VISION - Oando PLC · 8 Oando PLC Annual Report 2007 2007 2006 N’000 N’000 Turnover 185,892,083 209,078,938 Profit on ordinary activities before taxation 6,813,728 3,794,091 Profit

Oando PLC Annual Report 2007 1

VISIONTo be the premier company driven by excellence

MISSIONTo be the Leading Integrated Energy Solutions Provider

Oando PLC Annual Report 20072

BOARD OF DIRECTORSMajor General M. Magoro (Rtd.) PSC, OFR,Galadiman ZuruChairman. Non- Executive Director

Mr. J.A. TinubuGroup Chief Executive

Mr. G.O. BoyoDeputy Group Chief Executive

Mr. Mobolaji OsunsanyaGroup Executive Director

Mr. A. Akinrele SANNon- Executive Director

Prince F.N Atako JPNon- Executive Director

HRM Michael A. Gbadebo CFR, the Alake ofEgbalandNon-Executive Director

Mr. V. O. IbruNon- Executive Director

Alhaji H. Mahmudu Walin MubiNon- Executive Director

Mr. O.P OkolokoNon- Executive Director

Mr. Ike OsakweNon- Executive Director

Mr. O. OsifoNon- Executive Director (till 28 June 2007)

PROFESSIONAL ADVISERS:Group Company Secretary & ChiefCompliance OfficerOredeji Delano

Group Chief Financial Officer,Mr. Olufemi Adeyemo

Group Legal Adviser,Mrs. Ibironke Sokefun

Investor Relations Officer (Retail):Ms. Adenike Olaniyan

Registered Office:2, Ajose Adeogun Street, Victoria Island, Lagos

Auditors: PricewaterhouseCoopers,252 E, Muri Okunola Street, Victoria Island, Lagos

The Registrars & Transfer Offices:First Registrars Nigeria Limited,Plot 2, Abebe Village Road, Iganmu,Lagos

Computershare Investor Services(Proprietary) Limited,70, Marshall Street, Johannesburg, 2001, SouthAfrica

BANKERSAccess Bank PLC Afribank PLCBNP Paribas Diamond Bank PLCEcobank Nigeria PLC Fidelity Bank PLCFirst Bank of Nigeria PLC First City Monument Bank PLCFirst Securities Discount House(FSDH) Guaranty Trust Bank PLCIntercontinental Bank PLC Kakawa Discount House (KDH)Nigerian International Bank Ltd Oceanic International Bank PLCStandard Chartered BankNigeria Ltd. Standard Bank PLC, LondonStanbicIBTC Bank PLC Sterling Bank PLCUnion Bank of Nigeria PLC United Bank for Africa PLCWEMA Bank PLC Zenith Bank PLC

DIRECTORS AND PROFESSIONAL ADVISERS



NOTICE IS HEREBY GIVEN that theThirty-First Annual General Meeting ofOando Plc (the “Company”) will be heldat The Nigerian Law School Auditorium,Adeola Hopewell Street, Victoria Island,Lagos, Lagos State, Nigeria on Tuesday, the 27th day of May, 2008 at 10:00 a.m.for the purposes of:

1. Transacting the followingordinary business:

1.1 To present the annual financialstatements of the Companyand of the Group for the yearended 31 December 2007 andReports of Directors andAuditors thereon;

1.2 To receive the Report of theAudit Committee;

1.3 To declare the dividendrecommended bythe directors of theCompany;

1.4 To elect membersof the AuditCommittee;

1.5 To authorise thedirectors of theCompany to fix theremuneration of theAuditors;

1.6 To elect Mr. Navaid Burneydirector.

Please refer to page 30 - 32 of theannual report of which this noticeforms part for a brief curriculum vitae

1.7 To re-elect the followingdirectors who in accordancewith Articles 91 and 93 of thearticles, retire by rotation, butare eligible and offerthemselves for re-election:

Mr. Ademola Akinrele SANMr. Omamofe BoyoHRM Oba Michael A.Gbadebo, CFR, the Alake ofEgbalandMajor General Magoro(Rtd.), OFR, PSC, USAWC,Galadiman Zuru

Please refer to pages 28-30 of the annualreport of which this notice forms part fora brief curriculum vitae of each director.

2 To transact the following specialbusiness:

(i) To consider, and if approved,to pass with or withoutmodification the following

ordinary resolution tofix the

remunerat ionof the

directors:

“Resolvedthat thef e e spayable tothe non-execut ive

directors ofthe Company

be increasedfrom N600,000.00

per annum for theChairman and N550,000.00each per annum for all othernon-executive directors toN850,000 per annum for theChairman and N750,000 for allother non- executive directorswith effect from 1 January2008, payable quarterly inarrears”.

(ii) To consider, and if approved,

to pass with or withoutmodification the followingspecial resolution to alter theArticles of Association of theCompany by deleting thepresent Article 133 andadopting the following new

Article 133:

“Resolved that article 133 ofthe Articles of Association bedeleted and the following Articlebe adopted as the new Article133:

(133) Any dividend,interest or othermoneys payable incash in respect ofshares may bepaid:

(a) by cheque orwarrant sentthrough the postdirected to theregistered addressof the holder or, inthe case of jointholders, to theregistered addressof that one of thejoint holders whichis first named onthe Register ofMembers or tosuch person andsuch address asthe holder or jointholders may inwriting direct.Every suchcheque or warrantshall be madepayable to theorder of the personto whom it is sent.

Dividends tobe paid bymethoddirectorsconsiderappropriate.

NOTICE OF ANNUAL GENERAL MEETING


Any one of two ormore joint holdersmay give effectualreceipts for anyd i v i d e n d s ,bonuses or othermoneys payable inrespect of theshare held by themas joint holders;

(b) by any othermethod (includingdirect debit or banktransfer or otherelectronic meansof funds transfer)which thedi rectorscons ide rappropriate.

(iii) To consider, and ifapproved, to pass withor without modificationthe following ordinaryresolution:

“Resolved on therecommendation of theDirectors and inaccordance withArticle 141 of theArticles of Associationof the Company, a sumof N75,407,052.50 outof the balance standingto the credit of GeneralReserve as at the yearended 31 December2007 be capitalizedand that the Directorsbe and are herebyauthorized toappropriate the saidcapitalized sum ofN75,407,052.50 to themembers holdingshares of the

company at the close ofbusiness on Friday, 9 May,2008 in the proportion of 1ordinary share of 50 Kobo forevery 5 Ordinary Shares of50k each held by them on thatday on condition that the newcapitalized sum ofN75,407,052.50 be not paid incash to members holdingOrdinary Shares but applied ontheir behalf in paying up in fullat par 150,814,105 shares of50k each now issued to beallotted, distributed andcredited as fully paid up to andamongst the said members inthe proportion aforesaid.”

(iv) T oconsider, and if

approved,to pass

w i t h

or without modification thefollowing special resolution:

“Resolved that the directors beand are hereby authorized tosell a maximum of 49% of theCompany’s shareholding inOando Marketing Limited onterms, conditions and dates tobe determined by theDirectors, agreed with theIssuing House and approvedby the Regulatory Authorities”.

Voting and ProxiesOn a show of hands, every memberpresent in person or by proxy shall haveone vote, and on a poll, every membershall have one vote for each share ofwhich he is the holder.

A member of the Company entitled toattend and vote at the annual generalmeeting (the “Meeting”) is entitled toappoint a proxy to attend, speak and voteinstead of that member. A proxy neednot be a member of the Company.

Registered holders of certificatedOando Plc shares and holders ofdematerialised Oando Plc shares intheir own name who are unable toattend the Meeting and who wish tobe represented at the Meeting, mustcomplete and return the attachedform of proxy in accordance withthe instructions contained in theform of proxy so as to be receivedby the share registrars, FirstRegistrars Nigeria Limited at Plot 2,Abebe Vil lage Road, Iganmu,Lagos, or Computershare InvestorServices (Proprietary) Limited, 70,Marshall Street, Johannesburg,2001, South Africa, PO Box 61051,Marshalltown, 2107, not less than48 hours before the date of theMeeting.


Holders of Oando Plc shares in SouthAfrica (whether certif icated ordematerialised) through a nomineeshould timeously make the necessaryarrangements with that nominee or, ifapplicable, Central Securities DepositoryParticipant (“CSDP”) or broker to enablethem to attend and vote at the Meeting orto enable their votes in respect of theirOando Plc shares to be cast at theMeeting by that nominee or a proxy.

Dividend PaymentIf the dividend recommended isapproved and declared, the dividendwarrants will be posted or shareholdersaccounts credited directly on the 30th

day of May 2008 to those shareholders,whose names appear in the Company’sNigerian Register of Members at theclose of business on 9th of May, 2008.Dividends due to Shareholders whosenames appear on the South AfricanRegister of Members at the close ofbusiness on the 30th of April 2008

(certificated or dematerialized), will, onWednesday, 4 June 2008, either beelectronically transferred toshareholders’ bank accounts or, in theabsence of suitable mandates, havedividend cheques posted to them, orwill have their accounts, at their CentralSecurities Depository Participant orbroker credited.

Closure of Register of MembersThe Register of members and TransferBooks of the Company (Nigerian andSouth African) will be closed between 12May-16 May, 2008 (both days inclusive)in terms of the provisions of Section 89of the Companies and Allied Matters Act,1990 (the “Companies Act”).

Nomination for the AuditCommitteeIn Accordance with Section 359(5) of theCompanies Act, any member may

nominate a shareholder as a member ofthe Audit Committee, by giving notice inwriting of such nomination to theCompany Secretary at least 21 daysbefore the Meeting.

By the Order of theBoard

Oredeji Delano

Group Company Secretary & ChiefCompliance Officer

Registered Office:

2, Ajose Adeogun StreetVictoria Island,Lagos



2007 2006N’000 N’000

Turnover 185,892,083 209,078,938Profit on ordinary activities before taxation 6,813,728 3,794,091Profit after tax 5,480,415 3,075,068Attributable to group 4,755,009 2,725,481Earnings per 50k share (Naira) 7.51 4.76Dividend per 50k share - proposed (Naira) 6.00 4.00Net assets per 50k share (Naira) 62.88 38.64Dividend cover x 1.06 1.34

FINANCIAL HIGHLIGHTS

Oando Plc Annual Report 2007 8



Highly Esteemed Shareholders,

It is with delight that I welcome you all tothe thirty-first Annual General Meeting

of your company. We have cause to beproud of our achievements so far as anation and as an entity. The policies ofthe current democratic dispensationhave made it possible for Oando toposition itself in the forefront of thedevelopment of the energy sector. Ourgreat portfolio of assets and an excellentteam of people has been our corestrength; our commitment to being thepremier company driven by excellenceremains resolute and is evident in ourresults.

The Macro-economic environment:

GlobalThe global economy continued to expandin the light of financial volatilities andraging crude oil prices. The IMFestimated that the global Gross DomesticProduct (GDP) grew from 3.83% in 2006to 4.9% in 2007. The growth was as aresult of the expansion of the emergingeconomies despite the financialbreakdown witnessed in most of theadvanced economies. The U.S.witnessed 2.2% growth, the EU zone hada 2.6% growth, and Japan’s was at 1.9%.The emerging economies witnessedmost of the growth with China at 11.4%,India at 8% and Africa at 6%.

Africa showed considerable growthAfrica, amongst other emergingeconomies showed steady growth inGDP as it reached 6%. This is anexpected sustainable trend as countrieswithin the region have begun to adoptfounded macroeconomic policies alongwith increased productivity. Other factorsinfluencing this growth are a steadyincrease in the appreciation of the rule oflaw and stability in the region.

CHAIRMAN’S STATEMENT

The Local Operating EnvironmentThe Nigerian economy is still largelydependent on revenues from oil,however, the manufacturing sectorprojected to be at least 45% of GDP iseffectively taking over; whileagriculture remains themain employmentchannel. Non-oilGDP recorded agrowth rate of9.8% as against8.59% recordedin the previousyear, while OilGDP declinedfrom 5.1% to 4.51%in 2007. TheNigerian bankingsector was the highlightof 2007 activit ies; withinvestments reaching up to $1 billion,the strength of the Nigerian banks havebeen seen through further expansionsinto other West African markets. Thesteady growth in the economy washeralded by stability in political leadership.However, there were some challengingcircumstances displayed in the nation’spolitical system that threatened theexpected accelerated growth for mostparts of the year after the transition inMay, 2007. It is hoped that government’scommitment to the enthronement of theprinciple of rule of law, due process,transparency and accountability will besustained. This will go a long way inassuring investors and providing theneeded stability for short and mediumterm growth.

The Niger Delta for most part of 2007remained volatile due to the activities ofrestive youths who were agitating forgreater control of oil revenues. By theend of the year, crude oil production shut-in stood at 0.9mbbls/day. In all, averagegrowth in the non oil sector recorded anaverage growth rate of 9%; this is,

despite the increased price of crude oilwhich peaked at $102 per barrel and stillaverages at $80 per barrel.

Nigeria’s Gross Domestic Product (GDP)valued at current market prices

stood at N22.91tr in 2007 upfrom N18.5tr in 2006. Real

GDP growth rate wasestimated at 7.01% in2007 against 5.63% inthe preceding year.

Other economicindicesThe year on year

inflation figure stood at6.6% while the 12 month

average stood at 5.4%, theeconomy achieved the single

digit inflation figure projected for theyear due to the appreciation in the valueof the Naira against the US$ as well asother variables in managing liquidity.Provisional figures from the DebtManagement Office (DMO) showed thatthe total external debt stood at $3.39bnwhich is marginally down from $3.54bnin 2006. According to the CBN, Nigeria’sexternal reserves figure stood at $52bnwhich was a 15% increase from 2006figures which stood at $45bn. The valueof the Naira appreciated by 8.07%, 8.03%and 7.55% in relation to the dollar in theinter-bank market, official market and theparallel market respectively in 2007,which was on account of the escalatinginternational price of crude oil. Inter bankinterest rates were generally lower in2007 but still with a wide spread of 7.9%when compared with the average lendingrates and the average deposit rate. Theequity segment of the Nigerian financialmarket performed tremendously well witha capitalized market of N10.18tr($84.16bn) which was a 147% increaseover 2006 figures, and the all share indexgained 74.73% in Naira and 82.76% inUS$.


The 2008 Outlook

Over the next 12 months your companywill be investing a lot of effort inestablishing and consolidating all itsexperience in supply chain managementinto a new division known as OandoTerminal and Logistics Limited. This newdivision will professionally manage thesupply chain of our trading, marketingand energy services businessesensuring we can further reduce the costof these activities while ensuring theirbusiness requirements are efficientlymet.

During the same period, we expect thecompletion of our expansion of the Lagosthird phase gas pipeline expansionproject to be completed; hence increasein revenues in the Gas and Powerdivision. We are also looking forward tothe execution of the Gas supply toUNICEM in Calabar and the power supplyproject for Lagos Water Corporation.

Our Energy Services business procuredtwo swamp rigs late in 2007 and has beenrefurbishing them; it is expected that thisproduct service line will commenceoperation by Q2 2008. In addition to this,we expect to increase our client base inthis division by up to 25% in the drill bitsproduct line as a result of some strategicinvestment in 2007 and aggressive staffdevelopment campaigns embarked on in2007.

