50

9 Bimonthly donations of 22,000 litres of AGO and PMS to the Lagos State Security Trust Fund 76,289,709

10 Sponsorship of 38 members of the Xplicit Dance Group 3,015,800.01

11 Sponsorship of Mohammed Muazu at the Golf Academy of America 3,883,702.50

12 Donation to aid research on Phytoremediation of Polluted soil 100,000

13 Donation of Oando insecticide to the National Malaria Control Programme to commemorate the 4th World Malaria Day 2,000,000

14 Construction of 3km Access Road linking Ikot Efanga, Akpabuyo community to the highway 30,000,000

15 Reconstruction of Collapsed Classroom block at LGEA Primary School, Rido, Chukwu LGA. Kaduna 4,166,160.72

16 Completion of the renovation of Model Primary School, Ekara, Onne, Rivers State. 6,083,550.90

17 Construction of Government Primary School, Ikot Okoro, Oruk Anam, Akwa Ibom state 19,196,128.71

18 Construction of Government Primary School, Ikot Essien, Ukanafun, Akwa Ibom state 20,772,936.28

19 Renovation of Government Primary School, Ikpe Annang, Etim Ekpo, Cross River state 15,280,159.13

20 Renovation of Government Primary School, Ekorinim, Calabar Municipality, Cross River state 15,342,948.23

21 Renovation of St. Patrick’s Primary School, Adiabo, Odukpani, Cross River state 10,610,503.14

22 Renovation of Government Nomadic Primary School, Nassarawa, Cross River state 22,846,894

23 Renovation of Government Primary School, Mfamosing II, Akwa Ibom state 14,000,000

24 Renovation of Mohammadu Buhari Primary School, Daura, Katsina state 11,861,808.53

25 Renovation of Gidado Primary School, Katsina, Katsina state 11,271,563.10

26 Renovation of Central Primary School, Udubo, Gamawa, Bauchi state 8,339,119.75

27 Archbishop Taylor Memorial Primary School, Victoria Island, Lagos state 8,003,962.58

28 Renovation of Temidire Primary School, Gbagada, Lagos state 26,908,919.04

29 Renovation of Idi Odo Primary School, Gbagada, Lagos state 10,759,199.28

30 Renovation of Ogo Oluwa Primary School, Gbagada, Lagos state 10,503,130.29

31 Donation of school signages in Katsina, Kaduna, Bauchi, Cross River, Akwa Ibom, Delta, Ogun and Lagos State 7,327,500

TOTAL 364,814,234

64Oando PLC

2011 ANNUAL REPORT

report of the Directors2011 Corporate Social Responsibility ReportContinued

Developments & Initiatives of theHuman Capital ManagementDepartment Oando has a long tradition of attracting,developing and investing in talent within the organization. We aim to ensure we have a competitive workforce to support ourbusiness now and in the future. Our HumanCapital Management (HCM) teamcontinuously focuses on maintaining andstrengthening the performance of theorganization, as well as attracting highpotential professionals.

In 2011, the HCM Department focusedmainly on broadening, consolidating andinstitutionalising existing initiatives andprocesses with particular emphasis on talentmanagement and people development.

recruitment, Selection & AttritionManagementOando takes a proactive approach to findingthe right talent for the future. A total of eightyeight (88) full time employees were employedinto the organisation in 2011. Of this number,thirteen (13) joined in the Management StaffCadre and seventy five (75) in the Non-Management Staff Cadre.

The Oando Graduate Trainee (GT)Programme, initiated in 2008, continues toattract the very best of young minds fromacross various disciplines. In 2011, we wereagain able to attract twelve (12) youngprofessionals (trainees) with little or no workexperience to the GT program after anextensive and thorough selection process to select the best candidates. Successfultrainees from previous batches have beenfully integrated into the company as full termpermanent employees.

As we continue our drive to attract and retainthe best talent with special focus on ourgrowth businesses, Oando was a prominentparticipant at the Lagos Business School(LBS) career fair. The career fair at LBSattracts interns for the internship programand not for experienced hire opportunities.

Given the continued success with the GTProgramme and the LBS recruitment drive,we have made significant progress ingrowing talent and creating a pipeline oftechnically and morally competentindividuals, while keeping attrition rate steadyat 8%.

Talent Management and PeopleDevelopmentAnother key area of concern is the provisionof high quality training and support for ourworkforce. Our view is that employeedevelopment is a continuous process, thuswe target a range of courses to help enhanceour workforce. The HCM team rolled out twocourses – Strategic Talent Management andBusiness Acumen. Strategic TalentManagement embeds HCM skills into currentline roles to ensure that talent and knowledgesharing is practiced and shared, therebydeveloping and retaining key talent in theorganization. The Business Acumen courseensures that we all understand the essentialsof business – market dynamics, strategicthinking and business modelling amongstother competencies.

OMP commenced the Training School projecton 13th June, 2011 with the first trainingsession on 5th December, 2011. The start-upobjective of the training school was to have astate of the art training facility where wewould conduct various in-house training forstaff and business partners in line with our70:20:10 Talent Management model, whichaims to conduct job specific trainings thatwould address specific competency gaps inthe downstream sector. The Training Schoolis located near the Trade Fair Complex inLagos. The facility can adequatelyaccommodate 90 delegates and is effectivelymanned with a Training School Administratorand Receptionist.

Great Place to WorkOur commitment to foster an exciting andgreat place to work requires the input ofeveryone. As part of the effort toappropriately benchmark and align ourorganization globally, we participated in aglobal survey of leading organizations,conducted by the Great Place to WorkInstitute. The Great Place to Work Institute isa global research and management

consultancy firm that helps organizationscreate and sustain great workplaces.

The results reflected employees’ perceptionof Oando, relative to the top 100 companiesglobally across the 5 common themes –Credibility, Respect, Fairness, Pride, andCamaraderie which are in line with our corevalues – TRIPP. The results also indicated a strong sense of pride and belief inmanagement credibility across theorganization, while key focus areas forimprovement were respect and fairness. A town hall meeting was held for allemployees on the 9th of December 2011, of which the final result will be used to formulate the 2012 Oando peopleinitiatives for the organization.

Oando Competency Framework2011 was a year of systematic investment intalent as seen by continued developmentand implementation of ground-breakingprograms, including the revamp of thecompetency framework. The HCM teambegan the review and revamp of the Oandocompetency framework with a shift in focusfrom specific/unique job roles to a job familyapproach across the organization. The reviewof the framework will be implemented inphases and involves standardizing our JobTitles and aligning with Career Path models.

Creating a competency framework is aneffective method to assess, maintain, andmonitor the knowledge, skills, and attributesof people in the organization. The frameworkwill allow Oando measure currentcompetency levels to ensure that our staffhave the expertise needed to add value tothe business. It will also help our managersmake informed decisions about talentrecruitment, retention, and successionstrategies. And, by identifying the specificbehaviours and skills needed for each role, it will enable us budget and plan for thetraining and development needs of Oandostaff.

The process of creating a competencyframework is long and complex. Theincreased level of understanding and linkagebetween individual roles and organizationalperformance makes the effort well worth it.

65Oando PLC

2011 ANNUAL REPORT

Our commitment to foster anexciting and great place to workrequires the input of everyone.As part of the effort toappropriately benchmark andalign our organization globally,we participated in a globalsurvey of leading organizations,conducted by the Great Place toWork Institute.

66Oando PLC

2011 ANNUAL REPORT

remuneration, Benefits andEmployee WelfareDuring the course of the year, severalremuneration and salary surveys were carriedout to confirm our competitiveness within ourmarket and in line with our corporate rewardstrategy. The Company also continued tomaintain her reputation as an employer ofchoice as salary reviews were implementedwith employees receiving a pay rise basedon performance as well as to help cushionthe effects of inflation in the economy.

Finally, based on both individual andbusiness performances, eligible employeesreceived incentives in the form of both cashand shares under the Oando ManagementPerformance Plan (OMPP), Oando ProfitSharing Plan (OPSP) and the GCE’sDiscretionary Bonus. Stock Options were alsogranted under the Oando Staff EquityParticipation Scheme.

In order to provide Oando employees withthe best Medical Care, a review of selectedHMO's was carried out between May andJune 2011.

Oando Employee Equity IncentiveScheme (OEEIS)The year ended 31st December 2011 wasyear 1 of cycle 3 of the Oando Staff EquityParticipation Scheme. This year marked thebeginning of the 3rd cycle of the Scheme.

A total of 72,764,533 units were offered to500 eligible employees under the StockOption Plan at a strike price of N41.13. None of the options vested in 2011.

An additional 11,406,568 units of theCompany’s shares were listed on the floor ofthe Nigerian Stock Exchange and awarded toeligible employees, under the ManagementShare Award Scheme during the year 2011.

Environment, Health, Safety,Security and Quality CommitteeThis report provides an overview of activitieswithin Oando PLC and its subsidiaries withrespect to Environment, Health, Safety,Security, Quality and Community Affairs(EHSSQ/SCA) achievements as a company,in line with our EHSSQ Business plan.

EHSSQ/SCA activities within the Company in 2011 were largely driven by 2 (two) coreobjectives for the year:

• Enhanced EHSSQ awareness, withemphasis on employees’ health – fitnessand wellness (work life balance).

• World Class Quality Standards (DeliverISO-9001 Certification across the OandoGroup)

All the entities, with the exception of OandoEnergy Services, underwent ISO 9001:2008surveillance audits by StandardsOrganisation of Nigeria, an ISO certificationbody. All the entities retained theircertificates, and a gap analysis wasconducted for Oando Energy Services. With these ISO certifications, Oando hasdemonstrated its ability to remain customerfocused as well as its commitment to meetingthe quality needs of its customers. With theQuality Management Systems in place in thevarious entities, accidents, errors and re-works were greatly reduced, whileoperational efficiency and effectiveness –with a customer-focus orientation – wereenhanced.

In 2011, Oando achieved zero fatality in all its facilities and the EHSSQ departmentmade significant progress in boostingawareness campaigns and trainings for staff.In particular, health awareness was increasedas evident in activities carried out during ourEHSSQ Week and World Aids Day programs.EHS-MS audits/MFIs were conducted in linewith our EHSQ business plan for the year.

With 2 Rigs in operation, the companyexperienced an increase in the number ofHazard Identification Reports (HIRs) receivedfrom staff and a decrease in incidentsresulting in fewer Lost Time Injuries (LTI).

Nevertheless, we still experienced a series ofroad accidents from third party contractors, inspite of increased awareness campaignscarried out. Re-orientation of truck driversand aggressive truck inspections were toolsemployed to reduce the number ofunnecessary fatalities experienced onNigerian roads.

Oando PLC’s quest for world class operationcontinues to impact on excellent executionand attracts the attention of industrywatchers. In January 2011, it received anaward for Overall Safety Achievement fromthe Central Emergency Medical ClearingHouse (CEMCH), in conjunction with theNational Emergency Management Agency(NEMA) and Institute of Disaster, Safety andSecurity Management in Nigeria. The awardwas in recognition of the Company’sachievement and contribution to safetymanagement in Nigeria. The Head, EHSSQ,Oando Marketing led a team that receivedthe award on behalf of the Company.

Our 2011 key achievementsinclude the following:• Organized and managed a successful

EHSSQ/SCA Week, which extended toTogo and Ghana facilities.

• Organized and managed a successfulWorld Aids Day Commemoration, whichextended to a wider audience & increasednumber of locations.

• Facilitated the deployment of specializedEHS-MS Monitoring Tools across entities(e.g. Project Contractor Managementtracker at OMP, Action Dashboard Trackerat OGP).

• Commenced Annual Medical Screeningfor all Staff and conducted free HealthScreening for OMP Drivers/Transporters.

• Conducted EHS–MS Audits, ManagementFacility Inspection and follow up audits.

• Established the Oando Security ControlRoom to manage security information andsend security alerts to staff.

• Provided security support for Rigoperations.

• Provided security support for UNICEMgas project in Akwa Ibom and Cross RiverStates.

• Carried out Environmental Evaluationreports (EERs) for most of our servicestations.

• Secured MOU with OML90 hostcommunity – Ogulagha kingdom.

• Facilitated Public hearing for Akepo OML 90 Pipeline ROW at Asaba.

• Retained the ISO 9001:2008 certificatesfor Oando entities.

report of the Directors2011 Corporate Social Responsibility ReportContinued

Acquisition of Own SharesThe Company did not acquire its own sharesin year 2011

Market Value of Fixed AssetsInformation regarding the Group’s asset valueand notes thereon are contained in Note 4 ofthe financial statements on page 82 of thisReport. In the opinion of the Directors, themarket value of the Company’s properties isnot lower than the value shown in the financialstatements.

AuditorsPricewaterhouseCoopers, have indicatedtheir willingness to continue in office as theCompany’s auditors in accordance withSection 357(2) of the Companies and AlliedMatters Act, 2004

By Order of the Board

Ayotola Jagun (Ms.)Chief Compliance Officer & Company Secretary

OANDO Plc EHS 2011 Performace reviewThe figures below illustrate the Oando PLC EHS Performance for 2011

46 2010

5 2011

Security incidents

0 2010

3 2011

Gas leak

29 2010

27 2011

Fire incidents

43 2010

58 2011

Injury

0 2010

0 2011

Fatality

14 2010

13 2011

Audit

84 2010

127 2011

Near miss

67Oando PLC

2011 ANNUAL REPORT

report of the auditcommittee

In compliance with section 359 (6) of the Companies andAllied Matters Act 2004, we the members of Oando PLCAudit Committee have, on the documents and informationmade available to us:

a. Reviewed the scope and planning of the auditrequirements

b. Reviewed the external Auditors’ Management ControlsReport for the year ended December 31, 2011 as wellas the Management response thereto,

and can ascertain that accounting and reporting policies ofthe Company for the year ended December 31, 2011 are inaccordance with legal requirements and agreed ethicalpractices.

Dated this 8th day of May 2012

Oghogho Akpata Chairman, Audit Committee

Chief Sena Anthony - DirectorAmmuna Lawan Ali - DirectorMr. K.B. Sarumi - ShareholderMr. J. Onwughara - ShareholderMr. P. Eyanuku - Shareholder

68Oando PLC

2011 ANNUAL REPORT

Financial statement31 December 2011

Statement of Directors Responsibilities 72 Report of the Independent Auditors 73Balance Sheet 74Profit and Loss Account 75Statement of Cash Flows 76Statement of Significant Accounting Policies 77 - 81Notes to the Financial Statements 82 - 103Statement of Value Added 104Five-year Financial Summary 105 -106Statement of Unclaimed / Returned Dividend Warrants 107

72Oando PLC

2011 ANNUAL REPORT

Statement of Directors'responsibilities31 December 2011

i. responsibilities in respect ofthe financial statementsThe Companies and Allied Matters Actrequires the directors to preparefinancial statements for each financialyear that give a true and fair view of thestate of financial affairs of the Companyat the end of the year and of its profit orloss. The responsibilities includeensuring that the Company:

(a) keeps proper accounting records thatdisclose, with reasonable accuracy, thefinancial position of the Company andcomply with the requirements of theCompanies and Allied Matters Act;

(b) establishes adequate internal controls tosafeguard its assets and to prevent anddetect fraud and other irregularities; and

(c) prepares its financial statements usingsuitable accounting policies supportedby reasonable and prudent judgementsand estimates, and are consistentlyapplied.

