Forte Oil Plc released its 2015 second quarter results reporting a pre-tax profit of N2.4 billion for the second quarter of the year. The profits earned this quarter also helped take half year profits to N3.2 billion 22% lower than the N4.1 billion reported a year earlier.
This quarter could perhaps had been a disaster in the scheme of things if it wasn’t for some form of ingenuity. The quarter seemed destined to hit a rough patch when it reported an operating profit of N253 million representing a 73% drop compared N934 million in Q1 2015 and N2.3 billion in Q2 2014.
Typically after operating income, comes the other income and finance charge line which could potentially negatively impact on profits. But this quarter was different for both lines.
Other Income rose 78% to N1billion compared to N566.3 million in the first quarter of this year. This was the highest it had earned in any quarter since the business was restructured and changed hands. In the past and probably still is , a chunk of this income typically emanates from throughput income (income derived from its tank farms), exchange rate differentials from PPPRA late subsidy payments as well as transactional gains from FX sales earned from sale of dollar inflows.
The company also reported a net interest income of about N1billion this quarter compared to a Net interest expense of N658 million in the prior quarter. Forte has reported a Net Finance Income before and the last time it did was in Q2 2014 where it reported N143 million. How it achieved that is currently unclear considering that it still has an external debt to equity ratio of 85%.
With the extra N2billion in the bag it was easy for Forte to declare a pre-tax profit for the first half of the year of N2.4 billion. Though lower than what it declared in the prior year, it was still enough to ensure it is at-least beat 2013 results. Thus they can claim this year’s result was due to macro realities in the economy which by an extension is not limited to them alone.
Nevertheless it was a good result and shareholders should even be happier as their own share of the profits rose 477% to N1.6billion this quarter compared to just N280 million in Q1. Forte jointly owns Geregu Power plant with Amperion and such shares its profits with its minority interest. However, this results suggest the other income and finance income was purely for the downstream section ensuring shareholders benefit fully.
Whilst Forte Oil still remains overvalued by our estimates this results if nothing ensures the share price will continue to trade above its support price till at least the next set of results are released.
Forte will also release its facts behind the figures on Monday August 3rd.
- Share Price as at July 31 188
- 52Wk Range 141.67 – 215.00
- 1 Yr Return -0.39%
- YTD Return 0.05%
- Current P/E Ratio (TTM) 131.93
- Earnings per Share (NGN) (TTM) 1.43
- Dividend Indicated Gross Yield 1.11%
| FORTE OIL PLC | 2015 Q2 | 2015 Q1 | %age Change |
| N’m | N’m | ||
| Income Statement | |||
| Revenue | 28,105.80 | 33,062.20 | -15% |
| Cost of Sale | (23,829.00) | (29,009.30) | -18% |
| Gross Profit | 4,276.80 | 4,052.90 | 6% |
| Operating Expenses | (4,023.80) | (3,118.60) | 29% |
| Operating Profit | 253.00 | 934.30 | -73% |
| Other Income | 1,007.40 | 566.30 | 78% |
| Net Finance Cost | 1,153.10 | (658.20) | N/A |
| Profit Before Tax | 2,413.50 | 842.40 | 187% |
| Other Gains | – | ||
| Taxation | (665.90) | (59.10) | 1027% |
| Profit after Tax | 1,747.60 | 782.30 | 123% |
| Tax as a %age of Profits | 0.28 | 0.07 | 293% |
| Profit net Minority Interest | 1,612.20 | 279.30 | 477% |
| Tax as a %age of profits | 0.92 | 0.36 | |
| Indices | |||
| Earnings per share (N) | 1.49 | 0.26 | 477% |
| Outstanding Shares | 1,080.28 | 1,080.28 | 0% |
| Debt to Equity Ratio | 0.24 | 0.85 | -72% |
| Gross Profit Margin | 0.15 | 0.12 | 24% |
| Operating Profit Margin | 0.01 | 0.03 | -68% |
| Profit Margin | 0.06 | 0.02 | 163% |
| SGA as a %age of Gross Profit | 0.94 | 0.77 | 22% |
| Interest as a percentage of Operating Profit | N/A | 70% | N/A |