Revenues in our trading business havebeen on the rise over the last 2 yearsand we fully expect this trend to continue.Our expansion to other economies inWest Africa will continue and we expectit to bring in additional revenues for theGroup. This will be in addition to theincrease in revenue from our Nigeriaoperations as we continue to be the

Performance ReviewIn the year under review, Oando’s drivetowards excellence and becoming theleading integrated energy solutionsprovider were spearheaded by thefollowing key initiatives:

• Project Restore: in the year underreview, Oando executed ProjectRestore in a bid to determine ourcore values. The project culminatedin all employees agreeing to buildyour company on the core valuesof: Teamwork, Respect, Integrity,Professionalism and Passion(TRIPP) to further strengthen theworld class culture within its teams.TRIPP was driven by the entiremanagement team and it is evidentin all the locations in which Oando ispresent as all staff were involved.Following this, your Board ofDirectors approved a Code ofBusiness Conduct and Ethics(included in this Annual Report),premised on these core values.Project Restore, which is now in itsoperational phase, was verysuccessful as evidenced by newstaff friendly policies on training,performance appraisal, equality inthe work place and mutual respectfor all.

• Project Synergy: Phase 1 of ourERP implementation also went livein the year under review with CoreHR & Self Service in April 2007 andthe Finance, Payroll and SupplyChain in November 2007. SinceNovember, our entire financial andsupply chain functions are nowOracle based heralding an era ofdata integrity, automatedprocesses, real time access tomanagement information andseamless integration of our order to

cash and procurement to payfunctions. Its implementation hasadded tremendous value to our staffas they were all trained on the newworld class application and have allstarted to use the tool veryconfidently. We expect to finish thePhase 2 of the project in 2008.

• The Addition of a new ProductService Line (PSL) in the energyservice business.

• The commencement of the ApapaSubmarine Pipeline Project which isset-up to improve marketers’efficiency by the elimination ofdemurrage at our product receiptfacilities.

• Oando Corporate Restructuring:In the year under review we alsocompleted the corporaterestructuring of the Group bymaking Oando Marketing a whollyowned subsidiary. Our restructuringhas been premised on the need toensure our businesses can delivermaximum returns to all itsshareholders and also derive fromsynergies from each other.

As you are aware, Mr. Osaze Osifo wasnot re-elected as a director at the lastannual general meeting. You will recallat the same meeting, Mr. MobolajiOsunsanya, the CEO of our Gas andPower division was elected a director onthe recommendation of your board. Mr.Osunsanya was a seasoned bankerbefore he joined Oando Plc and hasserved in numerous capacities beforehis recent ascent to the Board of Director.Please join me as we wish him a verysuccessful stay as a member of the Boardof directors of your company.


indigenous trading company of choice formany marketers including the NNPC.

I am particularly excited about ourExploration & Production (E&P) divisionas it remains the division with the highestmargins potential for the group and wehave recorded significant progress in ourdrive to tap this potential. Over the next12 months we expect to make somestrategic acquisitions either from thegovernment or other majors that willunderscore our determination to be asuccessful E&P player in this industry.We also expect to commence productionof one of our upstream assets in the next9 months which will further increase ourrevenue, and of course, returns to youour esteemed shareholders.

The Refining division will continue tofocus on its plans for a new build as theconcluded privatization exercise wasunfavourable to us and it is still unclearwhat the government wants to do with itsrefineries. We however remaincommitted to the elimination ofimportation of petroleum products into the

country in the long run as we believe thatthis exposes the country to huge capitallosses and sub-standard products.

I expect our marketing business tocontinue to provide a lot of support to theother businesses in the Group while atthe same time providing quality productsand services to all its customers. We fullyexpect the government to recommencethe process of fully deregulating PMSwhile implementing strategies togetherwith major marketers and the privatesector to ensure that the deregulationdoes not cause hyper inflation in thecountry. We are fully committed tooperational efficiency in this business andthis we have expressed in the numerousprojects we embarked on in 2007. Overthe 12 months we will make a lot ofprogress in the construction of ourSubmarine Pipeline which should bring inincreased efficiencies in the drawingdown of petroleum products from shipson our high seas. We will also continueto build on our teams to ensure weinstitutionalize our TRIPP values adoptedin 2007. In summary we expect another

bumper year for the marketing businessand indeed for the entire company.

My esteemed shareholders, I amconfident about the outlook of yourcompany, its management and teamsand about the strategies we areimplementing to ensure that your returnsfrom this investment continues to growyear on year. I believe that we have theright business framework manpower/capabil ity development init iatives,operational management systems,leadership development framework andincentive systems, to better position usas the leading integrated energy provideron our continent. I thank everyone fortheir performance in 2007 and I lookforward to an even better 2008. Thankyou for your attention.

Major General M. Magoro (Rtd.)PSC, OFR, USAWCGaladiman Zulu, Chairman

Oando Plc Annual Report 2007 12



GROUP CHIEF EXECUTIVE’S REPORT

I am delighted to present to you asummary of our performance in 2007,the drivers for our expected performancein 2008 and indeed a future outlook foryour company Oando Plc. Over the last7 years we have earnestly pursued ourmission to be the leading integratedenergy solutions provider, whilesimultaneously delivering optimal valueto our shareholders. I am pleased toinform you that in 2007, our profit beforeand after tax rose by 80% and 78%respectively compared to 2006, ourbusiness has also experiencedsubstantial growth compared to theprevious year. Our financial performancefor the period shows our commitment tocontinue to grow the income of yourcompany year on year.

Some of the initiatives which underpinnedour successes in 2007 despite thetumultuous business terrain were:• Corporate Restructuring: After

your approval of the corporaterestructuring of Oando Plc at thelast Annual General meeting, I ampleased to inform you that thisprocess has now been completed.Oando Plc is now better positionedto realize untapped value from anyof the subsidiaries in the Group.

• Oracle Implementation: Onesignificant requirement to be a worldclass company is a world classoperating system that will enable usrealize the synergies in all ourdivisions and ensure all ourprocesses are visible, simple,adaptable and have sufficientcontrols. To effectively compete inour environment and be ahead ofour competitors in response time tocustomers, new products andservices, availability of clean dataand correct management reports,we were clear about the need for an

Enterprise Resource Planning tool.This we successfully implementedin 2007. Oando has now joined theelite group of companies worldwidebold enough to implement an ERPand structured enough to use it.

• Staff Competency Framework: Inthe year under review we embarkedon a job competencyprofile update of allthe jobs andpositions in theorganization.Our decisionto ensure alljobs andp o s i t i o n sa r ecompetencybased ispremised onthe need toensure all our staffhave clearly definedcareer paths which withour support they can achieve. Thedata from this exercise has nowbeen loaded into our Oracle CoreHR application and has beenlaunched for use in the company.

• In 2007, your company embarkedon an inward search to rediscoverand clearly articulate its core values.Our decision to be a world classcompany driven by world classpeople and processes requires thatwe all understand the values we arebuilding our company on and learnto imbibe these values. This projectwhich we named “Restore”,culminated in T.R.I.P.P., whichmeans, Teamwork , Respect ,Integrity, Professionalism andPassion. It was a year long projectwhich saw the executives of yourcompany visit all the locations in

which we operate to ensure thesecore values were well understoodand in the process receive feedbackfrom the field about issues disturbingtheir performance. I am proud toinform you that this project was ahuge success and we are well onthe way to ensure working in Oandois a pleasant and enrichingexperience for all members of staff.

• Finally, within theyear under review and asa result of our resolve toretain our employees andensure they are wellcompensated for theirefforts in delivering ourpromises to you ouresteemed shareholders,

the company embarkedon specific people and

incentive oriented initiativeswhich are now fully operational

within the Group. These initiativesare:

• Career Progression andSuccession planningframework: to ensure all keypositions are well backfilledthereby creatingredundancies in theorganization for thesepositions.

• Training ManagementSystem: to ensure our stafftraining is proactive andcompetency based ratherthan reactive.

• Leadership DevelopmentFramework: to ensure ourpeople management systemis not only developingtechnically sound people butalso leaders who can ensure


eased due to refinery outage. Both theRetail and Commercial channels wereable to deliver above budget unit margins,more than off-setting the consumer priceresistance which dampened volumes forthe first quarter but cost pressureseverely dampened second halfcontribution.

HHK sourced locally and under the PSF,was able to deliver very strong unitmargins for the company for the first twoquarters. However, price enforcement ata level below which suppliers canreasonably be expected to recoup costsseverely reduced second halfcontribution. The supply problemsresulting from diversion of PPMC HHKimports to the Aviation business havefinally begun to reduce although the pricedistortion that this creates continues toimpair our Aviation Fuel business.

In the earlier part of the year under review,our ATK cost caused us somedisadvantage when compared with someof our competitors who had more accessto cheaper PPMC supply. Our strategyfor the latter part of the year was tosignificantly reduce our logistics costwhile continuing to seek cheaper sourcesfor the product without jeopardizingquality.

Other Products (Lubricants,Specialties):Lubricants saw strong growth in the Retailbusiness, as a result of the strategicfocus for expansion in new non-forecourtchannels. Unit margins came underpressure due to increasing costs and ahighly competitive environment. TheCommercial business was affected bythe customer rationalisation drive to givethe company a sophisticated set of creditcustomers. In addition to this, our eastern(marine) business suffered somereduction in commercial activities as aresult of the unrest caused by militants

our organization continuesto grow.

• Reward Management: asystem of consistentlyrewarding our best staffwhile ensuring they are wellchallenged and adequatelymentored.

• Industrial Relations: asystem of ensuring ourindustrial relations areprofessionally done.

• Equal Opportunity Employer:a system to ensure that weremain an equalopportunities employer.

Below are additional details of ourperformance by division:

MarketingOur marketing business continues to bethe leading marketing retailer in thecountry with about 500 retail outlets andoperations in Ghana, Togo, Republic ofBenin and Liberia. Oando Marketing dealsin a range of petroleum products whichinclude, Premium Motor Spirit (PMS),Automotive Gas Oil (AGO commonlyknown as diesel), Dual Purpose Kerosene(DPK), Aviation Turbine Kerosene (ATK),Low Pour Fuel Oil (LPFO), Lubricatingoil and Greases, Insecticides, Bitumen,Chemicals and Liquefied Petroleum Gas(LPG commonly known as Cooking Gas)

Review of 2007 Operating Activities:Our gross margin in 2007 grew by 15%compared to 2006 while profit before taxgrew by 30%. This is despite theexternalities which adversely affectedour business. The most significant ofthese which was well beyond our controlwas the several days of election holidaysduring which we could carry out onlyskeletal commercial and operational

activit ies for our products. Ourperformance in the marketing businessin 2007 is therefore as a result of wellmanaged operational cost reductioninitiatives and efficient interest costmanagement.

Product Review

White Products (PMS, AGO, HHK):During the period, our white productsbusiness which contributes up to 83% ofour revenues faced a wildly fluctuatingexternal market. PMS imports by NNPCfor the first Quarter of 2007 were wellbelow expectation and with the PortHarcourt refinery being the only refineryin operation the supply of white productswas well below expectation. During thefirst half of the year, there wereoccasional outbreaks of unrest in isolatedparts of the country as a result of theelections and this contributed to theslowdown of commercial activities inthese areas. This had its negative effectson our white products business. On theother hand the continued insolvency ofthe Petroleum Equalization Fund (PEF)led to a reduction in bridging volumes(products sold to stations in the Northernpart of Nigeria) and this led to the loss ofover 100m litres of sales.

By the second quarter, our new PMS andHHK pricing strategies had started toyield some results and this resulted in a20% rise in unit margins. In addition tothis our internal re-organization, whichberthed a potentially new division knownas Oando Terminals and Logistics,provided huge cost savings as producthandling and dispatching from importationto customer’s tank was done with a lotmore efficiency.

Our performance with AGO wassatisfactory despite the imbalance ofgovernment supply to the major marketingcompanies, supply constraints were


in the Niger Delta and Port Harcourtregions. By the end of the first quarter in2007, we had successfully resolved allproduct costing issues and provided ahigher profitability mix in the Commercialbusiness to ensure the product line wasable to deliver sales returns as expected.

Other specialty product volumes stillsuffer from supply interruptions, the moveto a better quality of commercial creditcustomers and aggressive marketpricing. Our 2007 positions on theseproducts reflected a more risk adjustedposition and this will continue into 2008.

Balance Sheet ManagementThe balance sheet was assiduouslyguarded through the year; trade accountsreceivables are now of a superior qualityand PEF receivables were controlled bythe management of bridging in the firsthalf of the year and the new policy ofoffsetting the liability until the balancecomes closer to the company’s favour.The company also secured dollar basedfinancing to retire overdrafts andcorporate paper using this lower costfinancing. This led to a better interest costperformance.Capital expenditure remained tight onstrategy to support liquidity, with thecompany’s focus on maintaining excellentretail and terminal assets.

Looking forward to 2008Despite the expected continueduncertainty in Government Policy andincreasing competitive pressures in 2008,we expect our marketing business tocontinue to deliver quality products andservices to all i ts customers whiledelivering good returns to allshareholders.

Price control policy of PMS remains asignificant unknown in 2008 and we lookforward to the government addressingthis uncertainty thereby allowing us to

add more value to our customers. Wewill continue to focus on liquidity as aStrategy for our Marketing business, witha lot of emphasis on efficiency andcontrol, which will underpin our valuedelivery approach in 2008. We expectthe following initiatives to be the highpoints for 2008, they include:

• Optimizing asset efficiency tomaximize throughput;

• Increased utilization of our ERPplatform;

• Higher margin products willcontinue to receive heavyresource support;

• Heavier investment in humancapabilities will ensure yourcompany makes the bestchoices for the long termprofitability of your investment

Oando’s Trading BusinessOando Supply and Trading Limited andOando Trading Limited (Bermuda)represent the products trading divisionof the Oando group. Business activitiescovered in our trading division includethe trading of refined and unrefinedpetroleum products to refiners, marketingcompanies world-wide and other tradingcompanies. Oando Supply and Tradingis responsible for deliveries into Nigeria,whilst Oando Trading is responsible forsupply into other markets. Productstraded include gasoline, gas oils,kerosene, aviation fuel, disti l lates,naphtha, fuel oils, bitumen, base oils, andliquefied petroleum gas. The businessalso maintains a presence in the world’sproducts freight market in terms ofvessels chartered on spot and timecharter basis for delivery of oil and oilproducts to various customersworldwide.

2007 Review

Business Environment - At thebeginning of 2007, crude oil was hovering

around $60 a barrel and by December2007 the price was closer to $90. Thistrend was indicative of the rise ofpetroleum products prices in theinternational market in 2007. The conflictin the Middle East, violence in Nigeria,polit ical strife in Pakistan and theshrinking of oil inventories in the UnitedStates led to a steady rise in oil prices.Instability arising from mortgage marketcrisis and speculators overall were alsoa significant contributor to oil priceincreases in 2007.In 2006, the Petroleum Subsidy Fund(PSF) which is regulated by the PetroleumProduct Pricing Regulatory Agency(PPPRA) continued to encourage theuninterrupted supply of gasoline andHousehold HK cargoes into the country.