The directors accept responsibility forthe annual financial statements, whichhave been prepared using appropriateaccounting policies supported byreasonable and prudent judgementsand estimates, in conformity with theNigerian Accounting Standards and therequirements of the Companies andAllied Matters Act.

The directors are of the opinion that thefinancial statements give a true and fairview of the state of the financial affairs ofthe Company and of its profit. Thedirectors further accept responsibility forthe maintenance of accounting recordsthat may be relied upon in thepreparation of financial statements, aswell as adequate systems of internalcontrols over financial reporting.

Nothing has come to the attention of thedirectors to indicate that the Companywill not remain a going concern for atleast twelve months from the date of thisStatement.

ii. responsibilities in respect ofCorporate Governance

"The Company is committed to theprinciples and implementation of goodcorporate governance. The Companyrecognises the valuable contribution thatit makes to long-term businessprosperity and to ensuring accountabilityto its shareholders. The Company ismanaged in a way that maximises longterm shareholder value and takes intoaccount the interests of all of itsstakeholders.

The Company believes that fulldisclosure and transparency in itsoperations are in the interests of goodgovernance. As indicated in thestatement of responsibilities of directorsand notes to the accounts the businessadopts standard accounting practicesand ensures sound internal controls tofacilitate the reliability of the financialstatements."

iii. The Board of Directors "The Board is responsible for setting theCompany's strategic direction, forleading and controlling the Companyand for monitoring activities of theexecutive management. The Boardpresents a balanced andunderstandable assessment of theCompany's progress and prospects.

The Board consists of the Chairman, sixnon-executive directors and fourexecutive directors. The non-executivedirectors have experience andknowledge of the industry, markets,financial and/or other businessinformation to make a valuablecontribution to the Company's progress.The Managing Director is a separateindividual from the Chairman and heimplements the management strategiesand policies adopted by the Board. Theymeet at least four times a year."

iv. The Audit Committee"The Audit Committee (the ""Committee"")is made up of six members - threedirectors (all of whom are non-executive)and three shareholders. The Committeemembers meet at least thrice a year."

The Committee's duties include keepingunder review the scope and results ofthe external audit, as well as theindependence and objectivity of theauditors. The Committee also keepsunder review the risk and controls overfinancial reporting, compliance with lawsand regulations and the safeguarding ofassets. In addition, the Committeereviews the adequacy the Internal Auditplan and implementation status ofinternal audit recommendations.

v. Systems of Internal Control Oando PLC has well-established internalcontrol system for identifying, managingand monitoring risks. The Risk andControls Management and Internal Auditfunctions have reporting responsibilitiesto the Audit Committee. Both functionshave appropriately trained personnelsand undergo trainings on currentbusiness and best practices issues.

vi. Code of Business Ethics Management has communicated theprinciples in the Company’s Code ofBusiness Conduct and Ethics to itsemployees in the discharge of theirduties. This Code sets theprofessionalism and integrity required forbusiness operations which coverscompliance with laws, conflicts ofinterest, environmental issues, reliabilityof financial reporting, bribery and strictadherence to the principles so as toeliminate the potential for illegalpractices.

Director Director17 May 2012 17 May 2012

Chartered AccountantsLagos, Nigeria

REPORT OF THE INDEPENDENT AUDITOR TO THE MEMBERS OF OANDO PLC

Report on the financial statementsWe have audited the accompanying separate and consolidated financial statements of Oando plc (the company) and itssubsidiaries (together “the group”) which comprise the balance sheets as of 31 December 2011 and the profit and lossaccounts and statements of cash flows for the year then ended and a summary of significant accounting policies and otherexplanatory notes.

Directors’ responsibility for the financial statementsThe directors are responsible for the preparation and fair presentation of these financial statements in accordance withNigerian Statements of Accounting Standards and with the requirements of the Companies and Allied Matters Act and forsuch internal control, as the directors determine necessary to enable the preparation of financial statements that are free frommaterial misstatements, whether due to fraud or error.

Auditor’s responsibilityOur responsibility is to express an independent opinion on the financial statements based on our audit. We conducted ouraudit in accordance with International Standards on Auditing. Those standards require that we comply with ethicalrequirements and plan and perform our audit to obtain reasonable assurance that the financial statements are free frommaterial misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financialstatements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of materialmisstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditorconsiders internal control relevant to the entity’s preparation and fair presentation of the financial statements in order todesign audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on theeffectiveness of the company’s internal control. An audit also includes evaluating the appropriateness of accounting policiesused and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation ofthe financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

OpinionIn our opinion the accompanying financial statements give a true and fair view of the state of the financial affairs of thecompany and the group at 31 December 2011 and of their profits and cash flows for the year then ended in accordance withNigerian Statements of Accounting Standards and requirements of the Companies and Allied Matters Act.

Report on other legal requirementsThe Companies and Allied Matters Act requires that in carrying out our audit we consider and report to you on the followingmatters. We confirm that:i) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for

the purposes of our audit;ii) in our opinion proper books of account have been kept by the company, so far as appears from our examination of those

books;iii) the company’s balance sheet and profit and loss account are in agreement with the books of account.

PricewaterhouseCoopers Chartered Accountants, 252E Muri Okunola Street, Victoria Island, Lagos, Nigeria

74Oando PLC

2011 ANNUAL REPORT

Balance SheetAs of 31 December 2011

N’000

31-Dec-11 31-Dec-10NOTE Group Company Group Company

Non-current assetsProperty, plant and equipment 4 175,455,217 14,086,046 156,285,722 10,581,664Intangible assets 5 23,667,715 149,333 23,806,605 298,667 Long-term Investments 6 1,000 41,517,455 1,000 41,340,432 Deferred tax asset 13 5,553,035 319,676 3,695,549 166,895 Long term receivables 7 34,426,127 2,198,296 25,492,756 1,854,462

239,103,094 58,270,806 209,281,632 54,242,120

Current assetsInventories 8 32,458,405 - 22,386,418 4,361 Debtors and prepayments 9 106,219,743 58,781,295 80,167,578 457,692,118 Short-term investments 9a 193,031 193,031 - - Deferred tax asset 13 1,856,959 73,518 - - Bank and cash balances 21,033,529 2,517,681 12,187,072 815,762

161,761,667 61,565,525 114,741,068 458,512,240

Current liabilitiesCreditors and accruals 10 74,017,829 3,929,517 60,467,691 395,267,049 Dividend payable 651,358 651,358 651,358 651,358 Deferred tax liability 13 3,970,742 63,094 208,829 13,755 Current income tax liabilities 26 6,904,218 931,754 5,521,737 1,064,907 Convertible debt 34 2,500,000 - - -Borrowings 11 119,993,236 6,164,285 71,020,640 6,067,078

208,037,383 11,740,008 137,870,255 403,064,147

Net current (liabilities)/assets (46,275,716) 49,825,517 (23,129,187) 55,448,094

Non-current liabilitiesBorrowings 11 85,591,771 51,225,000 76,348,834 51,000,000 Other non-current liabilities 12 1,088,241 - 1,188,784 - Deferred tax liability 13 9,610,331 97,516 12,417,400 192,425 Provision for other liabilities & charges 14 4,109,253 1,216,030 3,147,893 476,893

100,399,597 52,538,546 93,102,911 51,669,318

Net Assets 92,427,781 55,557,777 93,049,534 58,020,896 Capital and reserves attributable to equity holdersShare capital 15 1,137,058 1,137,058 905,084 905,084 Share premium account 16 49,521,186 49,521,186 49,042,111 49,042,111 Revaluation reserve 17 18,054,794 1,013,047 18,054,794 1,013,047 Retained earnings 18 22,548,472 3,886,486 23,945,029 7,060,654

91,261,510 55,557,777 91,947,018 58,020,896 Minority interest 19 1,166,271 - 1,102,516 -Total Equity 92,427,781 55,557,777 93,049,534 58,020,896

The financial statements on pages 74 to 106 were approved by the Board of Directors on 8 May 2012 and signed on its behalf by:

DIrECTOrS: _________________________________________ _________________________________________

The accounting policies and notes on Pages 77 to 103 form an integral part of these financial statements.s.

75Oando PLC

2011 ANNUAL REPORT

Profit and Loss AccountFor the period ended 31 December 2011

N’000


Turnover 20 586,619,034 8,122,502 378,925,430 4,352,005 Cost of sales (518,178,147) - (324,797,391) - Gross profit 68,440,887 8,122,502 54,128,039 4,352,005 Selling and marketing costs (7,901,252) - (7,220,296) - Administrative expenses 21 (42,150,326) (4,305,088) (22,484,703) (1,882,531)Interest received 22 2,533,121 2,877,014 1,468,674 3,692,764Other operating income 23 12,456,510 1,240,803 4,174,589 322,420 Operating profit 33,378,940 7,935,231 30,066,303 6,484,658 Interest and similar charges 24 (8,825,689) (1,058,746) (5,747,458) (806,108)Profit before exceptional items and taxation 24,553,251 6,876,485 24,318,845 5,678,550 Exceptional items 24(a) (9,624,853) (4,374,853) - Profit before taxation 25 14,928,398 2,501,632 24,318,845 5,678,550 Taxation 26 (11,481,755) (19,020) (9,943,879) (275,826)Profit after taxation 3,446,643 2,482,612 14,374,966 5,402,724

Attributable to:Equity holders of the company 16 3,666,730 2,482,612 14,379,066 5,402,724 Minority interests (220,087) - (4,100) -

3,446,643 2,482,612 14,374,966 5,402,724

Earnings per share for profit attributable to equity holders of the Company during the year:Basic earnings per share (kobo) 27 162 109 829 311Diluted earnings per share (kobo) 27 161 109 - -

The accounting policies and notes on Pages 77 to 103 form an integral part of these financial statements.

76Oando PLC

2011 ANNUAL REPORT

Statement of Cash FlowsFor the period ended 31 December 2011

N’000


Cash flows from operating activitiesNet cash flow from operating activities before changes in working capital 29 33,255,642 2,450,771 37,728,245 3,039,993 Net decrease/(increase) in working capital (24,445,170) 8,336,553 (19,303,810) (9,856,725)Income tax paid 27 (12,882,172) (424,041) (7,806,099) (156,082)Net cash from/(used in) operating activities (2,071,700) 10,363,283 10,830,484 (6,972,814)

Cash flows from investing activitiesPurchase of property plant and equipment (27,161,298) (5,047,853) (18,745,614) (1,104,311)Investment in subsidiaries - (177,023) - (1,868,752)Short-term investments 9a (193,031) (193,031) - -Payments relating to pipeline construction 7 (9,910,080) - (8,615,464) - Pipeline construction costs recovery 7 1,866,525 - 3,753,789 - Proceeds from sale of property plant and equipment 105,655 46,576 318,655 267,868 Interest received 2,533,121 2,877,014 1,468,674 3,692,764 Cash used in by investing activities (32,759,108) (2,494,317) (21,819,960) 987,569

Cash flows from financing activitiesProceeds from long term loans 36,691,445 4,500,000 74,748,659 60,000,000 Repayment of long term loans (19,434,052) (4,275,000) (15,715,642) (3,000,000)Proceed from import finance facilities 10,533,274 - 9,142,843 -Share issue expenses - - (1,660,865) (1,660,865)Repayment of finance lease (52,938) - (111,429) - Proceeds from other short term loans 62,071,494 17,291,000 16,486,606 3,200,868 Repayment of other short term loans (33,718,041) (17,334,426) (93,947,807) (83,042,271)Increase/(decrease) in bank overdrafts 1,740,220 140,633 (4,878,560) (355,159)Dividend paid (5,430,508) (5,430,508) (2,114,019) (2,114,017)Issue of shares - - 21,118,641 21,118,641 Interest paid 24 (8,723,631) (1,058,746) (5,652,290) (806,108)Net cash from/(used in) financing activities 43,677,263 (6,167,047) (2,583,863) (6,658,911)

Net change in cash and cash equivalents 8,846,457 1,701,919 (13,573,339) (12,644,156)Cash and cash equivalent at the beginning of the year 12,187,072 815,762 25,760,411 13,459,918 Cash and cash equivalents at end of the year 21,033,529 2,517,681 12,187,072 815,762

Cash at year end is analysed as follows:Cash at bank and in hand 18,158,733 1,110,800 9,209,746 355,517 Fixed deposits 2,874,796 1,406,881 2,977,326 460,245

21,033,529 2,517,681 12,187,072 815,762

The accounting policies and notes on Pages 77 to 103 form an integral part of these financial statements.

77Oando PLC

2011 ANNUAL REPORT

Statement of SignificantAccounting Policies31 December 2011

1. General informationOando Plc (formerly Unipetrol NigeriaPlc) was registered by a specialresolution as a result of the acquisitionof the shareholding of Esso AfricaIncorporated (principal shareholder ofEsso Standard Nigeria Limited) by theFederal Government of Nigeria. It waspartially privatised in 1991 and fullyprivatised in the year 2000 following thedisposal of the 40% shareholding ofFederal Government of Nigeria toOcean and Oil Investments Limited andthe Nigerian public. In December 2002,the Company merged with Agip NigeriaPlc following its acquisition of 60% ofAgip Petroli’s stake in Agip Nigeria Plc.The Company formally changed itsname from Unipetrol Nigeria Plc toOando Plc in December 2003.

Oando Plc (the ""Company”) is listed onthe Nigerian Stock Exchange. TheCompany has a subsidiary calledOando Marketing Limited with retailand distribution outlets in Nigeria,Ghana and Togo and other smallermarkets along the West African coast.In 2010, Oando Marketing Limited, asubsidiary of Oando Plc, changed itsname to Oando Marketing Plc inpreparation for a divestment that isplanned for 2011. As of 31 December2011, Oando Plc retained 100%interest in Oando Marketing Plc, OandoTrading (Bermuda) and Oando Supplyand Trading (Nigeria). These entitiesmainly supply petroleum products tomarketing companies and largeindustrial customers.

The Group provides energy services toExploration and Production (E&P)companies through its fully ownedsubsidiary, Oando Energy Services.The Group also operates in the E&Psector through Oando Exploration andProduction Limited (100%), OandoProduction and Development CompanyLimited (95%), Oando OML 125 & 134Limited, Equator Exploration Limited(81.5%) and Oando Akepo Limited(100%). Other subsidiaries within theGroup and their respective lines ofbusiness including Gas and Power, areshown in note 36.

2. Statement of significantaccounting policies

2.1 Basis of preparationThe financial statements are preparedin compliance with the Statements ofAccounting Standards (SAS). Thefinancial statements are presented inthe functional currency, Nigeria Naira(N), rounded to the nearest thousand,and prepared under the historical costconvention as modified by therevaluation of certain property, plantand equipment.

The preparation of financial statementsin conformity with generally acceptedaccounting principles requires the useof estimates and assumptions thataffect the reported amounts of assetsand liabilities and disclosure ofcontingent assets and liabilities at thedate of the financial statements and thereported amounts of revenues andexpenses during the reporting period.Although these estimates are based onthe Directors’ best knowledge ofcurrent events and actions, actualresults ultimately may differ from thoseestimates.