Oando Trading and Oando Supply &Trading took advantage of thisopportunity and sold over 40 cargoes ofPMS to marketing companies who wereeligible to import under the PetroleumSubsidy Fund. For the better part of 2007,the criteria set by NNPC for oil tradingfirms to supply them with petroleumproducts remained unchanged i.e. onlycompanies with over $5bn in turnoverwere eligible to supply the NNPChowever we were still able to supply 3spot cargoes as a result of our goodrelationship with the NNPC. In addition, amuch sought after 30,000 barrel per daycrude oil contract was signed betweenNNPC and Oando in December 2007.Though endemic in the oil tradingindustry, our cargo losses for the yearwere 0.2% which was well below theindustry average of 0.3%. This was dueto the combination of the use ofinternational super cargo inspectors anda marked improvement in operationalefficiency.

PERFORMANCEDespite the difficulties the business faced,its turnover position was N186bn which


was a 16% increase compared to ourperformance in 2006. This performancewas possible due to the increasedinvolvement in the PSF opportunities andmore trading activities along the WestAfrican coast.

Outlook for 2008In summary, the trading businessesperformed over budget in 2007 and areset to do the same in 2008. We will focuson our sourcing strategy and leverageour experience, capacity and expertisein securing long-term off-take volumesfrom refineries along the coast of WestAfrica. In 2008 we willcontinue to implementour competit ivepricing, increasedflexibil i ty andexclusivity at sourcestrategies. We arepoised to formstrategic alliances withour upstreamoperations and also getinvolved in the tradingof its crude production.

Oando Gas & PowerOando Gas & Power(OG&P) is the divisionwhich overseesOando Plc’s gas andpower businesses.Gaslink NigeriaLimited, East HorizonGas Company Limited,Akute Power Limitedand other gas andpower companies.

Gaslink NigeriaLimited was theprimary operatingentity of Oando Gasand Power (OG&P)division of the group inthe period under

review. A key achievement within theyear was the completion of a significantportion of the construction for theexpansion of Greater Lagos (GL 3).

Foremost amongst our challenges in2007 was gas supply reliabil i ty ascumulative gas outages went from nearzero in 2006 to fifty-seven (57) days in2007. The gas outages were caused bya combination of technical challenges andsabotage on the Nigerian Gas Company(NGC) Escravos to Lagos pipelineinfrastructure. Ultimately this resulted insome revenue loss and delay inexpansion plans by existing customers.

In addition, some of theu n d e r l y i n g

assumptions thatinformed the

plan tod e l i v e r

t h e

GL3 expansion by Q3 2007 did not hold.Pipes were scarce and expensive in theinternational market as a result of thehuge global demand for steel. Bottlenecksat the entry ports led to further delays inthe landing date of pipes. These delayshave lead to the completion date of GL3being moved to the later part of Q2 in2008.

East Horizon Gas Company Limited(EHGC)EHGC is shaping up to be the next entityin the OG&P division to join Gaslink as acash generating company. It wasestablished as a project company toundertake the supply of natural gas tothe United Cement Company of NigeriaLimited (UNICEM), located in Mfamosing,Cross Rivers State. UNICEM is a jointventure company set up by Flour MillsNigeria, Orascom Industries and HolcimInternational to build a $500mill ionCement plant with a production capacityof 2.5million metric tonnes per year.

The Federal Government and the NigeriaNational Petroleum Corporation (NNPC)have given their approval for the gassupply project on a Build Operate andTransfer (BOT) basis with NGC. Theproject includes construction of an18inch gas supply line from the existingObigbo-ALSCON pipeline at Ukanafunto the Cement Plant Site at Mfamosing, atotal distance of 124km through land,swamp and 4 river crossings. Theconstruction project will be executedfollowing international standards ofquality and safety and is scheduled forcompletion during the second half of2008. Upon completion the pipeline willdeliver 22 million standard cubic feet perday (mmscf/d) initially, growing to 50mmscf/d in the medium to long term.

Akute Power LimitedOando Gas & Power has concludeddiscussions with the Lagos StateGovernment to develop and install a 12


Megawatt (MW) plant to power the LagosWater Corporation’s major water works.The plant, upon completion wil l bepowered by Natural Gas supplied byGaslink. The project is scheduled forcompletion by the forth quarter of 2008.

West African Subsidiaries

The Federal Government of Nigeria,along with the Governments of Benin,Togo and Ghana has been driving theWest African Gas Pipeline (WAGP) whichwill see the supply of natural gas via acoastal pipeline to Togo, Benin Republicand Ghana. The project earlier scheduledfor completion in May 2007 was subjectto some delays but has now beencompleted.We have incorporated subsidiaries inthese countries to participate andcollaborate with local companies todeliver world class gas distributionservices to the region. We are poised tobe at the forefront of the natural gasutilization program across the WestCoast.

OG&P Outlook for 2008The socio political and macro economicenvironment portends a mix ofopportunities and challenges forbusinesses in the incoming year.Disruptive activities in the Niger Deltaconstitute a major threat to gas supplyfrom this area as evidenced by a 20%reduction in the Country’s Oil output since2005. The on-going restiveness hascaused some gas supply flow stations inthe area to completely shutdown. Withthe additional gas requirements of theNational Integrated Power Project (NIPP)and other Government gas projects,there is a potential for high demandpressure on the available gas supply. Inspite of these challenges, the growingawareness of natural gas as a viable fueland the favourable price differencebetween natural gas and alternative liquid

fuels (Diesel, Petrol etc…) continue todrive gas demand.Our objective is to ensure the continuedmaximization of investment in Gaslinkand subsequently, the emerging entitieswithin the Gas and Power Business. Webelieve that OG&P has a potential to growoverall PAT at a minimum CompoundedAnnual Growth Rate (CAGR) of 50% overthe next 5 years. We will achieve thisgoal by optimizing the existing Gaslinkassets (adding new connects andproviding additional services) and byaggressively seeking out newopportunities in the Gas and PowerIndustry.

We shall be further guided by the keyobjective to diversify beyond gasdistribution in Lagos and earn revenuefrom other business ventures by:

- Establishing workablepartnerships towards gasexports using new technology

- Pilot a Compressed NaturalGas project within the GreaterLagos Area under viablecommercial terms.

We will formalize our inherent culture ofcustomer focus and commitment totechnical standards by getting Gaslinkcertified under the ISO 9001.2000. Inaddition, our commitment to efficiencyand process standardization will beenhanced by full deployment of OracleERP in 2008.

We remain confident that 2008 willprovide enormous opportunities forOG&P to execute on the entity’s visionto provide affordable and reliable energyto its very valuable customers.

2007 Financials in perspectiveOando Gas & Power’s Profit after Tax(PAT) in 2007 was N495million whichshows a 35% growth when compared to2006. Turnover was N4.39 billion by endof year representing a marginal increase

of 3% from the year 2006. Other incomesincreased in 2007 by 136% compared to2006 due in part to income earned fromengineering consultancy services.Operating cost was N547 million anincrease of 53% over 2006 figure. Thiswas due to increased spending to addcapacity to operate the OG&P platform.

Oando Energy ServicesOando Energy Services (OES), in linewith its strategic initiatives for the year2007 repositioned its portfolio of existingbusinesses as well as entered into newones. To this effect OES focused on thefollowing product service Lines (PSL)namely

• Drilling Fluids• Drill Bits• Oil Well Cement

It transferred the “Automotive Gas Oil(AGO)” supply business to the tradingdivision of the Group. This realignmentallowed OES to focus on providingservices specifically to the upstreamsector of the service industry andcreated better synergy between productService Lines.

• Drill BitsSignificant progress was made in thearea of increasing our existing client baseto which we provide services in drill bitsapplications engineering. Market sharegains were made with the inclusion of thefollowing oil producers as clients suchas Nigerian Agip Oil Company, ShellNigerian Exploration and ProductionCompany (SNEPCO), Pan Ocean andEmerald.

Providing applications engineeringservices to all clients towards solvingspecific dri l l ing problems furtherdemonstrated the technical competencyof our engineers. These achievementshave contributed in:


• Enhancing our abil ity tocompete by recruit ingcompetent engineers andcarrying out training programsas planned

• Having adequate stock of bitsto service our clients

• Oil Well CementWe continued to maintain a sizeable stockof Oil Well Cement at our facilities at OnneFLT which is a free trade zone. Ouroperations with our alliance partnersprovided the much needed cementingneeds of key clients like Addax, TOTAL,Mart Energy, Chevron and ExxonMobil.Professional services using OESsupplied products were provided on allrigs spanning the Nigerian drilling terrainfrom Land to Swamp, Shallow offshoreand finally Deep Water environment.

• Drilling FluidsWe provided Drilling & Completions Fluidsservices to our existing customers likeChevron, ExxonMobil and Snepco. Ourexisting Technical Support agreementwith Halliburton’s Baroid allows OES todeliver quality mud services to theupstream companies. During the firstquarter of 2007, OES invested resourcesinto the local sourcing of Barites in theNorthern and Southern part of Nigeriathereby empowering local miners andmillers. OES also commenced the cuttingand bulking of locally-sourced Bariteduring the period.

• New Product Service Line – DrillingRigsBeing an integrated service provider hasalways been a vision which OES hasstrived to achieve and with respect tothis, starting up more profitable serviceswhich fit into the profile of the companyhas been a key objective. In the secondhalf of 2007 Oando Energy Servicesacquired two Swamp Drilling Rigs. Theserigs are currently undergoing

refurbishment and expected to beoperational by the end of the secondquarter of 2008. This acquisition marksOES’s first entry into the drilling servicesbusiness. To complement this move,OES also acquired a large base at thehighly strategic Trans Amadi IndustrialLayout which is at the heart of oilfieldoperational location in Port Harcourt. Onthis 18,100 m of land the operational baseis currently being built with room enoughfor expansion as more services arebrought into the fold.

As a result of the significant investmentsin our Energy Services division and theneed to develop the requisite skills andcompetencies for the business we havebeefed up the management team with theaddition of an experienced executive tolead the rig business. The importance ofa smooth operational take-off for thisbusiness cannot be understated and tounderscore this, we have entered into atechnical support agreement with areputable company and aresimultaneously carrying out contractnegotiations with other reputablecompanies.

Looking forward to 2008

In 2008, OES shall rationalize its portfoliowhile it gains competency in the new PSL(Rigs). Within this period, it is expectedto acquire more rigs to build the portfolioof this unit. There are still plans tocommence the Solid Control and WasteManagement line of the business, whichare contingent upon the awards ofcontracts.

UPSTREAM DIVISIONOando upstream division presentlycomprises of Oando Exploration andProduction Limited (OEPL) and OandoProduction Development Company(OPDC). OEPL was incorporated to tapinto the vast resources of the Niger Delta

and other opportunities within the Gulf ofGuinea.

At the start of the year under review,OEPL had interests in 2 assets, namely;OPL 278 - with a 60% working interestand OPL 282 - with a 4% interest as partof a Local Content Vehicle. OPDC, theother vehicle for oil exploration, had a45% interest in the Obodeti/Obodugwamarginal field in OML 56. Over the courseof the year to date, OEPL acquired a 95%interest in OPL 236, situated in AkwaIbom state, as part of a discretionaryaward, following the failure of the previousright-holder to complete payment for theblock.

2007 Blocks Review

OPL 278Activity in OPL 278 has concentrated onevaluating the potential of the block usingthe available data. This data consists of3D seismic coverage on the eastern one-third of the block, and a sparse coverageof 2D lines.In addition, OEPL is actively pursuing rigopportunities in preparation for theplanned 2008 drilling campaign. We arein the process of pre-qualifying suppliersfor Wellheads and Oil Country TubularGoods (OCTG’s), which are long-leaditems required for drilling. We have alsosecured approvals to advertise for drilling-related services from NAPIMS and NCD.

OPL 236OEPL obtained the award letter for theblock from DPR on 25 May 2007, and wehave since then worked on the details ofthe PSC agreement. This agreement wasrecently signed by the Minister of Statefor Petroleum Resources.

OEPL has signed an agreement withSepta Energy (a subsidiary ofWeatherford International) and alsocommenced preliminary work on


Community Relations and EnvironmentalImpact Assessment (EIA).

OML 56In partnership with Energia, the operatorof the Obodeti/Obodugwa marginalfield, OPDC re-entered the Obodugwa-1well and retrieved the 2 tubing plugs in arig less operation in early May 2007. Thewell was re-logged in June 2007.

OPL 282The Nigerian Agip Oil Company, operatorof OPL 282, focused on the planned 3Dseismic acquisition as the main activityin 2007. The pre-qualification bids wereopened at the end of February, with 2contractors qualifying for the technicalstage. The Technical “Invitation to Tender(ITT)” documents were approved byNAPIMS and NCD, and Agip is currentlyawaiting the incorporation of the NAOCPSC into the NIPEX portal in order toissue the ITT to the qualified contractors.

Outlook for 2008Our outlook for 2008 and beyond looksvery bright and to underscore ourcommitment to be an upstream player,Oando plc became the preferred bidderand is poised to takeover SHELL’s 49%stake in 2 blocks which have Agip as theoperator. These deepwater offshoreblocks will immediately move Oando tobeing a dominant indigenous player in theupstream sector as one of the blocksalready produces up to 18,000 barrelsper day while the other has onesuccessful discovery and is the subjectof a further appraisal drilling

Our upstream division is not anopportunistic play for us, it is a platformwe intend to deliberately fund and growas its margins are very high and is ableto deliver value to all shareholders. Wewill therefore continue to invest in thisdivision especially in near productionassets to ensure our time to production

is as short as possible.

Over the years we have positionedourselves to be the local content partnerof choice and we expect this to deliversome dividends for us in 2008 andbeyond.

Oando RefineryOando’s refining division was establishedto explore opportunistic avenues ofentering the refining business in theshortest possible time while at the sametime deliberately developing a refinery ofour own. It will also manage all Oando’sinvestments in this sector on behalf ofthe Group.

Review of 2007 and outlook for 2008and beyond

2007 was a challenging year in actualizingthe objectives of the Refining divisionespecially as concerns the privatisationof the Port-Harcourt Refinery. Aftertaking part in more than 2 privatisationattempts by the government andpositioning ourselves to be the preferredbidders for the refinery, the process hassince been stopped and the governmentis yet to announce its plans for therefinery. I am however pleased to informyou that Oando is undeterred in itsresolve to build and operate a refinery inNigeria and we are exploring the optionof a green field development. ThePreliminary Feasibil i ty Studycommenced in 2007 and is expected tocomplete within 2008.

I am also delighted to inform you that ourapplication for land to site the refineryand tanks farms have been approvedand we have just concluded the paymentof 10% of the cost of the land accordingto contractual terms. We expect to be inpossession of the land by the end of Q2and will start developing Phase 1 of thedevelopment via an ultra modern

(minimum) 200,000 metric tonne tankfarm and off-shore SBM dischargefacility. We remain resolute to developNigeria’s first private indigenous refineryand provide the added benefits therein toour country and indeed the West Africanregion.

Finally, in 2008, we plan to finalise theconcept design for the Green field andalso to commence detailed engineeringdesign as soon as we are in possessionof the land.

ConclusionIn summary the outlook for 2008 for yourcompany is very positive as we intend tounlock value from our matured divisionsto fund the growth of our higher marginbusinesses.

In our E&P division, we expect first oil forthe Group in 2008 which will significantlyincrease the revenue and profitability ofthe Group thereby increasing returns toshareholders. We expect our new rigsPSL to become operational in 2008 aswe position ourselves as the largestindigenous rigs provider on the continent.In our Gas & power business we expectto complete our first private power stationby the end of 2008 for the Lagos WaterCorporation. We will also complete theformalization of our processes andtechnical standards by getting Gaslinkcertified under the ISO 9001.2000.On behalf of the Board of Directors andthe staff of Oando Plc, I thank you foryour support and I look forward toanother year of success leading yourcompany as we continue to bring valueto all our shareholders.

Mr. J. A. TinubuGroup Chief Executive



BOARD OF DIRECTORS

Major-General Mohammed Magoro(Rtd)•OFR, PSC, USAWC, Galadiman Zuru,Board of Directors - Chairman

Mr G. O. Boyo Esq †Deputy Group Chief Executive

Mr J. A. Tinubu †Group Chief Executive



Mr Ademola Akinrele SAN •Non-Executive Director

Prince Felix Ndamati Atako JP*Non-Executive Director

HRM Michael Adedotun Gbadebo CFR•The Alake of Egbaland

Non-Executive Director

• Non-executive Director* Independent Non-executive Director† Executive Director



Mr Valentine Oboden Ibru •Non-Executive Director

Alhaji Hamidu Mahmud *Non-Executive Director

Mr Ike Osakwe *Non-Executive Director



Mr Onajite Paul Okoloko •Non-Executive Director

Mr Mobolaji Olatunbosun Osunsanya†

Group Executive Director

• Non-executive Director* Independent Non-executive Director† Executive Director



The Directors hereby submit to themembers their Annual Report togetherwith the audited consolidated financialstatements for the year ended 31December 2007.

In accordance with the provisions of theCompanies and Allied Matters Act, 1990,the board is responsible for thepreparation of the annual financialstatements, which should give a true andfair view of the state of affairs of theCompany as at December 31, 2007. Theresponsibilities of the Board amongstothers include ensuring that:

• Applicable accountingstandards are followed;

• Proper accounting records aremaintained

• Implementation of InternalControl Procedures areinstituted to safeguard assets,prevent and detect fraud otherirregularities;

• It sets the Company’s strategicdirection, for leading andcontrolling the company and formonitoring activities of theexecutive management.

The Directors state that nothing hascome to their attention to indicate thatthe Company will not remain a goingconcern for at least twelve months fromthe date of this report

Legal formOando commenced operations in 1956as a petroleum marketing company inNigeria under the name ESSO WestAfrica Incorporated. It was then asubsidiary of Exxon Corporation of theUSA. On 25 August 1969, the Companywas incorporated under Nigerian Law asEsso Standard Nigeria Limited. In 1976,the Nigerian Government bought Exxon’sinterest in the Company and it was re-branded Unipetrol Nigeria Limited(“Unipetrol”). The Company became apublic limited company in 1991, when theFederal Government of Nigeria divested60% of its shareholding to the generalpublic. Its shares were listed on theNigerian Stock Exchange in February1992.

Ocean & Oil Investments Limitedacquired a 30% stake in Unipetrol fromthe Federal Government of Nigeria in2000 and thus became the core investor.

2007 2006N’000 N’000

Turnover 185,892,083 209,078,938Profit on ordinary activities before taxation 6,813,728 3,794,091Profit after tax 5,480,415 3,075,068Attributable to group 4,755,009 2,725,481Earnings per 50k share (Naira) 7.51 4.76Dividend per 50k share - proposed (Naira) 6.00 4.00Net assets per 50k share (Naira) 62.88 38.64

Dividend cover x 1.06 1.34

In August 2002, Unipetrol acquired a 60%stake in Agip Nigeria Plc (“Agip”) bywinning an international bid conducted byAgip Petroli International B.V. TheUS$86m acquisition was the largest everof a quoted Nigerian company. Unipetrol’smanagement team subsequently led themerger and integration of Agip withUnipetrol and the combined entity wasre-branded Oando Plc in December2003. In 2004, Oando consolidated itsaffiliate and subsidiary companies into anintegrated energy group.

Oando was registered as an externalcompany in South Africa on Tuesday,1 November 2005, and on 25 November2005, concluded its secondary listing onthe JSE Limited (Johannesburg StockExchange) in South Africa.

REPORT OF THE DIRECTORS


OandoSupply &Trading100%

OandoTrading100%

OandoEnergy

Services100%

OandoExplora-

tion&Produc-

tion100%

OandoProduc-tion &Dev.

Company95%

OandoPH

Refinery100%

OandoGas &Power100%

EastHorizonGas &

Company100%

OandoMarket-

ing100%

GaslinkNigeriaLimited

97%

OandoLekki

Refinery100%

Oando PLC

OandoGhana82%

OandoTogo

75.3%

OandoBenin100%

Oando Group Structure

Oando has consolidated its positionthrough its subsidiaries in being anintegrated energy player. Oando PLC(Oando), a proudly Nigerian Corporationborn through the merger of Unipetrol andAgip Nigeria’s downstream marketingoperations, which has metamorphosed froma purely downstream marketing companyto be the leading integrated energycompany with operations spanning acrossthe coast of western Africa along withbusiness interests on a global scale.

The activities of the Group span frompetroleum product marketing, supply andtrading of crude and refined petroleumproducts, natural gas distribution,independent power solutions, explorationand production of crude oil, oil servicesupport to the upstream businessesthrough its rigs, mud services, drill bits etc.The turnover attributable to the groupdecreased from N209bn in 2006 toN186bn in 2007 due to high level of intragroup transations during the year.

Nature of the Businesses

Petroleum Products Marketing:Oando’s flagship marketing division is theleading oil-marketing retailer in Nigeria withover 500 retail outlets also with operationsin Ghana and Togo. The company’sproduct ranges from Premium Motor Spirit(PMS), Automotive Gas Oil (AGO commonly

referred to as Diesel), Dual PurposeKerosene (DPK), Aviation TurbineKerosene (ATK), Low Pour Fuel Oil (LPFO),Lubricating Oils and Greases, Insecticides,Bitumen, Chemicals and LiquefiedPetroleum Gas (LPG, commonly referredto as Cooking Gas). Strategic Assetsowned by the division includes:

• 545 retail outlets spreadacross Nigeria;

• 5 depots with 70 million litrescombined capacity;

• 3 aviation fuel depots inLagos, Abuja and Kano;

• 2 bitumen plants with 12,000metric tonnes capacity,located in Apapa andPort Harcourt;

• a lubricant blending plant witha capacity of 140 millionmetric tonnes per annum(double shift) capacitylocated in Kaduna.This plant is the most modern

of its kind in sub-SaharanAfrica, capable of both lineand batch blending; and

• 7 liquefied petroleum gasplants with 535 metric tonnescapacity.

Supply and Trading:Oando Supply and Trading Limited andOando Trading Limited represent the

products trading arm of the Oando group.Its activities cover trading of refined andunrefined petroleum products to Refiners,Marketing and Trading companiesworldwide. Supply and Trading isresponsible for deliveries within Nigeriawhile Trading is responsible for othermarkets. Products traded include gasoline,gas oils, Kerosene, aviation fuel, distillates,naphtha, fuels oils, bitumen, base oils andliquefied petroleum gas. Also withpresence in the world’s products freightmarkets for which it provides vesselschartered on spot and time charter basisfor delivery of oil and oil products to variousglobal customers.

Support Services to Upstream E&PcompaniesOando energy services, in takingadvantage of the Federal governmentsdirective on local content has commencedthe supply of drilling products, completionfluids, base oils, drill bits and other inputmaterials for oil field operations. It hasrecently joined amongst its Product ServiceLines (PSL) the Drilling Rigs with theacquisition of two swamp rigs.


Oando, at the discretion of the directors,until claimed. Any dividends which remainunclaimed for a period of 12 years fromthe date when such dividends became duefor payment shall, if the directors soresolve, be forfeited to the Company. Nounpaid dividend shall bear interest asagainst the Company.

Oando has maintained an informaldividend policy over the last five years asa result of extensive growth in itsbusinesses. As the Company transits fromits aggressive growth phase to aconsolidation phase, the directors will moveto adopt a more formal dividend policywhich wil l balance steady dividendpayments with adequate equity retentionfor future growth. In the interim, theCompany has not entered into anyarrangements for which future dividendshave been or will be waived.

Directors

In accordance with section 259 (1) and (2)the Companies & Allied Matters Act, 1990(CAMA)and articles 91 and 93 of thearticles, the following Directors, who arethe longest in office, are retiring by rotationand will present themselves for re-electionat this meeting:

Mr. Ademola Akinrele (SAN)Mr. Omamofe BoyoHRM Oba Michael A.Gbadebo,CFR, the Alake ofEgbalandMajor General Magoro(Rtd.), OFR,PSC,USAWC,Galadiman Zuru

Non-executive directors

1. Major-General MohammedMagoro OFR, PSC, USAWC,Galadiman ZuruA retired general of the NigerianArmy. He was one time theFederal Commissioner ofTransport, Minister of InternalAffairs and Member of the

Gas Distribution and PowerThe Oando Gas and Power business is inthe distribution of Natural Gas which isappended by Gaslink, which operates a20 year BOT to distribute gas in the GreaterLagos Area. The company has over 100kmof gas pipeline network passing throughthe major industrial areas of the state andhas a broad industrial customer base.Oando power initiative, aimed at boostingthe electricity generation in the country,will start its first power project for the LagosState Water Corporation, and is alsopositioned to acquire and upgrade someof the distribution companies slated forprivatisation by the Federal government.

Refinery:Oando is committed reducing the nationsdependent on importation of Petroleumproduct and also to increase the countriestotal refining capacity through theestablishment of a Greenfield refinery inLagos state.

Exploration and Production of Crude OilOando Exploration and Production Ltd andOando Petroleum and DevelopmentCompany, are the Groups vehicle for thepossession of upstream assets whichinclude:

• 45% non – operating stakein OML-56 (Obudeti/Obudugwa)

• 60% stake and operator inOPL-278

• 4% non operating interestin OPL-282

• 95% operating stake inOPL 236

Future ProspectsOando has been suitably positioned toincrease the value attributable toshareholders within the dynamics of theenvironment it find itself in. This would beachieved through the following initiatives:

• Focusing on Marketing’s corecompetence and increasedoperational efficiency through theestablishment of Oando Terminal &logistics Limited (OTL) which willmanage the terminals, storage andlogistics for all the businesses.

• An increase in the Gas distributionnetwork and venturing into newfranchise areas.

• Establishing more supply and tradingactivities along the coast of Africaand beyond.

• Rapid growth of the Oando energyservice business through theaddition of New Product service lines(Rigs).

Dividend and BonusThe directors are pleased to recommendthe payment of dividend of N 6.00 or 600kobo per ordinary share of fifty kobo andbonus shares at the rate of one ordinaryshare of fifty kobo for every five ordinaryshares of f ifty kobo each held. Therecommended dividend is subject to thededuction of appropriate withholdingtaxes. If the dividend recommended isapproved and declared, the dividendwarrants will be posted or shareholdersaccounts credited directly on the 30th dayof May 2008 to those shareholders, whosenames appear in the Company’s NigerianRegister of Members at the close ofbusiness on 9th of May, 2008. Dividendsdue to Shareholders whose names appearon the South African Register of Membersat the close of business on the 30th of April2008 (certificated or dematerialized), will,on Wednesday, 4 June 2008, either beelectronically transferred to shareholders’bank accounts or, in the absence of suitablemandates, have dividend cheques postedto them, or will have their accounts, at theirCentral Securities Depository Participant orbroker credited.

Any dividend payable on or in respect ofan Oando share which is unclaimed maybe invested or otherwise made use of by


Supreme Military Council. Inaddition, he has served on theboard of the National MaritimeAuthority. He currently sits on theboards of several othercompanies as well as the Boardof Trustees, Peoples DemocraticParty (“PDP”). He has held theposition of Chairman of Oandosince 2000.

2. Ademola Akinrele SANMr. Akinrele is a partner in thelaw firm F. O. Akinrele & Co. Heholds a Bachelor of Laws Degreefrom University College, Londonand an LL.M from the Universityof Cambridge. He is a memberof the Nigerian Bar Association,a Senior Advocate of Nigeria anda Fellow of the CharteredInstitute of Arbitrators in theUnited Kingdom.

3. Prince Felix Ndamati AtakoJP‡Prince Atako is a seasonedfinancial analyst and a memberof the Nigerian Stock Exchangeand sits on the board of manycompanies. He obtained aBachelor’s Degree in PublicAccountancy and an MBA inFinance & Investments from TheBaruch College of the CityUniversity of New York, NewYork, USA. He served in variouscapacities both in the private andpublic sectors. He is also amember of the Institute ofDirectors (IoD).

4. HRM Michael AdedotunGbadebo, CFR, the Alake ofEgbalandPrior to his coronation as theAlake of Egba Land in 2005, HisRoyal Majesty had a successfulcareer in the Nigerian Armyculminating in his appointment

as the Principal Staff Officer tothe Chief of Staff, SupremeHeadquarters from January1984-September 1985. TheAlake holds a Bachelor of Artsdegree from the premieruniversity in Nigeria: Universityof Ibadan and has served onthe boards of several companiesincluding: Ocean and OilServices Limited, and GlobalHaulage Resources Limited. Hewas also awarded militaryhonours such as the ForcesService Star (FSS) and theDefence Service Medal (DSM).

5. Valentine Oboden IbruHolds a Bachelor of ScienceDegree in Finance and aBachelor of Science Degree inDecision Sciences, from theUniversity of San Francisco,California, as well as a MastersDegree in BusinessAdministration from theInternational Graduate Schoolof Management (IESE), Navarra,Spain.Mr. Ibru is currently theManaging Director/ChiefExecutive Officer of OceanicCapital Limited, a subsidiary ofOceanic International Bank PLC,where he had worked for over15 years in various capacities.Mr Ibru serves on the boards ofAero Contractors Nigeria Limitedand Minet Insurance Brokersamongst others.

6. Alhaji Hamidu Mahmud‡He is the principal partner in thelaw firm of Mahmud Ahaneku &Co. Holds a Bachelor of LawsDegree from the Ahmadu BelloUniversity, Zaria and is a memberof the Nigerian Bar Association.He served on the board of theGongola State Broadcasting

Corporation from where he wasappointed to the Gongola StateExecutive Council. AlhajiMahmud was a director of theSecurit ies & ExchangeCommission and a formerSenator of the Federalgovernment of Nigeria. He is alsoa member of the Institute ofDirectors (IoD).

7. Ike Osakwe‡Mr Osakwe is a CharteredAccountant as well as aFinancial and ManagementConsultant. He holds aBachelor’s and a Masters Degreein Chemistry from the Universityof Oxford, England and is anassociate Member of theInstitute of CharteredAccountants for England andWales. Ike Osakwe has workedin various audit and consultancyfirms and has carried outextensive managementsystems, operational andaccounting review assignmentswithin Nigeria andinternationally. He currentlyserves as chairman of ThomasWyatt Nigeria Plc and sits on theboards of Notore ChemicalIndustries Ltd, and LeadwayPensure PFA. He haspreviously served on the boardsof Fedex (Red Star Express)Limited, and also as theChairman of UBA TrusteesLimited.