2.2 Consolidation(a) Subsidiaries

Subsidiaries include all entities(including special purpose entities)over which the Group has the power togovern the financial and operatingpolicies generally accompanying ashareholding of more than one half ofthe voting rights. The existence andeffect of potential voting rights that arecurrently exercisable or convertible areconsidered when assessing whetherthe Group controls another entity.Subsidiaries are fully consolidated fromthe date on which control is transferredto the Group. They are de-consolidatedfrom the date that control ceases.

The purchase method of accounting isused to account for the acquisition ofsubsidiaries by the Group. The cost ofthe acquisition is measured as the fairvalue of the assets given, equityinstruments issued and liabilitiesincurred or assumed at the date ofexchange plus costs directlyattributable to the acquisition.Identifiable assets acquired and

liabilities and contingent liabilitiesassumed in a business combination aremeasured initially at their fair values atthe acquisition date irrespective of theextent of any minority interest. Theexcess of the cost of acquisition overthe fair value of the Group’s share of theidentifiable net assets acquired isrecorded as goodwill. If the cost ofacquisition is less than the fair value ofthe net assets of the subsidiaryacquired, after reassessment by theGroup, the difference is recognisedimmediately in the profit and lossaccount any excess remaining afterthat reassessment.

All balances and unrealised surplusesand deficits on transactions betweenGroup companies are eliminated.Where necessary, accounting policiesfor subsidiaries are changed to ensureconsistency with the policies adoptedby the Company. Separate disclosure(in equity) is made of Minority Interests.

(b) AssociatesAssociates are all entities over whichthe Group has significant influence butnot control, generally accompanying ashareholding of between 20% and 50%of the voting rights. Investments inassociates are accounted for by theequity method of accounting and areinitially recognised at cost. The Group’sinvestment in associates includesgoodwill (net of any accumulatedimpairment loss) identified onacquisition.

The Group’s share of its associates’post-acquisition profits or losses isrecognised in the income statement,and its share of post-acquisitionmovements in reserves is recognised inreserves. The cumulative post-acquisition movements are adjustedagainst the carrying amount of theinvestment. When the Group’s share oflosses in an associate equals orexceeds its interest in the associate,including any other unsecuredreceivables, the Group does notrecognise further losses, unless it hasincurred obligations or made paymentson behalf of the associate. Unrealisedgains on transactions between theGroup and its associates are eliminatedto the extent of the Group’s interest inthe associates. Unrealised losses are

78Oando PLC

2011 ANNUAL REPORT


also eliminated unless the transactionprovides evidence of an impairment ofthe asset transferred.

The accounting policies of theassociates are consistent with thepolicies adopted by the Group.

All subsidiaries and associates haveuniform accounting period.

2.3 Segment reportingA business segment is a group ofassets and operations engaged inproviding products or services that aresubject to risks and returns that aredifferent from those of other businesssegments. A geographical segment isengaged in providing products orservices within a particular economicenvironment that are subject to risksand returns that are different from thoseof segments operating in othereconomic environments.

2.4 Foreign currency translation(a) Transactions and balances

Transactions in foreign currenciesduring the year are converted into thefunctional currency, Nigeria Naira,using the exchange rates prevailing atthe dates of the transactions. Foreignexchange gains and losses resultingfrom the settlement of suchtransactions and from the translation atyear-end exchange rates of monetaryassets and liabilities denominated inforeign currencies are recognised inthe profit and loss account.

The functional currency of the upstreamcompanies is the US Dollars with effectfrom January 1, 2011. The US Dollars isthe currency mainly influencing salesand significant portion of upstreamcosts.

(b) Group companiesIn accordance with the Statement ofAccounting Standard (SAS 7), thefinancial statements of foreign entities,prior to consolidation, are translatedinto Naira using the Closing RateMethod as follows:

(a) assets and liabilities, both monetaryand non-monetary are translated at the closing rate;

(b) income statement items are translated at the closing rate;

(c) the exchange differences resulting from translating the opening net investment in the foreign entity at an exchange rate different from thatat which it was previously reported is taken to a retained earnings.

2.5 Property, Plant andEquipmentAll categories of property, plant andequipment are initially recorded at cost.Buildings and freehold land aresubsequently shown at market value,based on triennial valuations byexternal independent valuers, lesssubsequent depreciation for buildings.All other property, plant and equipmentare stated at historical cost lessdepreciation.

Subsequent costs are included in theasset’s carrying amount or recognisedas a separate asset, as appropriate,only when it is probable that futureeconomic benefits associated with theitem will flow to the Company and thecost of the item can be measuredreliably. All other repairs andmaintenance are charged to the profitand loss account during the financialperiod in which they are incurred.

Increases in the carrying amountarising on revaluation of land andbuildings are credited to revaluationreserve in shareholders’ equity.Decreases that offset previousincreases of the same asset arecharged against revaluation reserves;all other decreases are charged to theincome statement. An asset’s carryingamount is written down immediately toits recoverable amount if it is greaterthan its estimated recoverable amount.

Gains or losses on disposals aredetermined by comparing proceedswith carrying amounts. These areincluded in the income statement.When revalued assets are sold, therelated revaluation reserves aretransferred to income statement.

DepreciationDepreciation is calculated using thestraight-line method to allocate theircost or revalued amounts to their

residual values over their estimateduseful lives, as follows:

%Building 2 - 5

Bulk Plants, Terminal 5 - 121/2

and Equipment

Motor Vehicles 20 - 25

Other Assets and Equipment 5 - 331/3

The rigs are depreciated according tothe estimated useful lives of theircomponents.

2.6 Upstream activitiesExploratory drilling costs are includedin property, plant and equipmentpending determination of provedreserves. Following such determination,the capitalised costs are thenamortised against the results of thesuccessful finds on a ""unit-of-production"" basis. Capitalised costsare written off when it is determined thatthe well is dry. Costs incurred in theproduction of crude oil from theCompany's properties are charged tothe income statement of the period inwhich they are incurred.

Tangible fixed assets related to oil andgas producing activities are depletedon a unit-of-production basis over theproved developed reserves of the fieldconcerned except in the case of assetswhose useful lives are shorter than thelifetime of the field, in which case thestraight-line method is applied.Producible wells are not depleted untilthey form part of a producing field.Rights and concessions are depletedon the unit-of-production basis over thetotal proved reserves of the relevantarea.

Estimated site restoration andabandonment costs are based oncurrent requirements, technology andprice levels and are stated at fair value.The associated asset retirement costsare capitalized as part of the carryingamount of the related tangible fixedassets. The fair value calculation of theliability is based on the economic life ofthe production assets and discountedusing the Company's average cost ofborrowing. The obligation is reflectedunder provisions in the balance sheet.

79Oando PLC

2011 ANNUAL REPORT


2.7 Intangible assets(a) Goodwill

Goodwill represents the excess of thecost of an acquisition over the fair valueof the Group’s share of the netidentifiable assets of the acquiredsubsidiary/associate at the date ofacquisition. Goodwill on acquisition ofsubsidiaries is included in intangibleassets. Goodwill on acquisition ofassociates is included in investments inassociates. Goodwill is tested annuallyfor impairment and carried at cost lessaccumulated impairment losses. Gainsand losses on the disposal of an entityinclude the carrying amount of goodwillrelating to the entity sold.

Goodwill is allocated to cash-generating units for the purpose ofimpairment testing. Each of those cash-generating units represents the Group’sinvestment in each country of operationby each primary reporting segment."

In accordance with SAS 26, goodwill istested for impairment annually, as wellas when there are indications ofimpairment.

(b) Computer softwareAcquired computer software licensesare capitalised on the basis of the coststo acquire and bring to use the specificsoftware. These costs are amortisedover their estimated useful lives.

Costs associated with maintainingcomputer software programmes arerecognised as an expense as incurred.Expenditure on internally-developedsoftware is capitalised if it meets thecriteria for capitalising developmentcosts. Direct costs include the softwaredevelopment, employee costs and anappropriate portion of relevantoverheads. Computer softwaredevelopment costs recognised asassets are amortised over theirestimated useful lives (not exceedingfive years).

2.8 Long term receivable -pipeline cost recoveryLong-term receivable in respect ofpipeline cost recovery is accounted forat cost, less provision for impairment.Provision for impairment of the long-term receivable is established whenthere is objective evidence that theGroup will not be able to collect allamounts due according to the originalterms of the receivable.

2.9 Impairment of assetsAssets are reviewed for impairmentwhenever events or changes incircumstances indicate that thecarrying amounts may not berecoverable. An impairment loss isrecognised for the amount by which theasset’s carrying amount exceeds itsrecoverable amount. The recoverableamount is the higher of an asset’s fairvalue less costs to sell and value inuse. For the purposes of assessingimpairment, assets are grouped at thelowest levels for which there areseparately identifiable cash flows(cash-generating units).

2.10 InventoriesInventories are stated at lower of costand net realisable value. Cost includesexpenditure incurred in acquiring andtransporting the inventory to its presentlocation. Cost is determined using theweighted average method for finishedgoods and work-in-progress, rawmaterials, direct labour, other directcosts and related productionoverheads (based on normal operatingcapacity). It excludes borrowing costs.Net realisable value is the estimatedselling price in the ordinary course ofbusiness, less applicable variableselling expenses. Crude oil and gasinventories are stated at cost. Cost ofproduction comprises field operatingexpenses and directly relatedexpenditure.

2.11 Trade receivablesTrade receivables are stated afterprovisions have been made for debtsconsidered doubtful of recovery. Aprovision for impairment of tradereceivables is established when there isobjective evidence that the Group willnot be able to collect all amounts dueaccording to the original terms of thereceivables. The amount of theprovision is recognised in the incomestatement.

2.12 Cash and cash equivalentsCash and cash equivalents includecash in hand, deposits held at call withbanks and other short-term highly liquidinvestments with original maturities ofthree months or less.

2.13 BorrowingsBorrowing costs are recognised as anexpense in the period in which they areincurred, except when they are directlyattributable to the acquisition,construction or production of aqualifying asset.

2.14 TaxationCurrent income taxes are provided forin the financial statements inaccordance with relevant taxation Actsin the country of operation.

Deferred income taxes are provided infull, using the liability method, ontemporary differences arising betweenthe tax bases of assets and liabilitiesand their carrying amounts in theconsolidated financial statements.However, if a deferred income taxarises from initial recognition of anasset or a liability in a transaction otherthan a business combination that at thetime of the transaction affects neitheraccounting nor taxable profit or loss,such a deferred income tax is notaccounted for. Deferred income tax isdetermined using tax rates (and laws)that have been enacted orsubstantively enacted by the balancesheet date and are expected to applywhen the related deferred income taxasset is realised or the deferred incometax liability is settled.

80Oando PLC

2011 ANNUAL REPORT


Deferred income tax assets arerecognised to the extent that it isprobable that future taxable profit willbe available against which thetemporary differences can be utilised.

Deferred income tax is not provided ontemporary differences arising oninvestments in subsidiaries andassociates, as the timing of the reversalof the temporary difference is controlledby the Group and it is probable that thetemporary difference will not reverse inthe foreseeable future. Where thisceases to be the case, deferredincome tax will be provided for.

2.15 Employee benefitsThe Group operates a definedcontribution pension plan in line withthe provisions of the Pension ReformAct, under which the Group pays fixedcontributions into a separate entity. The Group has no legal or constructiveobligations to pay further contributionsif the fund does not hold sufficientassets to pay all employees thebenefits relating to employee service in the current and prior periods.

The assets of all schemes are held inseparate trustee administered funds,which are funded by contributions fromboth the Group and employees.

The Group’s contributions to thedefined contribution schemes arecharged to the profit and loss accountin the year to which they relate.

In addition, the Group operates adefined benefit service gratuity plan.Under the plan, an employee willreceive gratuity on retirement, usuallydependent on one or more factors suchas years of service and compensation.The past service liability, actuarial gainor loss are determined by an Actuaryusing the Accrued benefit cost method.Actuarial gains or losses arerecognised in the profit and lossaccount in the year to which they relate.The Group meets past serviceobligations from funds set aside andinvested.

2.16 ProvisionsIn accordance with SAS 23, provisionsfor environmental restoration,restructuring costs and legal claims arerecognised when: the Group has apresent legal or constructive obligationas a result of past events; it is morelikely than not that an outflow ofresources will be required to settle theobligation; and the amount has beenreliably estimated. Restructuringprovisions comprise lease terminationpenalties and employee terminationpayments. Provisions are notrecognised for future operating losses.

Where there are a number of similarobligations, the likelihood that anoutflow will be required in settlement isdetermined by consideration of theclass of obligations as a whole. Aprovision is recognised even if thelikelihood of an outflow with respect toany one item included in the sameclass of obligations may be small.

Provisions are measured at the presentvalue of management’s best estimate ofthe expenditure required to settle thepresent obligation at the balance sheetdate. The discount rate used todetermine the present value reflectscurrent market assessments of the timevalue of money.

Decommissioning liabilitiesProvision is recognised for thedecommissioning liabilities forunderground tanks. Based onmanagement's estimation of the future cash flows required for thedecommissioning of those assets, aprovision is recognised and thecorresponding amount added to thecost of the asset under property plantand equipment. The present values aredetermined using the Company’saverage cost of borrowing. Subsequentdepreciation charges of the asset areaccounted for in accordance with theGroup’s depreciation policy and theaccretion of discount (i.e. the increaseduring the period in the discountedamount of provision arising from thepassage of time) included in financecosts.

2.17 Share capitalOrdinary shares are classified asequity. Incidental costs directlyattributable to the issue of new sharesor options are shown in equity as adeduction, net of tax, from theproceeds.

2.18 revenue recognitionRevenue comprises the fair value of thesale of goods and services, net ofvalue-added tax, rebates anddiscounts and after eliminating saleswithin the Group.

Discounts are usually negotiated withcommercial customers and aresometimes given on a transaction basisor fixed per customer, subject tosubsequent reviews.

revenue is recognised as follows:(a) Sale of petroleum products and gas

Revenue from sale of petroleumproducts and gas is recognised when aGroup entity has delivered products tothe customer, the customer hasaccepted the products andcollectability of the related receivablesis reasonably assured.

Revenue from the sale of crude oil isthe realised value of crude oil lifted bycustomers. Revenue is recognisedwhen crude products are lifted bybuyers free on board. At the point oflifting, risks and rewards are transferredto the buyer.

(b) Sale of servicesRevenue from sale of services, such asfreight and through-put charges, isrecognised in the accounting period inwhich the services are rendered, byreference to completion of the specifictransaction assessed on the basis ofthe actual service provided as aproportion of the total services to beprovided.

(c) Dividend incomeDividend income is recognised whenthe right to receive payment isestablished.

(d) Interest incomeInterest income is recognised on a timeproportion basis using the contractedinterest rate.

81Oando PLC

2011 ANNUAL REPORT


2.19 LeasesOperating leasesLeases in which a significant portion ofthe risks and rewards of ownership areretained by the lessor are classified asoperating leases. Payments madeunder operating leases (net of anyincentives received from the lessor) arecharged to the income statement on astraight-line basis over the period of thelease.

Finance leasesLeases in which ownership, risks andrewards are transferred to the lessee,who is obligated to pay such costs asinsurance, maintenance and similarcharges on the asset are classified asfinance leases. Assets under financelease are capitalised and depreciatedover their estimated useful lives in linewith the Group's policy for assets of thesame class. Finance charges areallocated over the lease term.