8. Onajite Paul OkolokoHe was the Managing Directorand Chief Executive Officer ofOando Energy Services Limitedfrom 2001 to 2006. Mr Okolokowas one of the foundingmembers of the Ocean and OilGroup and focused on thetrading and energy services


business l ines. He holds aBachelor of Science Degree inEconomics from the University ofBenin. He started his careerworking with Bounty Alarms, anindependent marketer of AT&Tsecurity systems in the UnitedStates of America, where he roseto the position of Sales TrainingManager. Mr. Okoloko iscurrently the Managing Directorof Notore Chemical IndustriesLimited.

‡ - Independent non-executive

Group Executive Directors

9. Adewale Tinubu

Mr. Adewale Tinubu is theGroup, Chief Executive ofOando Plc. He assumed thisposition in January 2005 afterthe consolidation of all Oando’saffi l iates and subsidiarycompanies into an integratedenergy group known as theOando Group.

Prior to this, Mr. Tinubu was MD/CEO of Oando Plc, a positionhe assumed in July 2001 afterserving as the Executive Director,Finance and Administration ofthe company.

Mr. Tinubu has a Bachelor ofLaw Degree (LLB) from theUniversity of Liverpool, Englandand a Master of Law degree(LLM) from the London Schoolof Economics where hespecialised in InternationalFinance and Shipping. He is alsoa member of the Nigerian BarAssociation.

He started his career with thelaw firm, K. O. Tinubu & Co.,

where he worked on corporateand petroleum law assignments.In 1994, he became one of thefounding partners of the Oceanand Oil Group.

He is the Chairman of GaslinkNigeria Ltd, Oando Supply andTrading, Oando Power, OandoEnergy Services, OandoExploration and Production,Ocean and Oil Holdings Limited,Oando Ghana, Oando Togo,Oando Sierra Leone, TilcaNigeria Limited and TrojanEstates Limited.

He is a member of the 7th

Governing Council for LagosState University and the Instituteof Directors of Nigeria and wasselected as a Young GlobalLeader (Business) for 2007 bythe World Economic Forum.

10. Omamofe BoyoHe is the Deputy Group ChiefExecutive. He obtained hisBachelor of Laws Degree fromKings College, University ofLondon. He started his careerwith Chief Rotimi Will iams’Chambers, a leading Nigerianlaw firm, where he specialised inshipping and oil services andworked on several joint venturetransactions between theNigerian National PetroleumCorporation and majorinternational oil companies. Heis one of the founding membersof the Ocean and Oil Group,where he developed andmanaged the operationsdepartment before hisappointment in July 2001 asExecutive Director, Marketing ofOando. Mr Boyo serves on theboards of companies in theOando group.

11. Mobolaji OlatunbosunOsunsanyaHe is the Chief Executive Officerof Oando Gas & Power Limited.He holds a First Class bachelorsdegree in Economics from theUniversity of Ife and a Mastersdegree, also in economics, fromthe University of Lagos. Hepreviously worked as aconsultant with Arthur AndersenNigeria (now KPMG professionalservices) with experience in thebanking, oil & gas andmanufacturing industries. Priorto joining Oando in August 2001,he was an assistant generalmanager at Guaranty Trust BankPlc and later an executivedirector at Access bank PLC.Before his appointment as CEO,Gaslink Nigeria, he was theChief Marketing Officer –Commercial, for Oandomarketing.

The directors, pursuant to section 259(4)of the 1990 companies & allied mattersact & article 95 of the company’s articles ofassociation are pleased to recommend Mr.Navaid Burney for election to the office ofdirector of your company.

Brief Curriculum Vitae

Mr. Navaid Burney is the ManagingDirector of Emerging Capital Partners(“ECP”), a leading Africa-focused privateequity fund manager. He runs ECP’sJohannesburg office sourcing, transactingand monitoring investments in a number ofhigh-growth sectors. Mr. Burney joined ECPin September 2000 from First MerchantBank of Zimbabwe where he had beenGeneral Manager of Investment Bankingsince 1997. During his tenure, the Bankbecame a leader in corporate finance,particularly in privatizations, the structuringand placement of corporate and parastatal


debt and cross border mergers andacquisitions. From 1993 to 1997, he wasSenior Investment Officer with theInternational Finance Corporation (IFC)where he focused on mining finance,completed transactions and providedadvisory services in Chile, Venezuela, Peru,Sierra Leone, Zimbabwe and Gabon. Priorto joining the IFC, Mr. Burney was anAssociate Manager with Union CarbideCorporation’s treasury and hadinternational banking experience fromassignments in New York, Paris and AbuDhabi. Mr. Burney serves on the Board ofDirectors of Starcomms Plc, Notore Ltd,Ocean & Oil InvestmentsLtd, Touch the Wild (Pty)Ltd and De Rust OliveEstates (Pty) Ltd amongothers. Mr. Burney holdsa B.S. in InternationalEconomics fromGeorgetown University andan MBA in Finance andAccounting from Universityof California at Berkeley.

Corporate GovernanceOando is committed to theprinciples andimplementation of bestbusiness practices as it isexhibited in the company’scorporate governancepolicy below. Oando isdedicated to theprotection and promotionof shareholders’ interestthus regularly updatingand reviewing its structuresand processes in order tohave the best businesspractice at all times and inturn exhibiting a valuebased performance. TheCompany recognises theimportance of adoption ofbest practice principles, itsvaluable contribution to

long-term business prosperity andaccountability to its shareholders, and hasapplied the principles set out in the Codeon Corporate Governance issued by theSecurities & Exchange Commission, Codeof Corporate Practice and Conductcontained in the 2002 King Report andthe Combined Code on CorporateGovernance issued by the FinancialReporting Council (UK) in June 2006, asdescribed below.

Corporate Governance PolicyThe Company views a vigilant,professional, and Independent Board of

Directors essential for good corporategovernance. The Board of

Directors is notinvolved in the

day to day running of operations of theCompany. It however, influences theperformance of the Company through itssupervision, guidance, and control ofmanagement in the interest and for thebenefit of the Company’s shareholders.Executive Management also plays a crucialrole in the governance process. TheCompany believes that the effectiveinteraction between the governing bodiesand a clear separation of authorities is keyto sound corporate governance. There isa formal schedule of matters reserved forthe decision of the Board, which is reviewedregularly. This includes (inter alia):

• strategy and objectives;

• business plans and budgets;

• changes in capital andcorporate structure;

• accounting policies andfinancial reporting;

• internal controls;

• major contracts;

• capital projects;

• acquisitions and disposals;

• dividend policy;

• communications withshareholders; and

• Board membership.

At the Board of Directors Level

a. Authority. The Board of Directors’scope of authority is set forth inthe Company’s Delegation ofAuthority, in conformity withrelevant legislation and bestpractice recommendations.


b. Size. The Board of Directors,upon the recommendation of itsCorporate GovernanceCommittee, recommends theappropriate size of the Board ofDirectors. The Board of Directors’size is fixed by Article 78 of theCompany’s Articles ofAssociation. Achieving theneeded quality and mix-of-skillsis a primary consideration inarriving at the overall number.

c. Election, Term, and Dismissal(Articles 86-96) the Companybelieves that experiencedDirectors, familiar with theCompany from diverse industrybackground, are key to providingproper guidance.

d. Composition andIndependence. The Board ofDirectors’ composition,competencies, and mix-of-skillsare adequate for oversightduties, and the development ofthe Company’s direction andstrategy. Each individualDirector has the experience,knowledge, qualif ications,expertise, and integritynecessary to effectivelydischarge Board of Directorsduties and enhance the Board’sability to serve the long-terminterests of the Company andits shareholders. The Board ofDirectors has a broad range ofexpertise that covers theCompany’s main business,sector, and geographical areas,and includes at least threeexperienced financial expertswho are non-executive andindependent Directors. A full andcomplete set of information onthe Directors’ qualifications is setforth and annually reviewed by

the Board of Directors upon therecommendation of its CorporateGovernance Committee and canbe viewed on the Company’swebsite.Best practice prohibits the GroupChief Executive Officer andChief Executive Officers frombeing the Chairmen of theirrespective Boards of Directors.To enhance unbiased oversight,the Company believes that anon-executive Director shouldchair the Board of Directors.

To ensure the impartiality of decisionsand to maintain the balance ofinterests among various groups ofshareholders, a number of the Boardof Directors’ members areIndependent Directors. The Companydefines those Directors who have nomaterial relationship with the Companybeyond their Directorship asIndependent. The Board of Directors,through its Corporate GovernanceCommittee, ascertains which membersare to be deemed Independentduring the first Board of Directorsmeeting post the Annual GeneralMeeting. Criteria for determiningDirector Independence is based onthe Combined Code referred toabove, and has therefore determined,for t he time being, that Directors that

have served for longer than nineyears shall not be consideredIndependent Directors.

e. Structure and Committees.The Company has establishedthe following Board of Directorscommittees:

• Corporate GovernanceCommittee

• Nominations Committee• Remuneration Committee• Strategic Planning and

Finance Committee; and

• Audit Committee (astatutory Committee withshareholder members)

• Environmental Health &Safety Committee

• Other committeesdeemed necessary bythe Board of Directors willbe established.

All Committees have by-laws/terms ofreference containing provisions on thescope of authority, competencies,composition, working procedures, as wellas the rights and responsibilities of thecommittee members. Each committee is toprovide provisional consideration of themost important issues that fall within theauthority of the Board of Directors. Aftereach of its meetings, the committees reportto the meeting of the Board of Directors.

f. Working Procedures . TheBoard of Directors meetsaccording to a fixed schedule,set at the beginning of eachyear, which enables it to properlydischarge its duties. As a rule,the Board of Directors meets atleast five (5) times a year.

All Directors are provided with aconcise but comprehensive setof information by the CompanySecretary in a timely manner,concurrently with the notice ofthe Board meeting. This set ofdocuments is to include:

- an agenda;- minutes of the prior

board meeting;- key performance

indicators, includingrelevant f inancialinformation preparedby management, andclear recommendationsfor action.

The Board of Directors throughthe Group Company Secretary


keeps detailed minutes of itsmeetings that adequately reflectBoard discussions, signed by theChairman and included votingresults on an individual basiswhere necessary. The Companykeeps recordings of importantBoard decisions, such as theapproval of extraordinarytransactions.

g. Self Evaluation. The Board hasnot yet undertaken a formal andrigorous evaluation of its ownperformance and that of itsCommittees and individualDirectors, However, thisevaluation will take place during2008.

h. Training and Access toAdvisers. The Company hasput together an inductionprogramme for new Directors ofthe Company, on its business,and other issues that will assistthem in discharging their duties.The Company will also providegeneral access to trainingcourses to its Directors as amatter of continuousprofessional education. TheBoard of Directors and itscommittees also have the abilityto retain independent legalcounsel, accounting, or otherconsultants to advise the Boardof Directors when necessary.

i Remuneration. Theremuneration of non-executiveDirectors is competitive and iscomprised of an annual fee anda meeting attendanceallowance. The remunerationpackage shall, however, notjeopardize a Director’sindependence. ExecutiveDirectors are not paid feesbeyond their executive

remuneration package. TheBoard of Directors shall, throughits remuneration committee,periodically review theremuneration paid to Directors.The Company publicly disclosesthe remuneration of Directors.The Company will not providepersonal loans or credits to itsnon executive directors. Further,the Company shall not providestock option to its Directorsunless approved byshareholders in generalmeeting.

j. Duties and Responsibilities.Directors act in good faith, withdue care and in the bestinterests of the Company andall its shareholders – and not inthe interests of any particularshareholder – on the basis ofrelevant information. EachDirector is expected to attend allBoard of Directors meetings andapplicable committee meetings.

The Company shall not prohibitits Directors from serving onother Boards of Directors.Directors are expected to ensurethat other commitments do notinterfere in the discharge of theirduties. Directors shall not divulgeor use confidential or insiderinformation about the Company.Directors shall abstain fromactions that will or may lead to aconflict of interest with theCompany and shall comply withthe Company’s Policy on relatedParty transactions.

k. Terms and conditions ofappointment of the Non-Executive DirectorsThese are available forinspection by any person at theregistered office of the Company

during normal business hours.

l. Re-election of DirectorsIn accordance with theCompany’s Articles, not morethan one-third of the Directorsare required to retire at eachAnnual General Meeting of theCompany, the Directors to do sobeing those who have beenlongest in office since their lastappointment or election.

The Company Secretary isresponsible to the Board, and isalso available to individualDirectors for advice and services.


Attendance at board meetings during the year ended 31st December 2007

‡ Mr. Osaze Osifo ceased being a director on June 28, 2007* Mr. M. Osunsanya was elected on 28 June 2007.

The current composition of the Board and its Committees is as follows:

Director Audit Nomination Remuneration Strategic Corporate Environment,Planning & Governance Health &

Finance SafetyM. Magoro OFR

J. A. TinubuO. Boyo

M. Osunsanya

F. N. Atako JP

A. Akinrele SAN

HRM M.A. Gbadebo CFR

H. Mahmud

V. O. Ibru

O. P. Okoloko

I. Osakwe

O. Osifo‡

‡ Mr. Osaze Osifo ceased being a director on June 28, 2007

Director 27-03-07 10-05-07 27&28-6-07 09 &10-08-07 07-11-07 18-12-07(103rd) (104th) (105th) (106th) (107th) (108th)

M. Magoro OFRJ. A. TinubuO. BoyoM. Osunsanya* - -F. N. Atako JPA. Akinrele SANHRM M.A. GbadeboH. MahmudV. O. IbruO. P. OkolokoI. OsakweO. Osifo‡ - - -


Board CommitteesThe board has established six formalcommittees as outlined below:

Strategic Planning & FinanceCommittee members:Mr. I. Osakwe (Chairman)Prince F. Atako JPMr. O. IbruMr. O. Osifo (till June 28, 2007)Mr. O. Okoloko

Corporate Governance Committeemembers:Mr. A. Akinrele SAN (Chairman)Alhaji H. MahmudMr. O. Ibru

The corporate governance committeeassists the Board of Directors inperforming its guidance and oversightfunctions effectively and efficiently, andis specifically charged with thedevelopment of, compliance with, andperiodic review of the Company’s

Remuneration committee members:Mr. I. Osakwe (Chairman)Mr. A. Akinrele SANMr. O. Ibru

* O. Osifo ceased being a director on June 28, 2007

Director 7 March 12 March 26 March 30 April 30 July 29 Oct 3 Dec 12 Dec 13 Dec‘07 07 ‘07 ‘07 ‘07 ‘07 ‘07 ‘07‘ 07

I. Osakwe XF. Atako JP XO. Ibru x xO. P. Okoloko x X x xO. Osifo* - - - - -

Attendance at meetings during the year ended 31st December 2007

Director 2 Feb 31 July 03 Aug2007 2007 2007

A. Akinrele SANH. Mahmud xO. Ibru X

Strategic Planning & Finance Committeeassists the board of directors inperforming its guidance and oversightfunctions effectively and efficiently, byspecifically defining the Company’sstrategic objectives, determine itsfinancial and operational priorities, makingrecommendations regarding theCompany’s dividend policy, andevaluating the long-term productivity ofthe Company’s operations. Thecommittee met on 9 occasions in 2007.

corporate governance policies andpractices. The Committee furthermonitors and reviews policies concerningshareholder rights, conflict resolution,ethics, disclosure and transparency,evaluation, and the Company ’s internaldocuments (organisation and process).The committee is chaired by a non-executive director and comprises of twonon-executive directors, one of whom isan independent director. The Committee

held 3 meetings in the financial year ended31 December 2007.

The remuneration committee is chairedby an independent director and comprisesof the Chairman and two non-executivedirectors. It assists the Board of Directorsin performing its guidance and oversightfunctions effectively and efficiently, thecommittee is specifically charged withensuring the Company’s remunerationpolicies and practices support thesuccessful recruitment, development,and retention of directors and managers,

and thus help the company realise itsbusiness objectives and sustainableeconomic development. Whilst thecommittee may meet whenever and asoften as necessary to properly carry outits functions and duties in a timelymanner. The committee held meetingonce in 2007.


Attendance at meetings during theyear ended 31st December 2007

Nominations committee members:Alhaji H. Mahmud (Chairman)Mr. A. Akinrele SANPrince F. Atako JP

The nominations committee assists theBoard of Directors in performing itsguidance and oversight functionseffectively and efficiently, and isspecifically charged with identifyingqualified directors and senior executives.It is to ensure the company’s policiessupport the successful recruitment,development, and retention of directorsand executives and thus help thecompany realise its business objectivesand sustainable economic development.The committee is chaired by anindependent director and comprises oftwo independent directors and one non-executive director. The Committee heldone meeting in year ended 31st

December, 2007.

Attendance at meetings during theyear ended 31st December 2007

Director 27th March ‘07A. AkinreleF. AtakoH. Mahmud X

Statutory Committeeò:Audit Committee members:

Prince Felix Atako JP (Chairman)Prince Atako is a seasoned financialanalyst and a member of the NigerianStock Exchange and sits on the board ofmany companies. He obtained a

Bachelor’s Degree in Public Accountancyand an MBA in Finance & Investmentsfrom The Baruch College of the CityUniversity of New York, New York, USA.He served in various capacities both inthe private and public sectors. He is alsoa member of the Institute of Directors(IoD).

Mr. I. OsakweMr Osakwe is a Chartered Accountantas well as a Financial and ManagementConsultant. He holds a Bachelor’s and aMasters Degree in Chemistry from theUniversity of Oxford, England and is anassociate Member of the Institute ofChartered Accountants for England andWales. Ike Osakwe has worked in variousaudit and consultancy firms and hascarried out extensive managementsystems, operational and accountingreview assignments within Nigeria andinternationally. He currently serves aschairman of Thomas Wyatt Nigeria Plcand sits on the boards of NotoreChemical Industries Ltd, and LeadwayPensure PFA. He has previously servedon the boards of Fedex (Red StarExpress) Limited, and also as theChairman of UBA Trustees Limited.

Mr. Oboden Ibru†‡

Holds a Bachelor of Science Degree inFinance and a Bachelor of ScienceDegree in Decision Sciences, from theUniversity of San Francisco, California,as well as a Masters Degree in BusinessAdministration from the InternationalGraduate School of Management (IESE),Navarra, Spain. Mr Ibru is currently theManaging Director/Chief ExecutiveOfficer of Oceanic Capital Limited, asubsidiary of Oceanic International BankPLC (“the Bank”), where he had workedfor over 14 years in various capacities.Mr Ibru serves on the boards of AeroContractors Nigeria Limited and MinetInsurance Brokers amongst others.

Director 30th July ‘07I. OsakweA. Akinrele SANO. Ibru

Onajite Paul Okoloko# He was the Managing Director and ChiefExecutive Officer of Oando EnergyServices Limited from 2001 to 2006.Mr Okoloko was one of the foundingmembers of the Ocean and Oil Groupand focused on the trading and energyservices business lines. He holds aBachelor of Science Degree inEconomics from the University of Benin.He started his career working with BountyAlarms, an independent marketer ofAT&T security systems in the UnitedStates of America, where he rose to theposition of Sales Training Manager.Mr. Okoloko is currently the ManagingDirector of Notore Chemical IndustriesLimited.

Mrs. E. Fadayomi ƒ†

Mrs. Fadayomi is the principal partner ina firm of Solicitor and Advocates – EniolaFadayomi & Co. She holds a Bachelor ofLaws Degree from the University ofLagos, Nigeria. She is a member severalprofessional associations including theNigerian Bar Association, the Institute ofDirectors and the InternationalFederation of Women Lawyers. She hasserved as the Chairman on the board ofseveral companies including AfribankNigeria Plc, Millennium Harvest Ltd andTelegraphique. She also served as amember of the board of directors in Mayand Baker.She was formerly the Attorney General& Commissioner for Justice in LagosState, Commissioner for Establishment,Training and Pensions and FirstCommissioner for Women Affairs andPoverty Alleviation on the Lagos statecabinet.

Mr. Habibu M. Ma’aruf ƒ†

He is an experienced Legal Practitionerwith a Bachelor of Laws Degree fromUsman Danfodio University (formerlyUniversity of Sokoto), Nigeria. He is


currently the Principal Partner atH.M.MA’ARUF & CO. Solicitors andAdvocate.

Mr. Job Onwughara ƒ†

Mr. Onwughara holds a Master ofScience degree in Banking and Financefrom the University of Ibadan, Nigeria.He is a fellow of the Chartered Instituteof Bankers, London / Nigeria, anAssociate of the Institute of CreditManagement, London and Member of theBritish Institute of Management. He hasserved at various Managerial levels atSavannah Bank and Crown Flour MillLimited.

Alhaji Baguduƒ*Chief A. Okpan JPƒ *Otunba O. Olowuƒ*Mr. O. Osifo*

The audit committee of the Company ischaired by an independent director of thecompany and, in addition, comprises ofanother independent director and onenon-executive director together with thethree shareholder members as requiredby the Companies and Allied Matters Act,1990. The Audit Committee membersmeet at least three times a year and themeetings are attended by appropriatecompany executives, including the groupchief financial officer and the internalcontrol & audit manager. The committee’sduties include keeping under review thescope and results of the external audit,as well as the independence andobjectivity of the auditors. The committeealso keeps under review internal financialcontrols, compliance with laws andregulations and the safeguarding of

assets. It also reviews the adequacy ofthe plan of the internal audit and reviewsits audit reports. The committee held 4meetings in financial year endedDecember 31, 2007.òThe Companies and Allied Matters Act,1990’s requires that every publiccompany have an audit committee andstipulates that a number of shareholdersequal to the director members of thiscommittee must be members of the auditcommittee.ƒ Shareholder members* ceased being a member on June 28,2007† elected member on June 28, 2007‡ ceased being a member on 7November 2007# elected member on 7 November2007

Attendance at meetings during the year ended 31Attendance at meetings during the year ended 31Attendance at meetings during the year ended 31Attendance at meetings during the year ended 31Attendance at meetings during the year ended 31ststststst December 2007 December 2007 December 2007 December 2007 December 2007

Member 26 March ‘07 April ‘07 30 July ‘07 29 Oct ‘07F. AtakoBagudu - -A. Okpan - -O. Olowu - -I. OsakweO. Osifo -V. O. Ibru - - XE. Fadayomi - -M. Ma’aruf - -J. Onwughara - -

Directors declarationsNone of the directors have:

– ever been convicted of anoffence resulting fromdishonesty, fraud orembezzlement;

– ever been declared bankruptor sequestrated in anyjurisdiction;

– at any time been a party to ascheme of arrangement or

made any other form ofcompromise with theircreditors;

– ever been found guilty indisciplinary proceedings by anemployer or regulatory body,due to dishonest activities;

– ever been involved in anyreceiverships, compulsoryliquidations or creditorsvoluntary liquidations;

– ever been barred from entryinto a profession or occupation;or

– ever been convicted in anyjurisdiction of any criminaloffence or an offence under anyNigerian or South Africanlegislation.


Directors’ shareholdingsThe holdings of ordinary shares by the directors of Oando at 31 December 2007, being the end of Oando’s immediatelypreceding financial year, are set out in the table below:

*Indirect Holdings

There have been no changes in the holdings of Oando ordinary shares by the directors in 2007.

Name Address Share Total No.Holding of shares

held (as %of sharecapital)

Maj-Gen Magoro (RTD), OFR PSC USAWC FSS 8, Iman Agusto CloseGaladiman Zuru Victoria Island, Lagos - -

*Mr. Jubril Adewale Tinubu 2, Ajose Adeogun Street, - -Victoria Island, Lagos

*Mr. Omamofe Boyo 2, Ajose Adeogun Street, - -Victoria Island, Lagos

Mr. Ademola Akinrele SAN 188, Awolowo Road South 32,170 0.00427%West Ikoyi, Lagos

Prince Felix Atako JP 8, Chief Nna Atako Street, 46,001 0.00610%Amadi Flats, Port Harcourt ,Rivers State

HRM, Oba Adedotun Gbadebo, CFR, The Alake Ake Palace, Ake Abeokuta,of Egbaland Ogun State 1,025 0.0001%

Mr. Oboden Ibru 270, Ozumba Mbadiwe 126,141 0.01673Avenue Victoria Island, Lagos

Alhaji Hamidu Mahmud 3A, Oko Awo Close, 6,956 0.00092%Victoria Island, Lagos

*Mr. Onajite Okoloko 3rd Floor, Fortune Towers - -Adeyemo Alakija Street, Victoria Island, Lagos

Mr. Ike Osakwe 3, Eko Akete Close, South 61,931 0.00821%West Ikoyi, Lagos

Mr. Bolaji Osunsanya 2, Ajose Adeogun Street, 30,000 0.00398%Victoria Island, Lagos


Interests of Oando’s directors interms of the equity incentive schemeThe executive directors stand to benefitfrom the employee equity incentivescheme. See paragraph titled Staffequity participation scheme below fordetails of the scheme.

Directors’ interests in transactionsNone of the directors had a direct materialinterest in any transactions that wereeffected by Oando during:

- the current or immediatelypreceding financial year;or

– any preceding financialyear and remain in any

respect outstanding orunperformed.

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:

1. Avante Capital PartnersLimited (“Avante Capital”)Avante Capital is an investmentadvisory firm based in Lagos,Nigeria. Oando’s directors whoare also directors of AvanteCapital Partners are Mr. AdewaleTinubu, Mr. Jite Okoloko andMr. Omamofe Boyo.

Range No of Holders Holders% Units Units%

1 - 1,000 228,115 84.24 65,563,774 8.69

1,001 - 5,000 34,169 12.62 72,627,202 9.63

5,001 - 10,000 4,485 1.66 33,411,837 4.43

10,001 - 50,000 3,372 1.25 67,788,902 8.99

50,001 - 100,000 323 0.12 23,025,136 3.05

100,001 - 500,000 249 0.09 53,658,161 7.12

500,001 - 1,000,000 46 0.02 34,023,166 4.51

1,000,001 - 5,000,000 31 0.01 66,349,835 8.80

5,000,001 - 10,000,000 5 0.00 39,564,846 5.25

10,000,001 - 50,000,000 2 0.00 39,952,422 5.30

50,000,001 - 99,999,999,999 1 0.00 258,105,242 34.23

270,427 100.00 754,070,523 100.00

Register Range Analysis As at 31/12/2007

2. Avante Property Advisory &Management Services Limited(“APAMS”)APAMS is an investment advisoryfirm based in Lagos, Nigeria.Oando’s directors who are alsodirectors of Avante CapitalPartners are Mr. Adewale Tinubu,Mr. Jite Okoloko andMr. Omamofe Boyo.

3. F. O. Akinrele & Co.F. O. Akinrele & Co. are a lawfirm based in Lagos, Nigeria,whose services are employed bythe company. Mr. AdemolaAkinrele SAN is a partner at F.O. Akinrele & Co and a directorof Oando.


Group strategy review. Allbudgets are subject to approvalat Board level.

• The Group Leadership Councilis responsible for reviewing theoperational results,communicating and applicationof Group-wide polices andprocedures and strategy onoperational matters which arecommunicated both to theBoard and down to theoperating units.

• The formal monthly operationalreview by the ExecutiveDirectors together with thedivisional management teamsto assess the financial andoperating performance anddiscuss the ongoingdevelopment of each businessunit and the comparison ofdetailed monthly managementreports against budgets,forecasts and prior years. Inaddition the Group ChiefExecutive and Group ChiefFinancial Officer prepare aquarterly report for the Boardon key developments,performance and issues in thebusiness.

• The identification and mitigationof major business risks is theresponsibil ity of operatingcompany management. Eachoperating company maintainsinternal controls andprocedures appropriate to itsstructure and businessenvironment, whist complyingwith Group policies, standardsand guidelines.

4. Oceanic Bank International Plc(“Oceanic Bank”)Oceanic Bank is one of Nigeria’sleading financial institutions,whose financial services areemployed by the company. Mr.Oboden Ibru is a director ofOceanic Bank Plc as well as adirector of Oando.

5. Ocean and Oil Holdings(Nigeria) Limited (“OOH”)OOH is a diversified principalinvestment holding company withan indirect controlling stake inOando held through Ocean andOil Investments Limited. Oando’sdirectors who are also directorsof OOH are Mr. Adewale Tinubu,Mr. Jite Okoloko andMr. Omamofe Boyo.

The day-to-day operational managementof the Group’s activities is delegated tothe Group Chief Executive, who hasdirect responsibility for all operations andactivities. He is supported in this by theDeputy Group Chief Executive and theGroup Leadership Council whichcomprises, in addition to them, the ChiefExecutive Officers of the operatingsubsidiaries, plus the Group ChiefFinancial Officer, Group Head, HR, theGroup Company Secretary & ChiefCompliance Officer, the Group LegalAdviser and the GM, Corporate Services.

Internal control and riskThe Directors have overall responsibilityfor ensuring that the Group maintains asound system of internal controls toprovide them with reasonable assurancethat all information used within thebusiness and for external publication isadequate, including financial, operationaland compliance control and riskmanagement, and for ensuring that

assets are safeguarded and thereforethat shareholders’ investment isprotected. There are limitations in anysystem of internal control and,accordingly, even the most effectivesystem can provide only reasonable, andnot absolute, assurance against materialmisstatement or loss.

In line with past practice, the Companyhas an Internal Audit unit that carries outroutine and random checks on thecompany’s operations, including fixedassets and stocks. The unit is alsoresponsible for investigating frauds andmisuse or misappropriation of thecompany’s assets.

The company also has an InternalControl Unit, which lays down and teststhe controls and processes to ensurethat the assets of the company aresafeguarded. The Unit is currentlyheaded by a manager with vast controland processes experience.

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

• The Board sets out the Groupauthority procedures which areadopted by all the subsidiarycompanies.

• The issue of a Groupaccounting and proceduresmanual which sets out theGroup’s accounting practices,revenue recognition rules,accounting under NASB andIFRS and bid approvalprocesses.

• The application of a rigorousannual budgeting processfollowing a detailed entity and


• Insurance cover is maintainedto insure all the major riskareas of the Group based onthe scale of the risk and theavailabil ity of cover in theexternal market.

• The use of externalprofessional advisers to carryout due diligence reviews ofpotential acquisitions.

Relations with shareholders

CommunicationsThe Board considers effectivecommunication with its investors,whether institutional, private or employeeshareholders, to be extremely important.

The Company reports formally toshareholders four times a year, with thequarterly results announcement and thepreliminary announcement of the full-yearresults. Shareholders are issued with thefull-year Report and Accounts in May.These reports are posted on the website.The Company also makes otherannouncements from time to time, whichcan be found on the website.