2.20 Dividend distributionDividend distribution to the Company'sshareholders is recognised as a liabilityin the consolidated financial statementsin the period in which the dividends areapproved by the shareholders.

2.21 Long-term investmentsInvestment in quoted and unquotedsecurities are stated net of provision forpermanent diminution in carryingamounts. A permanent diminution isdeemed to have occurred when themarket values of the quoted securitiesand management's assessments ofunquoted investments are significantlybelow the carrying amounts over aperiod of six months . The amount ofprovision is recognised in the incomestatement.

2.22 Short term investmentsShort term investments are valued atthe lower of cost and market values.The carrying amount is determine onan item by item basis.

The amount by which costs exceedmarket value (unrealised loss) ischarged to the income statement to thestatement for the period. Realisedgains and losses on disposak of shortterm invetment are taken to the incomestatement for the period of disposal

.Upon partial sale of a particularinvestment, the carrying amount of partsold is calculated on the basis of theaverage carrying amount of the totalportfolio.

3 Segment information3.1 Primary reporting format -

business segments

The Group is broadly organised on aworldwide basis into seven mainsegments as follows:

(i) Exploration and production of oil andgas (E&P)This segment involves the explorationfor and production of oil and gasthrough the acquisition of rights in oilblocks on the Nigerian continental shelfand deep offshore.

(ii) Marketing of petroleum productsThis segment involves marketing andsale of petroleum products.

(iii) Supply and tradingThis involves bulk purchase ofpetroleum products and sales toindustrial and commercial customersand petroleum products' importation onbehalf of Government.

(iv) refining and terminalsThe Group has three principal projects:construction of 210,000 MT importterminal in Lekki; construction of LPGstorage facility at Apapa Terminal; andconstruction of a marina jetty andsubsea pipeline at the Lagos Port.

(v) Gas and powerThe Group through the activities of itssubsidiaries, Gaslink and East HorizonGas Company, is involved in thedistribution of natural gas. The Groupalso provides power to industrialcustomers through Akute PowerLimited and Oando Gas and Power.

(vi) Energy serviceshis segment involves the provision ofservices such as drilling andcompletion fluids and solid controlwaste management; oil-well cementingand other services to upstreamcompanies.

(vii) Corporate & OtherThese include Company activities thatcannot be directly allocated to any ofthe above segments.

82Oando PLC

2011 ANNUAL REPORT

Notes to theFinancial Statements31 December 2011

3.1 Primary reporting format - business segments (continued) N’000The segment assets and liabilities and capital expenditure for the year then ended are as follows:

Exploration Marketing Supply Refining & Gas & Energy Corporate Group& Production & Trading & Terminals power Services & Other

Total gross segment sales 26,880,886 199,846,726 632,698,954 - 20,228,431 14,383,398 194,413 894,232,808 Inter-segment sales - (364,785) (306,637,190) - (611,799) - - (307,613,774)Sales 26,880,886 199,481,941 326,061,764 - 19,616,633 14,383,398 194,413 586,619,034

Depreciation 5,770,288 1,897,366 23,014 - 48,382 2,046,581 1,508,395 11,294,026Amortisation - - 7,697 - - - 149,333 157,030Operating profit/(loss) 12,253,562 6,232,031 3,543,702 - 5,868,545 4,139,428 (8,283,182) 23,754,086after exceptional items Finance cost (5,100,749) (553,838) (286,687) - (870,573) (4,362,599) 2,348,757 (8,825,689)Profit before tax 14,928,397 Income tax expense (11,481,755)Profit for the year 3,446,642

The segment results for the year ended 31 December, 2010 are as follows:


Total gross segment sales 19,494,444 171,016,862 184,357,785 - 16,733,982 14,193,375 - 405,796,448 Inter-segment sales - - (26,871,018) - - - - (26,871,018)Sales 19,494,444 171,016,862 157,486,767 - 16,733,982 14,193,375 - 378,925,430

Depreciation 2,517,998 1,509,113 37,409 0 341,749 1,956,882 326,858 6,690,009 Amortisation 0 0 13,267 0 0 0 149,333 162,600 Operating (loss)/profit 9,761,255 6,686,981 5,187,571 (2,614) 4,814,680 4,927,666 (1,309,236) 30,066,303 Finance cost (85,661) (1,022,751) (188,141) 0 (606,471) (3,169,124) (675,311) (5,747,458)

Profit before income tax 24,318,845 Income tax expense (9,943,879)Profit for the year 14,374,966

Inter-segment revenue represents sales between the Supply & Trading and Marketing segments. Inter-segment transactions are entered into under the normalcommercial terms and conditions that would also be available to unrelated third parties. Profit on inter-segment sales have been eliminated on consolidation.

83Oando PLC

2011 ANNUAL REPORT


3.1 Primary reporting format - business segments (continued) N’000The segment assets and liabilities and capital expenditure for the year then ended are as follows:


Assets 120,850,598 72,127,924 72,093,288 6,518,622 44,588,220 56,499,221 72,297,880 444,975,753 Liabilities 26,878,013 68,612,397 80,477,200 2,343,466 37,369,934 16,270,837 66,674,516 298,626,365 Capital Expenditure* 11,958,164 2,324,700 19,931 - 983,718 4,529,806 7,344,978 27,161,297

The segment assets and liabilities as of 31 December, 2010 and capital expenditure for the year then ended are as follows:


Assets 104,344,385 63,734,427 43,220,692 3,056,572 37,901,543 45,690,098 18,679,638 316,627,354 Liabilities 18,771,162 44,403,226 49,074,434 - 32,461,400 7,068,255 61,046,721 212,825,198 Capital Expenditure 12,148,155 880,258 50,944 214,370 680,340 3,599,926 1,171,621 18,745,614

Segment assets consist primarily of property, plant and equipment, intangible assets, investments, inventories, receivables and operating cash. They exclude deferred taxation. Segment liabilities comprise operating liabilities. They exclude corporate and deferred taxation.*Capital expenditure comprises additions to property, plant and equipment

3.2 Secondary reporting format - geographical segments The home country of the Company which, is also the main operating company, is Nigeria. The Group's sales are mainly in Nigeria and other countries within andoutside the West African coast, namely, Ghana, Togo, and Liberia. 'Other countries' include Bermuda and the British Virgin Island.

Segment information on a geographical basis for the period ended 31 December, 2011 are as follows:


SalesWithin Nigeria 26,880,886 189,161,689 91,941,561 - 19,616,633 14,383,398 194,411 342,178,578 Other West African countries - 10,320,252 - - - - - 10,320,252 Other countries - - 234,120,204 - - - - 234,120,204

26,880,886 199,481,941 326,061,765 - 19,616,633 14,383,398 194,411 586,619,034

Total assetsWithin Nigeria 113,891,772 62,922,841 46,732,118 6,518,622 44,588,220 56,499,221 72,297,880 403,450,674 Other West African countries - 9,205,084 53,463 - - - - 9,258,547 Other countries 6,958,826 - 25,307,707 - - - - 32,266,533

120,850,598 72,127,924 72,093,288 6,518,622 44,588,220 56,499,221 72,297,880 444,975,754

Capital expenditureWithin Nigeria 11,936,462 2,255,173 19,931 - 983,718 4,529,806 7,344,978 27,070,068 Other West African countries - 69,527 - - - - - 69,527 Other countries 21,702 - - - - - - 21,702

11,958,164 2,324,700 19,931 - 983,718 4,529,806 7,344,978 27,161,297

84Oando PLC

2011 ANNUAL REPORT


Property plant and equipment N’000Segment information on a geographical basis for the year ended and as at 31 December, 2010 are as follows:

Exploration Marketing Supply Refining Gas & Energy Corporate Group& Production & Trading & Terminals Power Services & Other

SalesWithin Nigeria 19,494,444 161,943,112 71,413,414 - 16,733,982 14,193,375 - 283,778,327 Other West African countries - 9,073,750 23,263 - - - - 9,097,013 Other countries - - 86,050,090 - - - - 86,050,090

19,494,444 171,016,862 157,486,767 - 16,733,982 14,193,375 - 378,925,430

Total assetsWithin Nigeria 100,215,343 57,194,061 29,604,219 3,056,572 37,901,543 45,690,098 18,679,638 292,341,474 Other West African countries - 6,540,366 51,543 - - - - 6,591,909 Other countries 4,129,042 - 13,564,930 - - - - 17,693,972

104,344,385 63,734,427 43,220,692 3,056,572 37,901,543 45,690,098 18,679,638 316,627,355

Capital expenditureWithin Nigeria 12,023,718 815,842 50,944 214,370 680,340 3,599,925 1,171,622 18,556,761 Other West African countries - 64,416 - - - - - 64,416 Other countries 124,437 - - - - - - 124,437

12,148,155 880,258 50,944 214,370 680,340 3,599,925 1,171,622 18,745,614

Sales are disclosed based on the country in which the customer is located. Total assets are allocated based on where the assets are located.Capital expenditure is allocated based on where the assets are located.

4. Property plant and equipment4.1 Group

Fixtures,Upstream Land and Plant and Motor fittings, and Construction

assets* buildings machinery vehicles equipment in progress TotalCost/ValuationAt 1 January 2011 83,595,185 23,048,299 36,560,375 2,024,274 3,546,128 21,211,744 169,986,004 Prior year adjustment (Note 13) 5,849,780 - - - - - 5,849,780 Restated 89,444,965 23,048,299 36,560,375 2,024,274 3,546,128 21,211,744 175,835,785 Transfer/reclassification - (24,087) 737,419 - (1,488) (711,844) - Additions 11,889,743 217,924 2,807,962 403,752 1,311,434 10,530,481 27,161,296 Decommissioning assets additions - - 3,410 - - - 3,410 Disposals - (4,557) (118,169) (213,807) (23,310) - (359,843)Impairment (Note 37.2) (1,468,662) - - - - (1,228,361) (2,697,022)Exchange difference 3,744,711 (27,584) (7,121) 4,279 30,838 (372) 3,744,751 At 31 December 2011 103,610,757 23,209,995 39,983,876 2,218,498 4,863,602 29,801,649 203,688,377

DepreciationAt 1 January 2011 10,678,567 203,928 2,989,633 1,280,500 2,319,988 - 17,472,617 Prior year adjustment (Note 18) 2,077,446 - - - - - 2,077,446 Restated 12,756,013 203,928 2,989,633 1,280,500 2,319,988 - 19,550,063 Transfer/reclassification - - - - - - - Charge for the year 3,726,563 576,552 3,400,227 388,758 364,816 - 8,456,916 Disposals - (4,431) (115,934) (160,871) (21,644) - (302,880)Exchange difference 540,193 (2,736) (7,247) 214 (1,362) - 529,061 At 31 December 2011 17,022,769 773,313 6,266,679 1,508,600 2,661,799 - 28,233,160

Net book valueAt 31 December 2011 86,587,988 22,436,682 33,717,197 709,898 2,201,805 29,801,649 175,455,217 At 31 December 2010 76,688,952 22,844,371 33,570,742 743,774 1,226,139 21,211,744 156,285,722

Depreciation, depletion and amortisation of upstream assets for the year is included in cost of sales* Detail of Upstream Assets is shown in Note 37.1.

85Oando PLC

2011 ANNUAL REPORT


4.2 Company N’000Fixtures,

Upstream Land and Plant and Motor fittings, and ConstructionAssets* buildings machinery vehicles equipment in progress Total

Cost/ValuationAt 1 January 2011 - 1,687,552 117,481 665,787 866,926 8,298,486 11,636,232 Transfer/reclassification - - - - - (358,119) (358,119)Additions - - - 142,704 190,440 4,714,709 5,047,853 Disposals - - - (70,390) (5,880) - (76,270)Impairment* - (21,604) - - - (854,152) (875,756)At 31 December 2011 - 1,665,948 117,481 738,101 1,051,486 11,800,924 15,373,940

DepreciationAt 1 January 2011 - - 26,952 396,365 631,251 - 1,054,568 On transfer/reclassification - - - - - - - Charge for the year - 20,077 13,161 146,514 99,271 - 279,024 Disposals - - - (39,818) (5,879) - (45,697)At 31 December 2011 - 20,077 40,113 503,061 724,643 - 1,287,894

Net book valueAt 31 December 2011 - 1,645,871 77,368 235,040 326,843 11,800,924 14,086,046At 31 December 2010 - 1,687,552 90,529 269,422 235,675 8,298,486 10,581,664

Depreciation for the property, plant and equipment have been included in administrative expenses during the year.

*Management performed assessment of future economic benefit of one of the rigs, OES Professionalism, and decided to impair the rig on the basis that the cost ofrefurbishment is higher than the realisable economic benefit.

86Oando PLC

2011 ANNUAL REPORT


5. Intangible assets N’00031-Dec-11 31-Dec-10

Group Company Group Company

Goodwill (note 5.1) 23,484,623 - 23,484,623 -Software costs (note 5.2) 183,092 149,333 321,982 298,667

23,667,715 149,333 23,806,605 298,667

5.1 Goodwill31-Dec-11 31-Dec-10


Movement in goodwill is analysed as follows:At 1 January 23,484,623 - 23,483,905 - Additions - - 718 -At 31 December 23,484,623 - 23,484,623 -

In accordance with the Group's accounting policy, goodwill is not amortised but individually tested annually for impairment.

Impairment testing of goodwillGoodwill is allocated to the Group's cash-generating units (CGUs) identified according to the business segments. Impairment tests were conducted as at the balancesheet date based on value in use calculations. The calculations used cash flows projections based on financial forecasts covering a five year-period. The discount rateused is the pre-tax interest rate that reflects the current market assessment of the risks specific to the business segment.

Based on the impairment test, the carrying amount of goodwill is not higher that the recoverable value. Accordingly, no impairment loss has been recognised.

5.2 Software costsIn accordance with the Group's accounting policy, deferred software costs are amortised over 5years. Current year charge of N157.0 million (2010: N162.6million) isincluded in other administrative expenses.