Members of the Group LeadershipCouncil meet institutional investors on aregular basis, providing an opportunityto discuss, in the context of publiclyavailable information, the progress of thebusiness. Institutional investors andanalysts are also invited to attendbriefings by the Company following theannouncements of the full- and quarterlyresults. Copies of the presentationsgiven at these briefings are posted onthe website.

Constructive use of the AnnualGeneral Meeting

The notice of meeting is sent toshareholders at least 21 working daysbefore the AGM. The Directors

encourage the participation of privateshareholders at the AGM, and areavailable, both formally during the meetingand informally afterwards, for questions.The Chairmen of the Audit, Remunerationand Nomination Committees are allavailable to answer questions at theAGM.

Corporate Social Responsibility(CSR)In the year 2007, Oando PLC took a directand active participation in sustainabledevelopment of the environment in whichit operates by embarking on a number ofcommunity based projects. Oando isactively involved in the provision of socialamenities and improving the quality of lifein its host communities. In doing this thefollowing donations were made in year2007:


Projects Details Cost

Adopt A School Daura Primary School, Katsina State - Structural Renovations 5,651,195 Metropolitan Primary School - Phase 1 Structural Renovations 5,000,000 Ekorinim Primary School - Phase 1 Structural Renovations 4,500,000Scholarships Scholarships of 100 Back to School youths in Lagos communities 2,068,340Donations Lagos State communities - Agidingi, Omole, Keke Ogba, Wasimi, Ikosi, Ojota, Odo Iya

Alaro, Ilupeju, Ijora, Oshodi, Orile Iganmu, Apapa, Obanikoro, Onipanu, Jibowu andOjuelegba. 1,118,600

“ Rivers State communities - Onne, Eleme, Bundu, Rumueli and Alesa 1,000,000 “ Installation of Borehole to the Onne community in Rivers state. 977,000 “ Sponsorship of Fundraising Walk for the Blind 750,000 “ Sponsorship of Youth Fundraiser towards assisting Nigerian Orphanages 500,000 “ Heart Of Gold Hospice, Lagos 63,443 “ Motherless Babies Home Lekki, Lagos State 63,443 “ Motherless Babies Home, Iru, Lagos State 63,443 “ Pacelli School of the Blind, Surulere, Lagos State 63,443 “ Helping Hands African Children foundation, Lagos State 63,443 “ Little Saints Orphanage, Lagos State 284,243 “ Bab Salam Motherless Baby Home, Lagos State 63,443 “ School of the Blind, Sam Ethnan Air Force Base, Ikeja Lagos State 63,443 “ SOS Children Village, Isolo, Lagos State 63,443 “ Social Welfare Home, Kalambina, Sokoto State 63,443 “ Orphanage Home, Sokoto, Sokoto State 63,443 “ Zamfara Orphanage Home, Zamfara State 63,443 “ Heritage Homes Orphanage, Lagos State 367,404 “ Elderly Home -St Paul Catholic Church Awkunanaw, Enugu State 50,000 “ Motherless Babies-Holy Ghost, Enugu, Enugu State 50,000 “ Karu Orphanage, Karu, FCT Abuja 50,000 “ Sisters of Abraham Jabi, FCT Abuja 50,000 “ Cheshire Home School - Eleyele, Ibadan, Oyo State 40,000 “ Oransanye Orphanage Home, Benin Edo State 40,000 “ Zawan Orphanage Home,Jos, Plateau State 40,000 “ Orphanage Home, by Navy Rd, Borokiri, Rivers State 40,000 “ Orem Faith Orphanage Home, Warri, Delta State 40,000 “ School for the Blind, Ondo State 40,000 “ Kwara State School for the Handicapped, Ilorin 40,000 “ Motherless Babies home – Total Garden 30,000 Christian Mission School for the Deaf – Onireke, Ibadan, Oyo State 30,000 Edo Orphanage Home, Benin City, Edo State 30,000 Esther Orphanage Home, Benin City, Edo State 30,000 Gida Bege, Jos, Plateau State 30,000 Aisha Maina Motherless Home, Jos, Plateau State 30,000


Home of Elderly, Harbor Road, Port Harcourt Rivers State 30,000 Cheshire Home (Home of Handicaps), by New Layout,Borokiri, Rivers State 30,000 Mam Davis Buwa Memorial Children’s Home, Warri, Delta State 30,000 Heart Of Warri Orphanage Home, Warri, Delta State 30,000 Grace Orphanage, Ondo State 30,000 Ondo State Motherless Babies Home, Ondo State 30,000 Kwara State Ministry of Social Dev. & Culture, Kwara State 30,000 Children Reception Centre, Ilorin, Kwara State 30,000 Total 23,814,657

Asset ValueInformation regarding the Group’s assetvalue and notes thereon are contained inNote 4, of the financial statements on page67 of this Report. In the opinion of thedirectors, the market value of theCompany's property is not lower than the

value shown in the financial statements.

Substantial interest in sharesOcean & Oil Investments Limited is thehighest single shareholder in theCompany, holding 258,105,243 unitsrepresenting 34.2% of the issued shares.No other shareholder holds 5% andabove of the issued share capital of theCompany.

Acquisition of Its Own SharesThe Company did not acquire its sharesin 2007.

Environment, Health Safety andQualityOando recorded significantimprovements in EHSQ performance in2007. The Company is pleased to reportthat there was no fatality at its Terminalsor Plants across the country. It was alsoa year that witnessed improved &enhanced EHS performance reportingsystem with the commencement of theManagement Facility Inspection (MFI),Action Tracking System (ATS), Permit towork management system, contractor

pre-mob exercise, and monthly EHSperformance review. In addition, Oandoactively participated in the World Aids Daywhich was marked with lectures at someOando locations and a voluntary walk inassociation with an NGO.

Trainings such as Advance fire fightingcourse for Fire Marshals, EHS Level 1,2, & 3 trainings and Hazop studies wereconducted.

Employment & Employees

Oando offers its employees theopportunity to build a career in a dynamicand highly professional businessenvironment. The company continues toreinforce its belief that people are asource of competitive advantage andtherefore invests in employees’ trainingand development with the overall aim of:

– Maximizing the potential of all staffin terms of productivity, jobsatisfaction and careeraspirations in l ine withorganizational needs

– Ensuring the needs ofmanagement succession aresatisfied in line with companystrategy

– Attracting and retaining highquality people

Manpower/Capability Development

The company has created a range of

programmes and processes that offersupport and guidance to employees andenhance career development within theGroup. The company’s performancemanagement system offers an excellentopportunity for feedback on a formalbasis. This facilitates discussion basedon performance of employees in theircurrent roles and skills and aspirationsmoving forward.

One of the key initiatives deployed in year2007 is strengthening the process ofpromoting from within with cross-functional assignments. This hasprovided ample opportunities foremployees to grow and develop theircareers. This is being done on an ongoingbasis through the establishedPerformance and Rewards Managementprocesses. Ultimately, the companyensures that each employee develops acareer plan, showing a job progressionthat enables well-rounded competencydevelopment as well as exposure torequired job experiences.

Management has also gone ahead toensure a detailed documentation of theabove processes in the form of policies,which are made available on thecompany’s Intranet. All employees haveapproved job descriptions, which are alsomade transparent and available throughthe Intranet. Within the year in review, ofthe following people-oriented initiatives


developments in both theirfunctional areas and the overallindustry.

4. Leadership DevelopmentFramework

The Oando LeadershipDevelopment framework wasput in place to clearly set astructured system which helpsto develop a shared visionwithin the company for thefuture direction of effective andsustainable leadership andgovernance. While promotingpositive role models ofleadership, it establishes anappropriate and coherentprogramme of leadershipdevelopment opportunities,from nurturing early talent tomaking the most of ourexperienced leaders within theGroup. For the first time, theCompany ran a pilot 360degrees assessment processfor its key leaders. The plan isto cascade this to all managersin the first quarter of 2008.

The company recognizes theimportance of having talentedleaders at all levels of theorganization to succeed in thechallenging world of business.Consequently it commits toproviding practical processesand programs which ensurethe identification, development,and inspiration of our currentand future leaders. Throughthis commitment, which offerschallenging and rewardingcareer opportunities, weenhance our attractiveness asan employer of choice.

were put in place in line with the company’sobjective of being an employer of choice.

1. Competency Framework

The competency framework,integrated with the company’sperformance managementsystem, clearly communicatesto employees, the knowledge,skills and attributes required ofthem to perform effectively intheir current job roles. Theframework definesorganizational, leadership,managerial and functionalcompetencies. Functionalcompetencies are driven bydetailed job competencyprofiles.

The framework provides astructured and transparentapproach to staff developmentand a simple way formanagers to identify thedevelopmental needs of theirsubordinates.

2. Career Progression andSuccession planningframework

With the prospects for thefuture in mind, and to guaranteeconsistent positive returns forall stakeholders, the companyidentifies with the need toprepare identified talentedemployees and providetargeted development for themfor broader responsibilities inthe future.

The Career progression andSuccession planningframework also helps toensure that employees have a

clear view of “where theybelong” and what the futurecould be in terms of their careerwith the company whileproviding a structured processto continue to manage thesuccession pipeline.

The framework, which is a livedocument updated on an ongoing basis, identif iesemployees who are ready tofill critical positions in the nextsix, twelve, twenty four andthirty six months respectivelyand puts in place tailor madedevelopment solutions to makethis a reality.

3. Training ManagementSystem

The Training ManagementSystem enables trainingmanagement to become astructured process that isbased on identif iedperformance gaps using thecompetency framework.

Training and Learningadministration has alsobecome more effective andseamless with Talent andLearning Management toolsdeployed on the Oracle ERPplatform.

The Company continues topursue an aggressive trainingand development policy.Employees are continuouslysponsored on local andoverseas courses; and leadersare encouraged to attendindustry related seminars andmeetings to ensure they areabreast with current


Ultimately, the companyensures a deep pool ofengaged and talented leadersto fill vacancies as they arise.

Reward Management

Oando is guided by the aim to be theemployer of choice. In this respect, thecompany aspires to have competitiveand fair reward policies in place. In orderto recruit and retain high-qualityindividuals who can deliver our businessplans, we offer competitive salaries andbenefits that, as a minimum, benchmarkwith commensurate industry standards.

At Oando, we understand that it takesdifferent things to attract and retainexcellent employees. We thereforereward our employees through a wealthof compensation and benefits schemesthat are among the best in the industry.

Compensation schemes, made up ofcash bonuses and equity incentives havebeen improved and a new ManagementPerformance Plan has been put in placewithin the group. The reward mixcomprises the following:

· Base Salary plus allowances· Annual Performance Bonuses· Management Stock Awards· Employee Stock options· Special Recognition Schemes· Gain Sharing Scheme

Other benefits which employees continueto enjoy include:

· Free Comprehensive HealthCoverage

· Wellness Programs · Time Away from Work (Leave)· Industrial Relations

The company places considerable valueon consultation and involvement ofemployees in the promotion of workplacerelations.

The Management of the companyoperates an open-door policy andcontinues to communicate clearly andeffectively with employees and houseunions through meetings, briefings,memos, town-hall sessions and country-wide tours.

The relationship with the Unions remainsvery cordial and continues to improve witha definite focus on fostering anatmosphere of Industrial peace andharmony to assure business success. Inthe first half of the year, Managementsigned collective agreements with the twohouse unions.

Equal Opportunity Employer

Oando has a long-standing commitmentto the principles of equal employmentopportunity. In keeping with thiscommitment, the company continues torecruit, employ, compensate and setterms, conditions, and privileges ofemployment of qualified persons withoutregard to gender, race, age, sex, religion,ethnicity, national origin, disability, statusor sexual orientation.

This commitment ensures that thecompany conducts all its employmentpractices in a non-discriminatory manner.Employees are given fair considerationand are judged solely on their job-relatedaptitude, training, skills, and performance.

Staff Strength

The Oando group staff strength onDecember 31, 2007 stood at 492 (FourHundred and Ninety two). (Management:102, Senior: 329 and Junior: 61). TheGroup continues to show strongcommitment towards the support ofvarious Industrial Training efforts as wellas the mandatory National Youth ServiceScheme.

Staff Equity Participation Scheme.

The Oando Employee Equity IncentiveScheme was approved by theshareholders in June 2005. The schemehas a pool of shares made up of 5% ofcompany’s equity available fordistribution over a nine (9) year termbroken into three (3) year cycles.

Shares were allocated to staff in each ofthe years from 2005-2007. The allocatedshares for year 2005 – 2006 did not vestin eligible employees because theconditions precedent to the vesting werenot met. Employees have thus forfeitedtheir equity incentives allocations forthose years. However, the year 2007allocation will vest in eligible employeesin May 2008. Vetiva Capital ManagementLimited has been appointed as trusteesto the scheme and they are currentlyworking with management on themodalities for the administration of thescheme.

Code of Business Conduct & Ethics.

In its continued effort towards ensuringgood corporate governance at all levelsin the organization, the Board of Directorsat its meeting held on the 18th ofDecember 2007, approved the OandoGroup (including Oando Plc and itssubsidiaries) Code of BusinessConduct & Ethics . The code isapplicable to all Employees, Managers,Directors and Business Partners.

By adopting the code, the companyconfirms its desires to demonstrably leadand promote good ethical behaviour.Employees, Managers and Directorshave all been trained on the provisionsof the code, whilst preparations areongoing for the training of all our businesspartners.


customer location. With OIM, the entiresupply chain for all our sellable bulkproducts is now available online withbusiness intelligence reports to supportmanagement decision making.

Oracle Payroll: Oracle payroll also wentlive on the 3rd November 2007 after over4 months of testing. Fully integrated withour finance and HR applications, payrollhas reduced by about 80% the resourcesrequired to administer payroll for group.In addition to the Oracle payroll platformprovides online payslip access to all staff,it also for online requests for payelements, it automatically calculates andpays time bound benefits and it comeswith its own management reports.

Altogether our implementation has beena good success and this can bemeasured by the reduction in resourcesrequired for data gathering and cleansingas most of our data is now housed in theapplication and automatically managed.This implementation has also help toincrease the skill sets of every staff inOando. All Oando staff were trained touse the application as every staff usesthe application for at least one process.Over the coming years we expect to seea lot of innovation and creativity as aresult of this platform as resources thatwould otherwise have been used for datacleansing and gathering can be freed upto help ensure additional value exists inall our products and services. Thesuccessful roll-out of the OracleEnterprise Resource Planning system isexpected to boost business activities byintegrating business processes andensuring real t ime monitoring ofoperations.

Outlook for 2008In 2008 we expect to complete theimplementation by rolling out the platformto all our new divisions and also to

AwardThe Company won the Nigerian StockExchange’s President’s Merit Award asthe Best Company in the PetroleumMarketing Sector for 2006 in year underreview.

Enterprise Resource Planning System(ERP)In the year under review Oandosuccessfully implemented the 1st phaseof its Oracle Enterprise ResourcePlanning Tool, a project christenedProject Synergy.

Synergy started in September 2006 withan elaborate business requirementgathering session which lasted for 3months after which implementationproper began in 2007 as detailed below:

Human Resources: On the 4th of April2007, Oando went live with Oracle CoreHR and Self Service, thereby creatingthe platform for all employees to managetheir personal information themselves.With core HR also came an online realtime approval functionality well integratedinto staff emails that allows for transparentmanagement of employee requests likeleave, loans and updating of personalinformation. Oracle core HR and selfservice is now the base application formanaging all members of Oando’s staff.