6. Long term investments31-Dec-11 31-Dec-10


Quoted sharesAt 1 January 10,000 10,000 10,000 10,000Additions - - - -Provision for dimunition in value 9,000) (9,000) (9,000) (9,000)Balance, at end of year 1,000 1,000 1,000 1,000

Unquoted sharesAt 1 January - 41,339,432 - 39,470,680 Additions - 177,023 - 1,868,752 Balance, at end of year - 41,516,455 - 41,339,432

Total investments 1,000 41,517,455 1,000 41,340,432

87Oando PLC

2011 ANNUAL REPORT


6.1 Analysis of the company's unquoted investment N’00031-Dec-11 31-Dec-10


Akute Power Limited - 2,500 - 2,500 Apapa SPM Limited - 19,125 - 19,125 East Horizon Gas Co. Ltd. - 10,000 - 10,000 Gaslink Nigeria Limited - 6,950,847 - 6,933,125 Oando Energy Services Limited - 550,497 - 550,497 Oando Exploration and Production Limited - 3,896,152 - 3,896,152 Oando Gas and Power Limited - 1,000 - 1,000 Oando Lekki Refinery Limited - 2,500 - 2,500 Oando Marketing Limited - 15,573,051 - 15,573,051 Oando Petroleum and Development Company Limited - 3,315,774 - 3,315,774 Oando Port Harcourt refinery Limited - 2,500 - 2,500 Oando Properties Limited - 250 - 250 Oando Searex VI Limited - - - - Oando Searex XII Limited - - - - Oando Supply and Trading Limited - 763,344 - 763,344 Oando Trading Limited Bermuda - 2,894,333 - 2,894,333 OML 112 & 117 Limited - 6,538 - 6,538 OML 125 & 134 BVI Limited - - - - OML 125 & 134 Limited - - - - UNITAB Nigeria Limited - - - - OandoAkepo Limited - 2,500 - 2,500 Oando Terminal and Logistics - 2,500 - 2,500 Equator Exploration Limited - 7,479,839 - 7,347,953 Oando Liberia - 6,538 - 6,538 OES Passion Limited - 1,752 - 1,752 OES Professionalism Limited - 10,000 - 10,000 Central Horizon Gas Company Limited - 5,100 - - Ajah Distribution Limited - 2,500 - - Alausa Power Limited - 2,500 - - Gasgrid Nigeria Ltd - 2,500 - - Oando Resources Ltd - 2,500 - - Oando Petroleum Development Limited - 2,500 - - Investment in oando Logistics - - - -Investment in 0901887 BC Ltd - - - -

Lekki Gardens Power Ltd - 2,500 - - Oando Wings Limited - 3,000 - - Oando Netherland Holdings 1 Cooperahif U.A - - - - Oando Exploration Equator Holdings Ltd - 1,816 - - OandoServco Nig Ltd - 2,500 - -

- 41,518,956 - 41,341,932 Provision for diminution in value - (2,500) - (2,500)

- 41,516,456 - 41,339,432

Provision for diminution in value is analysed as follows:Oando Port Harcourt Refinery Limited - 2,500 - 2,500

7. Long term receivable N’00031-Dec-11 31-Dec-10


Long term prepayment 3,455,355 2,198,296 2,565,539 1,854,462 Pipeline Cost Recovery Account 30,970,772 - 22,927,217 -

34,426,127 2,198,296 25,492,756 1,854,462

88Oando PLC

2011 ANNUAL REPORT


7. Long term receivable (continued)

Pipeline Cost Recovery Account (PCRA) represents accumulated costs incurred in respect of the design, funding and construction of the pipeline infrastructure onbehalf of the Nigerian Gas Company by Gaslink and East Horizon Gas Company, which are recoverable from gas sales over the duration of the Natural Gas Sale andPurchase Agreement.

The PCRA includes land and building construction costs, plant and equipment costs, work-in-progress, pipeline construction costs, project vehicle costs, interest onborrowings, bank charges and fees, pipeline insurance cost, project management and other charges relevant to the pipeline construction such as legal andprofessional fees. This is stated at cost less amounts recovered from gas purchases.

Movement in the PCRA is analysed as follows:N’000

31-Dec-11 31-Dec-10Group Company Group Company

At 1 January 22,927,217 - 18,065,542 - Additions during the year 9,910,080 - 8,615,464 - Capital recovered during the year (1,866,525) - (3,753,789) - At 31 December 30,970,772 - 22,927,217 -

8. InventoriesFinished products 28,169,966 - 18,371,623 - Raw materials 2,496,153 - 1,089,582 - Materials inventory - - 599,251 - Products-in-transit 1,385,766 - 1,931,583 - Spares and other consumables 64,602 - 876,396 - Consumable materials and engineering stocks 766,537 - - 9,842

32,883,024 - 22,868,435 9,842 Provision for slow moving and obsolete stocks (424,619) - (482,017) (5,481)

32,458,405 - 22,386,418 4,361

9. Debtors and prepaymentsTrade debtors 43,322,121 - 43,791,730 - Bridging claims receivable 10,094,924 - 7,044,442 - Petroleum Support Fund 20,489,887 - 7,269,504 - Deposit for import 1,922,347 - 9,084,041 - Other debtors 19,299,571 3,930,791 11,150,737 5,460,502 Amounts due from related companies - 54,106,669 - 451,644,388 Prepayments 16,327,849 762,996 4,309,785 606,388 As previously stated 111,456,699 58,800,456 82,650,239 457,711,278

Revaluation reserve written off against prepayments - - (72,540) -111,456,699 58,800,456 82,577,699 457,711,278

Provision for doubtful trade and other receivables (5,236,956) (19,160) (2,410,121) (19,160)106,219,743 58,781,295 80,167,578 457,692,118

Included in Other debtors is a deposit of N2.4billion towards the acquisition of an aircraft for air surveillance over the company's newly constructed pipeline. Inaccordance with the purchase agreement with the seller, Churchill Finance C300-0462 Limited, a related party, legal and beneficial ownership of the aircraft shall passto East Horizon Gas Company upon full and final payment of the purchase price of US$22million (N3.4billion).

89Oando PLC

2011 ANNUAL REPORT


9a. Short-term investment N’00031-Dec-11 31-Dec-10


At the beginning of the year - - - - Adidition 193,031 193,031 - - At the end of the year 193,031 193,031 - -

The Company invested in marketable securities during the year.

10. Creditors and accrualsTrade creditors 28,371,214 - 25,786,570 - Other creditors 28,386,778 2,502,493 20,636,033 1,911,755 Accruals 15,349,082 1,427,024 8,121,989 939,636 Amounts due to other related companies - - - 392,415,658 Deferred income (Note 10a) 1,910,755 - 5,923,099 -

74,017,829 3,929,517 60,467,691 395,267,049

10a. Deferred incomeIncluded in deferred income is N1.9billion (2010: N4.3billion) that relate to billing for make-up (unutilised) gas invoiced to customers in line with the terms of theagreement.

11. BorrowingsCurrentBank overdrafts 25,361,628 164,285 23,621,408 23,652 Import finance facilities 39,670,265 - 29,136,991 - Finance lease obligation - - 52,938 - Other short term loans 36,692,377 - 8,328,324 43,426 Current portion of long term loans 18,268,966 6,000,000 9,880,979 6,000,000

119,993,236 6,164,285 71,020,640 6,067,078

Non-currentSyndicated/other project loans 85,591,771 51,225,000 76,348,834 51,000,000

11a. Current borrowings are analysed as follows:Drawdown/

Loan type/Purpose Tenor/Interest rate Security BalanceImport finance facility to finance the 3 - 90 days Sales proceeds of products financed 39,670,265purchase of petroleum products for resale Libor + 1.75 - 4% under the facility

Commercial papers to finance product allocation 3 - 90 days Stock Hypotecation, cash and cheque 36,692,376from PPMC and importation of petroleum products Libor + 1.75 - 4% collection from product sales

Overdraft 3 - 365 days Corporate guarantee/ Security trust deed 25,361,62812,5- 15.5%

101,724,269Current portion of non-current loans 18,268,967

119,993,236

90Oando PLC

2011 ANNUAL REPORT


11c. Non current borrowings are analysed as follows N’000Drawdown/

Loan type Purpose Tenor/Interest rate Security BalanceTerm Loan Finance CNG project 14.5%/5 Years Corporate guarantee of Oando PLC and CNG Plant 607,327

Term Loan Pipelines for customers' 15.25%/ Lien on deposit 1,400,000connection to gas facilities renewable annually

Term Loan To finance OML 90 Activites 6.53% Derivative barrels of oil 4,849,990

Medium Term Loan Financing Apapa SPM Project 8.5%/5 Years Fixed and floating charge on assets of Oando PLC 2,343,000

Term Loan Project Finance 15%/3 Years Corporate guarantee of Oando Plc and 2,625,000domiciliation of proceeds of sale of gas

Medium Term Loan Upgrade of Passion rig 8%/3 Years Negative pledge of Oando Energy Services 3,203,998

Project Finance Akute IPP 7%/4 Years Corporate guarantee of Oando Plc 2,947,927

Medium Term Loan Upgrade of Respect rig 8%/3 Years Domiciliation of rig contract proceeds, 3,514,500surbodinated corporate guarantee of Oando PLC

Syndicated gas project facility UNICEM gas pipeline NIBOR +3.5%/7 Years Corporate guarantee of Oando Plc 16,240,596construction

Long term Loan To finance OML 5years/LIBOR+6% Domiciliation of revenue account 8,903,400125&134 Activities

Medium Term Loan Restructuring of Mortgage on assets of 57,225,000Short -Long term Debt Oando Plc and some subsidiaries

Sub total 103,860,738Current portion of long term loans (18,268,967)

85,591,771

12. Other non-current liabilities N’00031-Dec-11 31-Dec-10


Customers' security deposits 1,088,241 - 1,188,784 -

Customer security deposits represent amounts deposited by dealers in respect of product supply, use of Oando Marketing PLC's equipment and retailing outlets. Thedeposits do not attract any interest and are refundable to the dealers less any amounts owed at the expiration of the dealership agreement.

91Oando PLC

2011 ANNUAL REPORT


13. Defered taxation N’00031-Dec-11 31-Dec-10


Deferred taxation - non-current assetAt 1 January 3,695,549 166,895 2,161,298 244,050Provision during the year (Note 26) 1,725,426 152,781 1,106,538 118,612Reclassification - - 404,080 (195,767)Net under/(over) provision for taxes - - 23,633 - Exchange difference 132,060 - - - At 31 December 5,553,035 319,676 3,695,549 166,895

Deferred taxation - current assetAt 1 January - - 6,922,654 - Provision/(writeback) during the year (Note 26) 1,385,816 73,518 (1,095,834) - Reclassification 186,577 - (4,098) - Net under/(over) provision for taxes - - (11,805) -Exchange difference 284,566 - 38,863 - As previously stated 1,856,959 73,518 5,849,780 - Reversal to fixed assets (Note 4.1) - - (5,849,780) - At 31 December 1,856,959 73,518 - -

Deferred taxation - current liabilityAt 1 January 208,829 13,755 923,737 217,691Provision during the year (Note 26) 3,575,336 49,339 (834,499) (203,936)Reclassification 186,577 - 119,591 - At 31 December 3,970,742 63,094 208,829 13,755

Deferred taxation - non-current liability

At 1 January 12,417,400 192,425 11,928,511 311,885Provision/(write back) during the year (Note 26) (3,231,467) (94,909) 775,192 (36,254)Reclassification - - (197,218) (195,767)Revaluation surplus (Note 17) - 1,049,926 112,561Net under/(over) provision for taxes - - (1,188,850) - Exchange difference 424,397 - 57,093 - As previously stated 9,610,330 97,516 12,424,654 192,425Reversal of deferred tax on revaluation surplus (7,254)At 31 December 9,610,330 97,516 12,417,400 192,425

Deferred tax liability is as a result of accelerated capital allowances on existing property, plant and equipment. Deferred tax asset is as a result of unrelieved taxlosses, unrealised exchange losses and accelerated capital allowances.

14. Provision for other liabilities & chargesTank decommissioning/abandonment provision (Note 14.1) 1,486,695 - 1,841,431 - Provision for gratuity (Note 14.2) 2,622,558 1,216,030 1,306,462 476,893

4,109,253 1,216,030 3,147,893 476,893

92Oando PLC

2011 ANNUAL REPORT


14.1 Tank decommissioning/abandonment provision N’00031-Dec-11 31-Dec-10


Balance, beginning of year 1,841,431 - 1,594,613 -Additions/Valuation change (516,554) - 95,168 - Accretion discount 102,058 - 144,869 - Exchange difference 59,760 - 6,782 - Balance, end of year 1,486,695 - 1,841,431 -

In accordance with the Group accounting policy a provision is recognised in respect of underground tanks decommissioning obligation and upstream, at the presentvalue of management’s best estimate of the expenditure required to settle the present obligation at the balance sheet date. A corresponding amount is included underplant and machinery, and depreciated in accordance with the policy.

14.2 Provision for gratuityBalance, beginning of year 1,306,461 476,893 837,624 127,591Provision for the year (Note 30b) 1,600,365 787,181 610,311 377,148 Payment during the year (284,268) (48,044) (141,474) (27,846)Balance, end of year 2,622,558 1,216,030 1,306,461 476,893

The Group operates a gratuity scheme (the Scheme) for qualified staff.

With effect from 1 January 2012, the Group discontinued the Scheme for management staff and increased employers contribution in respect of their existingcontribution plan under the 2004 Pension Act. Alexander Forbes Consulting Actuaries Nigeria Limited (Alexander Forbes) was engaged to perform to determine theliability from the curtailed scheme, which was estimated at N2.1 billion. The Group intends to pay the money to a fund manager who will manage the funds on behalf ofmanagement staff. In addition, Alexander Forbes performed an actuarial valuation of the past service liability for the employees using the Accrued benefit costmethod, and determined the liability as N0.5billion.

Payments for gratuity described above were met from funds set aside and invested,

15. Share capitalAuthorised:6,000,000,000 Ordinary shares of 50k each 3,000,000 3,000,000 3,000,000 3,000,000

Issued and fully paid:At beginning of the year1,810,169,256 Ordinary shares of 50k each 905,084 905,084 452,542 452,542

Additions:2010:301,694,876 Ordinary shares of 50k each - Rights - - 150,847 150,847 2010: 603,389,752 Ordinary shares of 50k each - bonus - - 301,695 301,695 2011: 452,542,314 Ordinary shares of 50k each - bonus 226,272 226,272 - - 2011: 11,406,568 Ordinary shares of 50k each 5,702 5,702 - - At end of year2,274,118,138 Ordinary shares of 50k each 1,137,058 1,137,058 905,084 905,084

16. Share premium accountAt beginning of the year 49,042,111 49,042,111 29,735,182 29,735,182 Issue of shares 479,075 479,075 20,967,794 20,967,794 Share issue cost - - (1,660,865) (1,660,865)At end of the year 49,521,186 49,521,186 49,042,111 49,042,111

93Oando PLC

2011 ANNUAL REPORT


17. revaluation reserve N’00031-Dec-11 31-Dec-10


At beginning of the year (note 4) 18,054,794 1,013,047 7,215,257 217,242 Revaluation surplus during the year:- Land & building - - 8,003,534 1,125,609 - Plant & Machinery - - 2,495,726 - Revaluation surplus written off - (217,242) (217,242)Under/over provision for deferred taxes - - (1,049,926) (112,561)Deferred tax - 1,672,731 - As previuously stated 18,054,794 1,013,047 18,120,080 1,013,047 Prior year adjustment - - (72,540) - Deferred tax on prior year adjustment - - 7,254 - At end of the year 18,054,794 1,013,047 18,054,794 1,013,047

Revaluation reserve is not available for redistribution to shareholders until realised through disposal of related assets.

18. retained earningsAt beginning of the year 23,945,029 7,060,654 14,401,178 4,674,878Exchange difference 580,836 - 259,179 - Bonus issues (226,272) (226,272) (301,695) (301,695)Dividend:2009 final - - (2,715,253) (2,715,253)2010 final (5,430,508) (5,430,508) - - Transactions with Minority Interest 12,657 - - - Profit for the year 3,666,730 2,482,612 14,379,066 5,402,724As previously stated 22,548,472 3,886,487 26,022,475 7,060,654Prior year adjustment (Note 4.1) - - (2,077,446) - At end of the year 22,548,472 3,886,486 23,945,029 7,060,654

Prior year adjustmentsThis relates to deferred tax adjustment on OML 125 & 134 Limited.

19. Minority interestMovement in minority interests during the year is as follows:At start of the year 1,102,516 1,007,583 Exchange difference 441,099 99,033 Minority Interest in increase in investment (157,257) - Loss for the year (220,087) (4,100)At end of the year 1,166,271 1,102,516

94Oando PLC

2011 ANNUAL REPORT


20. Turnover N’00031-Dec-11 31-Dec-10


Analysis by geographical region:Within Nigeria 342,178,578 8,122,502 283,778,327 4,352,005 Other West African Countries 10,320,252 - 9,097,013 - Others 234,120,204 - 86,050,090 -

586,619,034 8,122,502 378,925,430 4,352,005

Analysis by product/typeCrude oil 26,880,886 - 19,494,444 - Fuels 507,341,247 - 318,085,606 - Base oil, lubricants and other products 14,295,248 - 12,818,943 - Gas 19,616,633 - 16,733,982 - Barite, drill bits and oil well cement 4,101,621 - 2,107,612 - Rig services 14,383,398 - 9,684,843 - Intragroup dividend - 8,122,502 - 4,352,005

586,619,034 8,122,502 378,925,430 4,352,005

21. Administrative expensesStaff costs 9,384,180 1,332,607 6,485,461 268,885 Repairs and maintenance 1,311,326 49,045 737,192 4,073 Insurance 704,256 37,456 258,930 69,583 Rent and other hiring costs 655,763 10,455 694,692 82,474 Depreciation included in administrative expenses 8,456,916 279,024 2,120,932 326,957 Other administrative expenses 16,961,090 1,559,699 11,054,009 896,547 Exchange loss 4,676,795 1,036,803 1,133,487 234,012

42,150,326 4,305,089 22,484,703 1,882,531

22. Interest receivedThis represents interest income accruing from placement of surplus cash in commercial banks for Group; and placement of surplus cash in commercial banks andintercompany interest for Company.

23. Other operating incomeProfit on sale of property plant and equipment 48,692 16,004 41,258 35,590 Foreign exchange gain 8,106,323 1,026,282 1,387,538 281,785 Other income 4,301,495 198,517 2,745,793 5,045

12,456,510 1,240,803 4,174,589 322,420

24. Interest payable and similar chargesInterest on long term loan 2,048,621 - 957,568 - Interest on short term loans and overdrafts 6,675,010 1,058,746 4,694,722 806,108Total interest on bank loans and overdrafts 8,723,631 1,058,746 5,652,290 806,108 Accretion charge 102,058 - 95,168 - Total interest payable and similar charges 8,825,689 1,058,746 5,747,458 806,108

95Oando PLC

2011 ANNUAL REPORT


24(a). Exceptional items N’00031-Dec-11 31-Dec-10


Exceptional items consists of the following charges:Termination fee for Technical Services Agreement & Management Services Agreement 5,250,000 - - - Rig asset write-off 851,152 851,152 - - Project costs write-off 3,523,701 3,523,701 -

9,624,853 4,374,853 - -

25. Profit before taxationProfit before taxation is stated after charging or crediting:- Depreciation, depletion and amortisation of upstream assets (Note 37.1) 3,726,563 - 2,525,529 - - Depreciation - others 4,730,353 279,024 4,164,480 326,957- Auditors' remuneration 164,956 23,112 130,100 21,600 - Directors' remuneration 782,898 354,566 880,694 407,626- Foreign exchange loss 4,676,795 1,036,803 1,133,487 234,012- Foreign exchange gain 8,080,366 1,026,282 1,387,538 281,785- Profit on sale of property plant and equipment 48,692 16,004 41,258 35,590

26. Taxation(a) Per profit & loss accountCharges for the yearIncome tax 13,309,864 290,888 9,229,384 594,964 Education tax 939,264 - 784,505 39,664

14,249,128 290,888 10,013,889 634,628Deferred tax asset -non-current (Note 13) (1,725,426) (152,781) (1,106,538) (118,612)Deferred tax on asset - current (Note 13) (1,385,816) (73,518) 1,095,834 - Deferred tax liability - current (Note 13) 3,575,336 49,340 (834,499) (203,936)Deferred tax liability - non-current (Note 13) (3,231,467) (94,909) 775,192 (36,254)

11,481,755 19,020 9,943,878 275,825

(b) Per balance sheetBalance, 1 January 5,521,737 1,064,907 3,313,947 586,360 Payments during the year (12,882,172) (424,041) (7,806,099) (156,082)Charge for the year 14,249,128 290,888 10,013,889 634,629As previously stated 6,888,693 931,754 5,521,737 1,064,907 Exchange difference 15,525 - - - Balance, 31 December 6,904,218 931,754 5,521,737 1,064,907

96Oando PLC

2011 ANNUAL REPORT


27. Earnings per shareBasic & Diluted Earnings Per ShareBasic earnings per share is calculated by dividing the profit attributable to the equity holders of the Company by the weighted average number of shares in issueduring the year.

Diluted earnings per share is calculated by dividing the profit attributable to the equity holders of the Company plus after-tax amount of interest associated withconvertible debt by the weighted average number of shares in issue during the year and additional ordinary shares that would have been outstanding if the dilutivepotential ordinary shares had been issued.

N’00031-Dec-11 31-Dec-10


Profit attributable to equity holders of the Company 3,666,730 2,482,612 14,379,066 5,402,724

Weighted average number of shares in issue (thousands) 2,268,415 2,268,415 1,734,746 1,734,746Basic earnings per share (kobo) 162 109 829 311Diluted earnings per share (kobo) 161 109 - -

28. Net cash flow from operating activities before changes in working capitalProfit on ordinary activities after taxation 3,446,643 2,482,612 14,374,966 5,402,724 Adjustments for non-cash items and interests:- Taxation for the year 11,481,754 19,020 9,943,879 275,826- Depreciation, depletion and amortisation 8,456,915 279,024 6,690,009 326,957- Profit on sale of property plant and equipment (48,692) (16,004) (41,258) (35,590)- Foreign exchange differences (2,481,814) - 212,148 - - Revaluation surplus written off - - (217,242) (217,242)- Amortisation of software costs 157,030 149,333 162,600 149,333 - Impairment loss on property, plant and equipment 2,697,022 875,756 1,712,210 - - Increase in provision for doubtful debts 2,826,834 - 777,773 19,160 - Decrease/(increase) in provision for slow moving and obsolete stocks (57,398) (5,481) 46,524 5,481 - Interest expense 8,723,631 1,058,746 5,652,290 806,108 - Staff equity scheme 484,779 484,779 - - - Accretion expense 102,058 - 95,168 - - Interest received (2,533,121) (2,877,014) (1,468,674) (3,692,764)

33,255,642 2,450,771 37,940,393 3,039,993

29. Net decrease/(increase) in working capital- Decrease/(Increase) in inventories (10,014,588) 9,842 (12,739,632) 31,634 - Decrease/(Increase) in debtors and prepayments (28,806,460) 399,268,940 15,725,275 (114,831,122)- (Decrease)/ Increase in creditors and accruals 13,550,137 (391,337,532) (20,930,574) 106,440,543- (Decrease)/ Increase in convertible debt 2,500,000 - - -- (Increase)/Decrease in long term prepayments (889,816) (343,834) (1,847,691) (1,847,082)- Increase/(Decrease) in other long term liabilities (100,542) - 19,975 - - Increase/(Decrease) in gratuity provisions 1,316,097 739,137 468,837 349,302

(22,445,170) 8,336,553 (19,303,810) (9,856,725)

97Oando PLC

2011 ANNUAL REPORT


30. Directors and employees N’00031-Dec-11 31-Dec-10


(a) Directors' remuneration:The remuneration paid to the directors of the Company was as follows:Fees paid to non executive directors:Chairman 2,250 2,250 2,500 2,500 Others 18,427 9,604 24,793 18,000

20,677 11,854 27,293 20,500 Executive directors' salaries 595,850 282,578 443,327 187,131

616,527 294,432 470,620 207,631 Other emoluments 312,102 103,375 410,074 199,995

928,629 397,807 880,694 407,626

The directors received emoluments (excluding pension contributions) in the following ranges:

Number Number Number NumberN1,000,000 - N10,000,000 6 2 6 2 Above N10,000,000 24 14 24 14

Included in the above analysis is the highest paid director at N112 million (2010: N68.5million). N’00031-Dec-11 31-Dec-10


(b) Staff costsi. Employee costs during the year amounted to:Wages and salaries 6,895,885 221,188 5,289,674 - Welfare and training 627,056 5,960 488,961 - Other staff costs* 1,861,239 1,105,459 706,826 268,885

9,384,180 1,332,607 6,485,461 268,885

* Other staff costs include provision for gratuity disclosed in Note 14.2

ii. The average number of full-time persons employed by the Company during the year was as follows:

Number Number Number NumberExecutive 4 3 4 3Management staff 156 51 148 44Senior staff 442 90 417 83 Junior staff 3 - - -

605 144 569 130

iii. Higher-paid employees of the Company, other than directors, whose dutieswere wholly or mainly discharged in Nigeria, received remuneration (excluding pension contributions) in the following ranges:

Number Number Number NumberN2,500,001 - N4,000,000 142 28 264 57N4,000,001 - N6,000,000 260 53 141 24N6,000,001 - N8,000,000 51 9 57 15N8,000,001 - N10,000,000 46 14 27 8Above N10,000,000 106 40 80 26

605 144 569 130

98Oando PLC

2011 ANNUAL REPORT


31. Capital commitment N’00031-Dec-11 31-Dec-10


N'000 N'000 N'000 N'000Outstanding capital expenditure contracted but not provided for in the accounts 1,513,699 277,978 740,838 24,663 Capital expenditure approved by the Board but not yet committed 9,466,851 664,711 12,038,630 -

10,980,550 942,689 12,779,468 24,663

32. Contingent liabilities(32.1) Pending litigationThere are a number of legal suits outstanding against the Company for stated amounts of N8.5billion (2010:N14.4billion). On the advice of Counsel, the Board ofDirectors are of the opinion that no material losses are expected to arise. Therefore, no provision has been made in these financial statements.

(32.2) Bonds and guaranteesThe Company guaranteed loans amounting to N37.9 billion (2010: N18.33 billion) from commercial banks on behalf of its subsidiaries.

(32.3) Other claimsIn September 2007, the Group (through Equator Exploration Limited) transferred, under the Bilabri Settlement Agreement (‘BSA’), the full responsibility for completingthe OML 122 ‘Bilabri’ development to Peak Petroleum Industries (Nigeria) Limited (‘Peak’), who specifically assumed responsibility for the project’s future funding andits historic unpaid liabilities. A contingent liability estimated at N3.7billion might arise where Peak failed to meet unpaid debts. No provision has been made in thesefinancial statements.

33. related party transactions N’00031-Dec-11 31-Dec-10

N'000 N'000

Transactions with affiliates within the GroupTransactions relating to the Company's own financial statements are as follows:Oando Exploration & Production Limited 49,308,872 46,323,481 Oando Energy Services Limited 34,570,799 33,695,083 Oando Supply & Trading Limited (4,757,781) (2,383,318)Oando Lekki Refinery Limited 2,402,167 2,401,817 Apapa SPM Limited 2,258,944 552,347 Oando Properties Limited 58,688 44,678 Oando Gas and Power Limited (3,000,000) (2,000,000)Gaslink Nigeria Limited 1,288,158 183,847 Oando Marketing PLC (21,913,879) (11,438,411)Oando Trading Bermuda Limited (9,450,794) (8,344,492)Other Companies 3,341,497 193,698

54,106,669 59,228,730

The Company provided funds to Oando Exploration and Production Limited, Oando Energy Services Limited, Apapa SPM Limited, Oando Properties Limited, ApapaSPM Limited, and other companies during the year under review. Interest costs on such funds were directly charged to the entities without mark-up when the fundingwas financed by borrowings from external parties to the Group. Interest costs were charged on intercompany borrowings. Interest income and expense arising fromintercompany borrowings have been eliminated on consolidation.

Payable to Oando Trading Bermuda relates to part funding for the consideration paid on the acquisition of Equator Exploration Limited in 2009. In addition, payable toOando Marketing PLC relate to sundry expenses made on behalf of the Company.

99Oando PLC

2011 ANNUAL REPORT


Transactions with affiliates within the GroupDuring the year, transactions were conducted between Oando Plc and other affiliate companies. Such transactions include:(a) Ocean and Oil Investment received N737.5 million in respect of dividend declared at the end of 2010 (2009: N583.4 million).(b) Avante Property and Assets Management Limited, a subsidiary of Ocean and Oil Holdings received N37.01 million (2010: N83 million) for professional services.(c) Avaizon Consulting, a subsidiary of Ocean and Oil Holdings, received N10.7 million (2010: N10.4 million) for consultancy services to Oando PLC.(d) Offshore Personnel Services Limited, a subsidiary of Ocean and Oil Holdings, received N1.0 billion (2010: N644million) for the provision of personnel services to

Oando Energy Services Limited. (e) Argentil Capital received N265.1 million (2010: N291.4million) for consultancy services to Oando PLC.

Core investorOcean and Oil Investments (Nigeria) Limited is the highest single shareholder in the Company owning 12.49% at the balance sheet date (2010:13.58%).

34. Technical and management service agreementThe Company is a party to subsisting agreements in respect of technical know-how, marketing, management expertise, strategic planning and consultancy servicesassistance. These agreements are between the Company and Ocean and Oil Holdings Limited.

The terms of the agreements include payment of Technical and Management Service fees of 4% and 3% respectively of the Company's net profit before taxation, where net profit before tax is under N2 billion (or 5% and 4% where net profit before tax is over N2 billion).

Ocean and Oil Holdings Limited and Oando Plc agreed to terminate the Technical Service Agreements and Management Services Agreement during the year underreview. The negotiated termination fee of N5billion inclusive of value added tax (VAT) at the rate of 5% less payment of N1.5billion has been recognised in the balancesheet.

The Company agreed to settle the liability through convertible notes instruments and cash. The Company had issued twenty five convertible notes worth N2.5billion atthe balance sheet date.

35. Post balance sheet eventsThe House of Representatives conducted an investigation of subsidy payments to downstream companies between 2006 and 2011. None of the downstreamcompanies within the Group was indicted in the report of the House Committee.

100Oando PLC

2011 ANNUAL REPORT


36. Subsidiary informationEntity name Country of Nature Investment Issued share Percentage

incorporation of business Currency capital interest heldOperational subsidiaries All figures in thousandsDirect ShareholdingAjah Distribution Company Limited Nigeria Power Generation Naira 2,500,000 100%Akute Power Limited Nigeria Power Generation Naira 2,500,000 100%Alausa Power Limited Nigeria Power Generation Naira 2,500,000 100%Apapa SPM Limited Nigeria Offshore submarine pipeline construction Naira 19,125.00 100%Central Horizon Gas Company Limited Nigeria Gas Distribution Naira 9,100,000 51%East Horizon Gas Company Limited Nigeria Gas Distribution Naira 10,000,000 100%Equator Exploration Limited British Virgin Islands Exploration and Production USD 67,707,210 81.5%Gasgrid Nigeria Limited Nigeria Gas Distribution Naira 2,500,000 100%Gaslink Nigeria Limited Nigeria Gas Distribution Naira 1,717,697,000 97.24%Lekki Gardens Power Limited Nigeria Power Generation Naira 2,500,000 100%OES Integrity British Virgin Islands Provision of drilling and other services USD 50,000 100%

to upstream companiesOES Passion Bermuda Provision of drilling and other services USD 12,000 100%

to upstream companiesOES Professionalism Limited Nigeria Provision of drilling services Naira 10,000,000 100%

OES Respect Limited British Virgin Islands Provision of driiling and other services USD 100 100%to upstream companies

OES Teamwork Limited British Virgin Islands Provision of driiling and other services USD 100 100%to upstream companies

Oando Akepo Limited Nigeria Exploration and Production Naira 2,500,001 100%Oando Benin Benin Marketing and sale of petroleum products CFA 14,832,000 100%Oando Energy Resources Limited Canada CDN$ 100%Oando Energy Services Limited Nigeria Provision of drilling and other services Naira 5,000,000 100%

uptsream companiesOando Exploration and Production Limited Nigeria Exploration and Production Naira 5,000,000 100%Oando Gas and Power Limited Nigeria Gas and Power generation and distribution Naira 1,000,000 100%Oando Lekki Refinery Company Limited Nigeria Petroleum Refining Naira 2,500,000 100%Oando Logistics and Services Limited United Kingdom Provision of Logistics and other services GBP 1 100%Oando Marketing PLC Nigeria Marketing and sale of petroleum products Naira 437,500,000 100%Oando Netherlands Holdings 1 Cooperatief U.A Netherlands Financial holding company Euro 18,000 100%Oando Petroleum Development Company Limited Nigeria Exploration and Production Naira 2,500,000 100%Oando Portharcourt Refinery Company Limited Nigeria Petroleum Refining Naira 2,500,000 100%Oando Production and Development Company Limited Nigeria Exploration and Production Naira 10,000,000 100%Oando Properties Limited Nigeria Property Management Services Naira 250,000 100%Oando Resources Limited Nigeria Exploration and Production Naira 2,500,000 100%Oando Servco UK Limited United Kingdom Provision of Management Services GBP 100%Oando Supply and Trading Limited Nigeria Supply of crude oil and refined petroleum products Naira 5,000,000 100%Oando Terminals and Logistics Nigeria Storage and haulage of petroleum products Naira 2,500,000 100%Oando Trading Limited Bermuda Supply of crude oil and refined petroleum products USD 12,000 100%Oando Wings Development Limited Nigeria Real Estate Development Naira 3,000,000 100%

Indirect ShareholdingAqua Exploration Limited Bahamas Exploration and Production (100% sub of EEL) USD 100,000 81.5%Clean Cooking Fuel Investments Limited Nigeria Gas Distribution (Subsidiary of Oando Mkt PLC) Naira 7,500,000 100%Equator Exploration Limited (Congo) Congo Exploration and Production (100% sub of EEL) CFA 50,000 81.5%Equator Exploration Nigeria JDZ Block 2 Limited Nigeria Exploration and Production (100% sub of EEL) Naira 10,000,000 81.5%Equator Exploration Nigeria 321 Limited Nigeria Exploration and Production (100% sub of EEL) Naira 10,000,000 100%Equator Exploration Nigeria 323 Limited Nigeria Exploration and Production (100% sub of EEL) Naira 10,000,000 81.5%Equator Exploration Nigeria OML 122 Limited Nigeria Exploration and Production (100% sub of EEL) Naira 10,000,000 81.5%Equator Exploration OML (122) Limited British Virgin Islands Exploration and Production (100% sub of EEL) USD 500,000,000 81.5%Gaslink Benin Limited Benin Gas Distribution (100% owned by Gaslink Nig Ltd) CFA 10,000,000 100%Gaslink Ghana Limited Ghana Gas distribution (100% owned by Gaslink Nig Ltd) Cedis 1,000,000 100%Gaslink Togo S.A Togo Gas Distribution (100% owned by Gaslink Nig Ltd) CFA 10,000,000 100%Oando Ghana Limited Ghana Marketing and sale of petroleum products Cedis 126,575,000 82.9%

(Subsidiary of Oando Marketing PLC)Oando Liberia Nigeria Marketing and sale of petroleum products USD 50,000 100%

(Subsidiary of Oando Marketing PLC)Oando Servco Nigeria Limited Nigeria Provision of Management Services Naira 2,500,000 100%Oando Sierra Leone Limited Sierra Leone Marketing and sale of petroleum products Leones 10,079,000 80%

(Subsidiary of Oando Marketing PLC)Oando Togo S.A Togo Marketing and sale of petroleum products CFA 186,288,000 75%

(Subsidiary of Oando Marketing PLC)Oando OML 125 & 134 Limited Nigeria Exploration and Production Naira 2,500,001 100%

(100% owned by Oando OML 125 & 134 BVI Limited) USD 100,987,074 100%Oando OML 125 & 134 (BVI) Limited British Virgin Islands Exploration and Production

(100% owned by Oando Exploration and Production Limited)

Gas Network Services Limited Nigeria Gas Distribution (Subsidiary of Gaslink Nigeria Limited) Naira 5,000,000 100%Oando Netherlands Holdings 2 B.V Netherlands Financial holding company Euro 18,000 100%Oando Netherlands Holdings 3 B.V Netherlands Financial holding company Euro 18,000 100%Oando Servco Netherlands B.V Netherlands Financial holding company Euro 100%

101Oando PLC

2011 ANNUAL REPORT


37. Upstream activities N’00037.1 Details of upstream assets

Mineral rights Land and Expl. costs Production Capital Moveable Abandonment Totalacquisition building and producing Well construction assets assets

wellsCostAs at 1 January 23,816,678 23,750 47,751,859 - 8,153,661 444,244 3,404,993 83,595,185Prior year adjustment (Note 13) 5,849,780 - - - - - - 5,849,780Restated 29,666,458 23,750 47,751,859 - 8,153,661 444,244 3,404,993 89,444,965Transfers/reclassification 16,809,013 1,203 (24,236,866) 8,517,576 1,306,393 (111,573) (2,285,746) - Additions 4,933,397 - 3,046,783 2,298,713 1,497,360 13,365 100,124 11,889,742 Impairment (1,468,662) - - - - - - (1,468,662)Exchange differences 1,673,261 1,203 1,133,597 410,610 456,048 16,037 53,956 3,744,712As at 31 December 51,613,467 26,156 27,695,373 11,226,899 11,413,462 362,073 1,273,327 103,610,757

Depreciation / AmortisationAs at 1 January 3,296,150 56 4,147,270 - 2,877,965 87,168 269,958 10,678,567Prior year adjustment (Note 18) 2,077,446 - - - - - - 2,077,446Restated 5,373,596 56 4,147,270 - 2,877,965 87,168 269,958 12,756,013Transfers/reclassification (266,873) 2 (3,198,978) 3,083,848 376,329 (21,479) 27,151 - Charge for the period 158,904 (58) 2,942 1,471,716 1,828,093 72,707 192,259 3,726,563 Exchange differences (377,720) 3 45,715 697,824 156,881 3,167 14,323 540,193 As at 31 December 4,887,907 3 996,949 5,253,388 5,239,268 141,563 503,691 17,022,769

Net Book ValueAs at 31 December 2011 46,725,560 26,153 26,698,424 5,973,511 6,174,194 220,510 769,636 86,587,988

As at 31 December 2010 24,292,862 23,694 43,604,589 - 5,275,696 357,076 3,135,035 76,788,952

37.2 ImpairmentIn early 2011, the operator of JDZ Block 2, Sinopec, confirmed that the ‘Bomu’ gas discovery, which is small for deep water, was uneconomic in current conditions andthat the rest of the block had insufficient prospecting viability to justify entering the Phase 2 Exploration Period with its obligatory well. A further one year extension wasgranted by the JDA to end in March 2012 but, nothing occurred to change conclusions of the post Bomu 1 evaluation. During 2011, management decided to exit theexploration of JDZ Block 2, due to volumes of gas discovered which, are not in commercial quantities. The value of N1.5billion has been fully written off to incomestatement.

Disclosure required under Section 134 of the Statement of Accounting Standards is not required in these consolidated financial statements because the turnover fromthe exploration and production activities does not excced 10% of the Group turnover.

Supplementary data, including the standardised measure of oil and gas activities are presented in line with section 138 of the Statement of Accounting Standard No.14 in the relevant subsidiaries' financial statements.

102Oando PLC

2011 ANNUAL REPORT


37.3 Details of concessionsSubsidiary License Operator Interest Location Licence Expiration Status

Date

Oando OML 125 & 134 Ltd OML 125 NAE 15% working interest in OML 125 & 134 Offshore PSC 04/07/2023 ProducingOando OML 125 & 134 Ltd OML 134 NAE 15% working interest in OML 125 & 134 Offshore PSC 04/07/2023 AppraisalOando Petroleum Development Company Ltd OML 56 Energia/ Pillar Oil 45% participatory interest Onshore JV 31/01/2023 ProducingOando Exploration And Production Ltd OPL 236 OEPL 95% working interest Onshore PSC 31/03/2013 Development

/ Appraisal

Oando Exploration And Production Ltd OPL 278 OEPL 60% working interest Onshore PSC 31/01/2011 ExplorationOando Akepo Limited OML 90 Sogenal 30% participatory interest Offshore JV 13/03/2015 DevelopmentOPL 282 Limited OPL 282 NAOC 4% working interest Onshore PSC 31/08/2011 ExplorationEquator Exploration JDZ Block 2 Limited JDZ Block 2 Sinopec 9% non operator participating interest Offshore PSC 13/03/2034 Appraisal/

ExplorationEquator Exploration (OML 122) Limited OML 122 Peak Finance & service agreement with operator Offshore PSC 13/09/2021 Development

/AppraisalEquator Exploration Nigeria 323 Limited OPL 323 KNOC 30% non operator partcipating interest Offshore PSC 10/03/2006 ExplorationEquator Exploration Nigeria 321 Limited OPL 321 KNOC 30% non operator partcipating interest Offshore PSC 10/03/2006 ExplorationAqua Exploration Limited Allocation letter - Allocation letter with rights to enter Offshore PSC - Exploration

for Block 5 into a PSCAqua Exploration Limited Allocation letter - Allocation letter with rights to Offshore PSC - Exploration

for Block 12 enter into a PSC Equator Exploration JDZ Block 2 Limited JDZ Block 2 Sinopec 9% non operator participating interest Offshore PSC 14 /2/ 2012 ExplorationEquator Exploration (OML 122) Limited OML 122 Peak Finance & service agreement with operator Offshore Participation No Date DevelopmentEquator Exploration Nigeria 323 Limited OPL 323 KNOC 30% non operator partcipating interest Offshore PSC 9/3/2016 ExplorationEquator Exploration Nigeria 321 Limited OPL 321 KNOC 30% non operator partcipating interest Offshore PSC 9/3/2016 ExplorationAqua Exploration Limited Allocation letter - Allocation letter with rights to enter Offshore PSC 2020 Not signed

for Block 5 into a PSCAqua Exploration Limited Allocation letter - Allocation letter with rights to enter Offshore PSC 2020 Not signed

for Block 12 into a PSC

38. reclassification of prior year balancesCertain prior year balances have been restated/reclassified because of prior year adjustments or bevause of conformity with current year presentation format.

Condensed financial data of consolidated entities N’000Oando Equator Oando Oando Oando OML Oando OML Oando Oando

Exploration & Exploration Akepo Production & 125 & 134 125 & 134 Marketing Supply &Production Limited Limited Development BVI Limited Limited PLC Trading

Limited Company LimitedLimited

Condensed profit and loss accountTurnover - - - 4,238,737 - 22,642,149 189,526,474 154,217,662(Loss)/profit before taxation (1,615,359) - (1,002,503) 2,109,203 (487,946) 10,215,478 (1,615,359) 906,612Taxation 167,390 - 296,489 (1,438,437) - (7,112,422) (1,806,842) (407,808)(Loss)/profit after taxation (1,447,970) - (706,013) 670,766 (487,946) 3,103,056 3,682,279 498,804

Condensed financial positionNon-current assets 32,427,582 6,470,329 9,363,174 3,295,264 2,987 54,167,921 36,992,295 60,149Current assets 126,624,748 28,469 7,379,201 3,007,246 17,707,723 52,460,723 71,752,035 61,000,391Current liabilities 161,079,013 1,915,674 15,649,735 4,628,977 1,333,183 81,284,943 67,376,542 59,215,930Net (liabilities)/assets (2,026,683) 4,583,124 1,092,640 1,673,534 16,377,526 25,343,701 41,367,787 1,844,610

Condensed cash flowsNet cash generated from/ 3,062,770 (84,973) 771,472 2,458,900 - 7,939,021 2,070,925 (19,681,380)(used in) operating activitiesNet cash generated (used in)/ (757,882) (21,556) (2,543,717) (2,039,035) - (6,482,144) (1,460,761) (4,391)from investing activitiesNet cash generated (used in)/ (2,219,914) 609,492 1,726,010 - - (6,990,262) (1,132,949) 16,554,599from financing activities Cash and cash equivalents at 446,576 22,805 9,684 390,656 - 4,648,356 1,414,329 6,085,944 end of the year

103Oando PLC

2011 ANNUAL REPORT


Condensed financial data of consolidated entities N’000Oando East Akute Oando Oando OES OES OES

Trading Horizon Power Gas & Energy Integrity Passion ProfessionalismBermuda Company Limited Power Services Limited Limited Limited

Limited Limited Limited

Condensed profit and loss accountTurnover 478,481,293 - 1,975,100 - 14,383,398 - - - Profit/(loss) before taxation 2,351,093 (41,826) 273,930 (40,594) (223,169) - - - Taxation - 12,548 187,778 (24,515) 621,713 - - - Profit/(loss) after taxation 2,351,093 (29,278) 461,708 (65,110) 398,544 - - - Condensed financial positionNon-current assets 700 26,233,759 3,538,471 - 39,325,383 - - - Current assets 56,779,268 3,389,980 614,748 3,001,905 30,938,780 - 1,841 10,506Current liabilities 44,615,357 18,338,615 1,589,186 3,123,217 61,510,865 3,866,995 - - Net assets/(liabilities) 12,164,611 11,285,124 2,564,032 (121,312) 8,753,298 (3,866,995) 1,841 10,506Condensed cash flowsNet cash generated from/ 4,737,234 3,521,203 997,745 (999,981) 17,900,682 - - - (used in) operating activitiesNet cash generated (used in)/ - (3,032,407) (99,533) - (17,944,480) - - - from investing activitiesNet cash generated (used in)/ (3,883,757) (575,136) (1,018,924) 1,000,000 3,316,907 - - - from financing activitiesCash and cash equivalents 1,439,071 69,960 93,776 905 3,429,388 - - - at end of the year

Oando Oando Oando UNITAB Apapa Oando Oando GaslinkLiberia Terminals & Port Harcourt Nigeria SPM Properties Lekki NigeriaLimited Logistics Refinery Limited Limited Limited Refinery Limited

Company Limited Limited

Condensed profit and loss accountTurnover - - - - - - - 18,070,071Profit/(loss) before taxation (690) (280) (430) - (7,826) (350) (374,559) 4,766,757Taxation - - - - - - - (1,723,892)Profit/(loss) after taxation (690) (280) (430) - (7,826) (350) (374,559) 3,042,864

Condensed financial positionNon-current assets 409 223,910 - - 3,086,125 58,053 1,904,400 4,966,212Current assets 67,972 2,500 2,500 - 3,887,723 250 2,498 18,156,194Current liabilities 122,376 224,190 430 53,440 4,946,897 58,938 2,404,667 13,457,600Net (liabilities)/assets (53,994) 2,220 2,070 (53,440) 2,026,951 (636) (497,769) 6,912,292

Condensed cash flowsNet cash generated from/ 2,452,150 15,541 - - 2,519,029 - - 2,287,098 (used in) operating activitiesNet cash generated (used in)/ - (15,541) - - (2,519,029) - - (780,925)from investing activitiesNet cash generated (used in)/ - - - - - - - (2,319,483)from financing activitiesCash and cash equivalents 52,900 - - - - - - 1,878,289at end of the year

104Oando PLC

2011 ANNUAL REPORT

Statement of value addedFor thr year ended

N’00031 - Dec - 11 31 - Dec - 10

Group Company % Group CompanyN’000 % N’000 N’000 % N’000 %

Turnover 586,619,034 8,122,502 378,925,430 4,352,005 Other income 2,533,121 2,877,014 1,468,674 3,692,764 Interest received 12,456,510 1,240,803 4,174,589 322,420

601,608,665 12,240,319 384,568,693 8,367,189

Bought-in materials and services- Local purchases (320,845,439) (2,970,409) (247,396,066) 1,428,563 - Foreign purchases (239,388,132) - (91,215,601) - Value added 41,375,094 100 9,269,910 100 45,957,026 100 9,795,752 100

Distributed as follows:Employees:- To pay salaries, wages 9,384,180 23 - - 6,485,461 14 268,885 3

and other staff costs

Government:- To pay tax 14,249,128 34 290,888 3 10,013,889 22 634,628 6

Providers of capital:- To pay dividend - - 5,430,508 59 2,715,253 6 2,715,253 28- To pay interest on borrowings 8,825,689 21 1,058,746 11 5,747,458 13 806,108 8

Minority interests (220,087) - - - (4,100) - - -

Maintenance andexpansion of assets:- Deferred tax (2,767,374) (7) (271,868) (3) (70,010) - (358,803) (4)- Depreciation 8,456,915 21 279,024 3 6,690,009 15 326,957 4- Retained in the business 3,446,643 8 2,482,612 27 14,379,066 31 5,402,724 55Value distributed 41,375,094 102 9,269,910 100 45,957,026 100 9,795,752 101

105Oando PLC

2011 ANNUAL REPORT

Five-Year FinancialSummary (2007 - 2011)

N’0002011 2010 2009 2008 2007

Group

Balance SheetProperty plant and equipment 175,455,217 156,285,722 131,713,072 89,903,189 40,318,614 Intangible assets 23,667,715 23,806,605 23,969,748 22,350,513 22,464,771 Long-term investments 1,000 1,000 1,000 2,000 10,000 Deferred tax asset 5,553,035 3,695,549 2,161,298 1,044,162 - Long-term receivables 34,426,127 25,492,756 18,783,390 14,544,777 11,138,446 Net current liabilities (46,275,716) (23,129,187) (87,040,082) (31,450,625) (6,601,994)Borrowings and other non-current liabilities (86,680,012) (77,537,618) (22,415,936) (42,795,571) (18,457,205)Deferred tax liability (9,610,331) (12,417,400) (11,928,511) (7,482,795) (889,405)Provision for other liabilities and charges (4,109,253) (3,147,893) (2,432,237) (1,236,917) (566,950)

92,427,781 93,049,534 52,811,742 44,878,733 47,416,277

Share capital 1,137,058 905,084 452,542 452,442 377,035 Share premium 49,521,186 49,042,111 29,735,182 29,716,870 29,877,741 Revaluation reserve 18,054,794 18,054,794 7,215,257 7,215,257 10,652,936 Retained earnings 22,548,472 23,945,029 14,401,178 7,343,127 6,321,140 Minority interest 1,166,271 1,102,516 1,007,583 151,037 187,425

92,427,781 93,049,534 52,811,742 44,878,733 47,416,277

Profit and loss accountTurnover 586,619,034 378,925,430 336,859,678 339,420,435 185,892,083

Operating profit before exceptional items 24,553,251 24,318,845 13,512,155 10,742,611 6,813,728 Exceptional item (9,624,853) -Taxation (11,481,754) (9,943,879) (3,415,176) (2,399,286) (1,333,313)Profit after taxation 3,446,643 14,374,966 10,096,979 8,343,325 5,480,415

Dividend* 5,430,508 2,715,253 2,713,139 7,242,056 2,289,203

Per share dataWeighted average number of shares 2,268,415 1,734,746 904,885 904,885 632,891 Basic earnings per share (kobo) 162 829 1,132 922 751 Diluted earnings per share (kobo) 161 - - - - Dividends per share (kobo) 300 300 300 600 362 Net assets per share (kobo) 4,064 5,140 5,836 4,960 7,492Dividend cover (times) 0.68 times 2.65 times 3.71 times 1.54 times 2.08 times

* Dividends are disclosed in the years in which they are declared at the Annual General Meeting.

106Oando PLC

2011 ANNUAL REPORT

Five-Year FinancialSummary (2007 - 2011)

N’0002011 2010 2009 2008 2007

Company

Balance SheetProperty plant and equipment 14,086,046 10,581,664 8,910,979 1,539,035 26,039,055 Intangible assets 149,333 298,667 448,000 597,334 9,699,814 Long-term Investments 41,517,455 41,340,432 39,471,680 32,131,055 16,844,848 Deferred tax assets 319,676 166,895 244,050 - -Long-term receivables 2,198,296 1,854,462 7,380 44,369 318,391 Net current assets/(liabilities) 49,825,517 55,448,094 (13,562,769) 25,199,816 1,827,053 Borrowings and other non-current liabilities (51,225,000) (51,000,000) - (25,382,404) (9,024,571)Deferred tax liability (97,516) (192,425) (311,885) (910,683) (849,344)Retirement benefit obligations (1,216,030) (476,893) (127,591) - (141,671)

55,557,777 58,020,895 35,079,844 33,218,522 44,713,575

Share capital 1,137,058 905,084 452,542 452,442 377,035 Share premium 49,521,186 49,042,111 29,735,182 29,716,870 29,877,741 Revaluation reserve 1,013,047 1,013,047 217,242 217,243 10,652,936 Retained earnings 3,886,486 7,060,654 4,674,878 2,831,967 3,805,863

55,557,777 58,020,896 35,079,844 33,218,522 44,713,575

Profit and loss accountTurnover 8,122,502 4,352,005 4,207,854 6,837,741 131,007,169

Profit on ordinary activities before taxation 6,876,485 5,678,550 4,821,312 6,511,666 3,717,196 Exceptional items (4,374,853)Taxation (19,020) (275,826) (159,952) (168,099) (1,045,714)Profit after taxation 2,482,612 5,402,724 4,661,360 6,343,567 2,671,482

Dividend* 5,430,508 2,715,253 2,713,139 7,242,056 2,289,203

Per share dataWeighted average number of shares 2,268,415 1,734,746 904,885 904,885 632,891 Basic earnings per share (kobo) 162 829 1,132 922 751 Diluted earnings per share (kobo) 161 - - - - Dividends per share (kobo) 300 300 300 600 362 Net assets per share (kobo) 4,064 5,140 5,836 4,960 7,492Dividend cover (times) 0.68 times 2.65 times 3.71 times 1.54 times 2.08 times

* Dividends are disclosed in the years in which they are declared at the Annual General Meeting.

107Oando PLC

2011 ANNUAL REPORT

Statement of Unclaimed /returned Dividend Warrants

Oando Plc unclaimed dividend as at 31st December 2011Payment Unclaimed Payable Number Dividend Date

as at31/12/2011

17 439,376,143.59 5/30/0818 339,949,670.90 9/30/0819 38,641,389.60 8/3/0920 352,610,373.90 8/31/1021 926,194,216.50 8/31/11

Share Capital HistoryYear Authorised (N) Issued & Fully Paid-up (N) ConsiderationDate Increase Cumulative Increase Cumulative Cash/Bonus1969 0 4,000,000 0 4,000,000 Cash1978 3,000,000 7,000,000 2,100,000 6,100,000 Cash1987 43,000,000 50,000,000 33,900,000 40,000,000 Cash1991 10,000,000 60,000,000 0 40,000,000 -1993 40,000,000 100,000,000 10,000,000 50,000,000 Bonus1995 0 100,000,000 12,500,000 62,500,000 Cash1998 0 100,000,000 15,625,000 78,125,000 Bonus2001 50,000,000 150,000,000 0 78,125,000 Bonus2002 150,000,000 300,000,000 70,129,233 148,254,233 Bonus, Loan stock

conversion and Agip share exchange

2003 0 300,000,000 14,825,423 163,079,656 Bonus2004 0 300,000,000 40,769,914 203,849,570 Bonus2005 0 300,000,000 82,300,879 286,150,449 Cash2005 100,000,000 400,000,000 0 286,150,449 -2007 100,000,000 500,000,000 90,884,814 377,035,262 Share exchange under

Scheme of Arrangement2008 0 500,000,000 75,407,052 452,442,314 Bonus2009 0 500,000,000 100,000 452,542,314 Staff Share Scheme2009 500,000,000 1,000,000,000 0 452,542,314 -2009 0 0 0 452,542,314 -2010 0 0 0 905,084,628

2,000,000,000 3,000,000,000 301,694,876 1,508,474,380 Right Issue 0 0 150,847,438 1,810,169,256 Bonus Issue (1:2)

2011 0 0 226,271,157 2,262,711,570 Bonus Issue (1:4)2011 0 0 5,703,284 2,274,118,138 Staff Equity Scheme

109Oando PLC

2011 ANNUAL REPORT

Proxy Form

The 35th Annual General Meeting of Oando PLC (the “Company”) will be held at Shell Nigeria Hall, The Muson Centre, 8/9 Marina, Onikan,Lagos State, Nigeria on Friday, the 20th day of July 2012 at 10:00 a.m. (the Meeting).

I/WE* ______________________________________________________ of ________________________________________________________________

being a member/members of Oando Plc and holders of ___________________ shares, hereby appoint** ______________________ or failinghim/her, the Chairman of the Meeting as my/our proxy to act and vote for me/us on my/our behalf at the Meeting of the Company to be held onFriday 20 July, 2012, which will be held for the purposes of considering and, if deemed fit, passing with or without modification, the resolutions tobe proposed at the Meeting and at each adjournment of same and to vote for or against the resolutions in accordance with the followinginstructions:

NOTEA member who is unable to attend the Annual General Meeting is entitled by law to vote by proxy. The proxy form has been prepared to enableyou exercise your right in case you cannot personally attend the Meeting. The proxy form should not be completed if you will be attending theMeeting. If you are unable to attend the Meeting, read the following instructions carefully:

a. Write your name in BLOCK CAPITALS on the proxy form where marked*

b. Write the name of your proxy where marked**, and ensure that the proxy form is dated and signed by you. The Common Seal must be affixedon the proxy form if executed by a corporation.

Registered holders of certificated Oando PLC shares and holders of dematerialised Oando PLC shares in their own name who are unable toattend the Meeting and who wish to be represented at the Meeting, must complete and return the attached form of proxy in accordance with theinstructions contained in the form of proxy so as to be received by the share registrars, First Registrars Nigeria Limited at Plot 2, Abebe VillageRoad, Iganmu, Lagos, or Computershare Investor Services (Proprietary) Limited, 70, Marshall Street, Johannesburg, 2001, South Africa, PO Box61051, Marshalltown, 2107, not less than 48 hours before the date of the Meeting.

Holders of Oando PLC shares in South Africa (whether certificated or dematerialised) through a nominee should timeously make the necessaryarrangements with that nominee or, if applicable, Central Securities Depository Participant (“CSDP”) or broker to enable them to attend and voteat the Meeting or to enable their votes in respect of their Oando PLC shares to be cast at the Meeting by that nominee or a proxy.

Signature: __________________________________ Dated this _____ day of _______________ 2012.

Proposed resolutions For AgainstTo receive the Report of the Audit Committee;To elect members of the Audit Committee;To re-appoint the Auditors;To authorise the directors of the Company to fix the remuneration of the AuditorsTo elect Engr. Yusuf Njie as directorTo elect Ammuna Lawan Ali, CFR as directorTo re-elect Mr. Oghogho Akpata as directorTo re-elect Mr. Omamofe Boyo as directorTo re-elect Mr. Mobolaji Osunsanya as directorTo re-elect Ms. Nana Afoah Appiah-Korang as directorResolved that the fees payable to the Non Executive directors of the Company remains N2,500,000.00 per annum for the Chairman and N2,000,000.00 each per annum for all other Non Executive directors with effect from January1, 2012 which fees are payable quarterly in arrears”.Resolved that on the recommendation of the Directors and in accordance with Article 46 of the Articles of Association of the Company, the Authorised Share Capital of the Company be and is hereby increased from N3,000,000,000.00 (Three Billion Naira) to N5,000,000,000.00 (Five Billion Naira) by the creation and addition thereto of 4,000,000,000 (Four Billion) new ordinary share of 50 kobo each ranking in all respects pari passu with the existing shares of the company and that clause 6 of the Company's Memorandum of Association and article 3 of the Company's Articles of Association be and are hereby amended to reflect the new Authorised share capital of N5,000,000,000.00 (Five Billion Naira) divided into 10,000,000,000 (Ten Billion) ordinary shares of 50 kobo each

110Oando PLC

2011 ANNUAL REPORT

First registrars Nigeria Limited Plot 2, Abebe Village road, Iganmu, Lagos

or

Computershare Investor Services (Proprietary) Limited, 70 Marshall Street, Johannesburg, 2001, South AfricaPO Box 61051, Marshalltown, 2107

Please affixpostage stamp

111Oando PLC

2011 ANNUAL REPORT

ADMISSION CArD

35th ANNUAL GENERAL MEETING TO BE HELD ATSHELL NIGERIA HALL, THE MUSON CENTRE,

8/9 MARINA, ONIKAN, LAGOS STATE

On Friday July 20, 2012 at 10.00 a.m.NAME OF SHAREHOLDER

_________________________________________________

SIGATURE OF PERSON ATTENDING_________________________________________________

NOTE: The Shareholder or his/her proxy must produce this

admission card in order to be admitted at the meeting.

112Oando PLC

2011 ANNUAL REPORT

113Oando PLC

2011 ANNUAL REPORT

114Oando PLC

2011 ANNUAL REPORT

115Oando PLC

2011 ANNUAL REPORT

Notes

116Oando PLC

2011 ANNUAL REPORT

Notes

117Oando PLC

2011 ANNUAL REPORT

118Oando PLC

2011 ANNUAL REPORT

Contact Details

Oando PLC

(5th, 7th-10th Floor)2, Ajose Adeogun StreetVictoria IslandLagos, Nigeria

Tel: +234-1-2702400E-mail: [email protected]: www.oandoplc.com

Designed and produced by Westbrand Design Ltdwww.westbrand.net I [email protected]

Documents

Annual Report & Accounts 2011 Plc... · Engr. Yusuf N’jie Independent Non-Executive Director Appointed 20th October 2011 Ms. Amal Inyingiala Pepple, CFr Non-Executive Director Resigned