Oracle Finance Suite: On the 3rd

November 2007, Oando successfullywent live with Oracle Finance (AccountsPayable, Account Receivable, GeneralLedger, Cash Management, and FixedAssets) for all its divisions across theGroup. This feat not only creates theplatform for Oando to optimize itsprocesses across board, it also providesthe data and resources required forbetter management decisions in all itsoperations. Our Oracle Financeimplementation has allowed us to retire

all the various legacy applications in allthe businesses and it provides real timevisibility of all our transactions where-everthey occur.

Oracle Supply Chain: Simultaneouslywith our Finance go-live, we went livewith our supply chain suite whichcomprises of Procurement, OrderManagement and Inventorymanagement.

Our procurement module allows foronline requisition creation, onlineapprovals of requisitions, automaticbudget checks, automatic buyerselection, online creation of purchaseorders and seamless integration toaccounts payables.Order management, used mainly by thesales team, provides us with adequatedata to be more responsive to ourcustomers. Our sales teams are able tocreate customer orders online,determining the exact destination of theorders, the location of the product andthe balance of the customer. Oracleorder management has literallytransformed the way we do business,for example, it provides added flexibilityin customer and price management,discounts and swaps are requested fromthe field and approved online bysupervisors at the head office.

Oracle Inventory management allows fora global management of inventory;sellable and consumables, stores andwarehouses. With inventorymanagement, processing of customerorders is now online and so are invoicing,stock management and truckmanagement. Our oracle InventoryManagement is also integrated with ourOil Inventory Management Solution(OIMS) which is a specialist applicationfor managing our bulk products. OIMSprovides us the platform to manage ourbulk products from import to end


businesses outside Nigeria. 2008’simplementation will be in a much smallerscale when compared to the previousyear but it will ensure that the Oracleplatform exists in every Oando locationworld-wide thereby re-emphasising ourcommitment to be a world classOrganization driven by world classprocess and world class people.

TRIPPIn line with its vision of “excellence” in allit does, the Company embarked on an“acculturization” programme “ProjectRestore” which aims to support employeedevelopment, promote the best globalstandards of work ethics and ensureemployees’ dedication to the Company.The acronym “TRIPP” which stands forTeamwork, Respect, Integrity,Passion and Professionalism are theCompany’s Core Values and allmembers of staff understand theimportance of the programme to theCompany’s businesses and to theirindividual development as well. Theoverall project goals are to:

· Improve SharedUnderstanding of CoreValues

· Improve operations and;· Enhance Organizational

Capability and

Some of the specific goals are to:

· Improve EmployeeMotivation

· Improve Staff FeedbackChannels

· Improve Service Delivery· Improve Processes· Improve Project Execution

Capability· Improve Staff learning

Corporate Restructuring

Scheme of Arrangement 1:between Oando Plc and

(i) Ocean & Oil InvestmentsLimited;

(ii) Identified Shareholders ofGaslink Nigeria Limited.

Oando’s commitment to attaining the bestglobal Corporate Governance Standardsprecipitated the need to review theownership structure and management ofOando’s subsidiaries to identify potentialareas of conflict of interest. The followingsubsidiaries, which were jointly ownedby Ocean & Oil Investments Limited(OOI), Oando’s largest singleshareholder, were thus identified:

• Oando Supply and Trading

Limited(OS&T)

• Oando Trading (Bermuda)

Limited(OT)

• Oando Production and

Development

Company Limited (OPDC)

• Oando Energy Services Limited

(OES)

• Oando Exploration and

Production Company

Limited (OEPL)

The conflicts could arise because:

• OOI holds a direct equity stakein Oando as well as in the saidcompanies, while Oando has adirect equity stake in each of thesaid subsidiaries;

• Four of OOI’s Directors werealso Directors of Oando and thejointly-owned subsidiaries;

• Oando has management controlof the jointly-owned subsidiariesand transacts a considerablevolume of business with the saidsubsidiaries.

Consequently, Oando with the approvalof its shareholders, regulatory bodiesand sanction of the Court, acquiredOOI’s entire equity holding in the jointly-owned subsidiaries in exchange for theissue of new Oando shares to OOI. Atthe conclusion of the transaction, thejointly-owned subsidiaries becamewholly-owned subsidiaries of Oando.

By swapping its shares in the jointly heldsubsidiaries for shares in Oando, OOI’sinterests became 100% aligned with theinterests of Oando’s other shareholders.

Similarly, Oando owned 52.11% equitystake in Gaslink and it entered intodiscussions with the MinorityShareholders, who agreed to transfertheir shareholding in Gaslink to Oando,thereby significantly increasing its equitystake in Gaslink to 97%. This hasensured that shareholders of Oando Plcwill enjoy undiluted, the revenuegenerated from this lucrative and rapidlygrowing industry. It further ensures thatOando’s revenue stream is welldiversified, and as Gaslink is a high-margin business, it guaranteesincreased and sustainable profitabilityfor Oando.

Scheme of Arrangement 2: Creationof Oando Marketing Limited

Oando’s downstream marketing unit didnot exist as a stand alone entity and thislimited Oando’s options for sourcingappropriate capital to drive its operationsand subsequently increase shareholdervalue. Thus, Oando sought for andobtained shareholder approval for the


carve out of its downstream petroleum

marketing business to a new entity,

Oando Marketing Limited.

Post Scheme, the new Oando Group

structure will:

· enable each of the subsidiaries

in Oando to target appropriate

investors and the markets

attracted to the specific

business;

· increase the capital allocation

flexibility of the Group;

· allow each subsidiary to focus

on its core market, and

effectively grow market share;

· ensure a more effective and

efficient management of

resources;

· allow for uniformity of

comparison with competitors in

petroleum marketing sector.

AuditorsPriceWaterhouseCoopers, having

indicated their willingness will continue in

office as the Company’s auditors in

accordance with Section 357(2) of the

Companies and Allied Matters Act, 1990.

By Order of the Board

Oredeji DelanoCompany Secretary



In compliance with section 359 (6) of theCompanies and Allied Matters Act 1990,we the members of Oando Plc AuditCommittee have, on the documents andinformation made available to us:

a. Reviewed the scope andplanning of the auditrequirements

b. Reviewed the externalAuditors’ ManagementControls Report for theyear ended December 31,2007 as well as theManagement responsethereto,

And can ascertain that accounting andreporting policies of the company for theyear ended December 31, 2007 are inaccordance with legal requirements andagreed ethical practices.

Dated this 10th day of April 2008

Prince Felix N. Atako JPChairman, Audit Committee

MEMBERSPrince Felix Atako JP - ChairmanMr. I. Osakwe - DirectorMr. Onajite P. Okoloko - DirectorMrs. E. Fadayomi - ShareholderMr. Habibu M. Ma’aruf - ShareholderMr. Job Onwughara - Shareholder

REPORT OF THE AUDIT COMMITTEE



CharteredAccountantsLagos 29 April 2008

then ended in accordance with NigerianStatements of Accounting Standards andthe Companies and Allied Matters Act1990.

Report on other legal requirements

The Companies and Allied Matters Act1990 requires that in carrying out ouraudit we consider and report to you onthe following matters. We confirm that:

(i) we have obtained all theinformation and explanationswhich to the best of ourknowledge and belief werenecessary for the purposes ofour audit;

(ii) in our opinion proper books ofaccount have been kept by theCompany and the Group, so faras appears from our examinationof those books;

(iii) the Company and the Group’sbalance sheet and profit and lossaccount are in agreement withthe books of account;

Report on the financial statements

We have audited the accompanyingconsolidated financial statements ofOando Plc (“the Company”) and itssubsidiaries (together “the Group”) whichcomprise the balance sheet as of 31December 2007 and the profit and lossaccount, and cash flow statement for theyear then ended and a summary ofsignificant accounting policies and otherexplanatory notes.

Directors’ responsibility for thefinancial statements

The directors are responsible for thepreparation and fair presentation of thesefinancial statements in accordance withNigerian Statements of AccountingStandards and with the requirements ofthe Companies and Allied Matters Act1990. This responsibil ity includes:designing, implementing and maintaininginternal control relevant to the preparationand fair presentation of financialstatements that are free from materialmisstatement, whether due to fraud orerror; selecting and applying appropriateaccounting policies; and makingaccounting estimates that are reasonablein the circumstances.

Auditor’s responsibility

Our responsibil ity is to express anindependent opinion on the financialstatements based on our audit. Weconducted our audit in accordance withInternational Standards on Auditing.

PricewaterhouseCoopersChartered Accountants

Plot 252E, Muri Okunola Street,Off Ajose Adeogun Street,

Victoria Island, Lagos Nigeria.

Those standards require that we complywith ethical requirements and plan andperform our audit to obtain reasonableassurance that the financial statementsare free from material misstatement.An audit involves performing proceduresto obtain audit evidence about theamounts and disclosures in the financialstatements. The procedures selecteddepend on the auditor’s judgement,including the assessment of the risks ofmaterial misstatement of the financialstatements, whether due to fraud orerror. In making those risk assessments,the auditor considers internal controlrelevant to the entity’s preparation andfair presentation of the financialstatements in order to design auditprocedures that are appropriate in thecircumstances, but not for the purposeof expressing an opinion on theeffectiveness of the Company’s internalcontrol. An audit also includes evaluatingthe appropriateness of accountingpolicies used and the reasonableness ofaccounting estimates made by thedirectors, as well as evaluating the overallpresentation of the financial statements.We believe that the audit evidence wehave obtained is sufficient andappropriate to provide a basis for ouropinion.

Opinion

In our opinion the accompanying financialstatements give a true and fair view ofthe state of the Company and Group’sfinancial affairs at 31 December 2007 andof their profit and cash flows for the year

REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF OANDO PLC


Balance SheetAs of 31 December 2007 N000

31-Dec-07 31-Dec-06Non Curreent assets NOTE Group Company Group CompanyProperty, plant and equipment 4 33,069,844 20,379,423 14,396,003 13,788,755Intangible assets 5 29,713,541 15,359,446 14,514,551 13,445,903Long term Investments 6 10,000 16,844,848 10,000 2,080,320Long term receivable 7 11,138,446 318,391 4,612,042 326,654

Current assetsInventories 8 24,729,531 10,191,326 15,159,178 9,552,972Debtors and prepayments 9 46,813,296 30,294,251 36,139,592 20,664,171Bank and cash balances 17,209,397 11,494,703 7,605,153 4,102,872

88,752,224 51,980,280 58,903,923 34,320,015Current liabilitiesCreditors and accruals 10 41,409,519 20,906,936 23,600,313 15,260,729Dividend payable 1,910 1,910 1,910 1,910Tax payable 26 1,308,107 1,020,443 928,902 728,931Borrowings 11 52,634,682 28,223,938 40,053,723 23,652,443

95,354,218 50,153,227 64,584,848 39,644,013

Net current (liabilities)/assets (6,601,994) 1,827,053 (5,680,925) (5,323,998)

Non-current liabilitiesBorrowings 11 17,730,352 7,925,558 1,551,396 375,225Other non-current liabilities 12 726,853 673,734 706,448 655,957Deferred taxation 13 889,405 849,344 687,224 662,199Retirement benefit obligation 14 141,671 141,671 138,254 138,254Provision for other liabilities & charges 15 425,279 425,279 372,079 372,079

19,913,560 10,015,586 3,455,401 2,203,714

Net Assets 47,416,277 44,713,575 24,396,270 22,113,920

Capital and Reserves attributable to equity holdersShare capital 16 377,035 377,035 286,150 286,150Share premium account 17 29,877,741 29,877,741 15,980,263 15,980,263Revaluation reserve 18 10,652,936 10,652,936 2,423,923 2,423,923Retained earnings 19 6,321,140 3,805,863 3,853,399 3,423,584

47,228,852 44,713,575 22,543,735 22,113,920

Minority interest 20 187,425 - 1,852,535 -

Total Equity 47,416,277 44,713,575 24,396,270 22,113,920

The financial statements and notes on pages 56 to 84 were approved by the Board of Directors on 10 April 2008 and signed onits behalf by:

DIRECTORS:


Profit and Loss AccountFor the year ended 31 December 2007 N’000

31-Dec-07 31-Dec-06-05NOTE Group Company Group Company

Turnover 21 185,892,083 131,007,169 209,078,938 132,397,373

Cost of sales (164,443,490) (115,595,914) (192,401,529) (118,942,980)

Gross profit 21,448,593 15,411,255 16,677,409 13,454,393

Selling and marketing costs (5,722,171) (5,722,171) (5,394,251) (5,394,251)

Administrative expenses 22 (10,958,316) (7,280,183) (7,110,043) (5,101,015)

Interest received 871,336 507,155 456,453 308,661

Other operating income 23 2,471,002 1,707,933 1,305,958 971,268

Operating profit 8,110,444 4,623,989 5,935,526 4,239,056

Interest payable and similar charges 24 (1,296,716) (906,793) (2,141,435) (1,383,465)

Profit before taxation 25 6,813,728 3,717,196 3,794,091 2,855,591

Taxation 26 (1,333,313) (1,045,714) (719,023) (501,914)

Profit after taxation 5,480,415 2,671,482 3,075,068 2,353,677

Attributable to:

Equity holders of the company 19 4,755,009 2,671,482 2,725,481 2,353,677

Pre acquisition profit (note 34) 701,370 - - -

Minority interests 24,036 - 349,587 -

5,480,415 2,671,482 3,075,068 2,353,677

Earnings per share for profit attributableto equity holders of the company duringthe year:

Basic earnings per share (kobo) 28 751 422 476 411

Diluted earnings per share (kobo) 28 751 422 476 411

The accounting policies and notes on pages 58 to 86 form an integral part of these financial statements.


Statement of Cash FlowsFor the year ended 31 December 2007 N’000

31-Dec-07 31-Dec-06NOTE Group Company Group Company

Cash flows from operating activitiesNet cash flow from operating activities beforechanges in working capital 28 7,912,509 5,092,426 6,425,500 4,695,289

Net increase in working capital 29 (2,748,743) (4,742,856) (1,705,037) (744,610)

Decrease/(Increase) in long term prepayments 5,211 8,263 (266,308) (266,308)Decrease/(Increase) in pre-operational expenses 450,122 - (239,786) -Increase/(Decrease) in customers’ security deposits 20,405 17,777 (51,598) (54,911)Income tax paid 26 (678,656) (567,057) (414,360) (284,780)Staff gratuity paid 14 (120,764) (120,764) (287,305) (287,305)

Net cash from/(used in) operating activities 4,840,084 (312,211) 3,461,106 3,057,375

Cash flows from investing activitiesInvestment in Transcorp Plc - - (10,000) (10,000)Purchase of property plant and equipment (13,001,030) (755,389) (1,704,380) (1,531,953)Purchase of software (722,652) (682,072) - -Additional consideration in subsidiary undertaking - (550,147) - (315,167)Payments relating to pipeline construction 7 (7,657,559) - (1,924,818) -Pipeline construction costs recovery 7 1,125,944 - 1,152,552 -Payment to acquire exploration rights in marginal fields (1,106,377) (1,106,377) (831,268) (831,268)Investment in exploration activities (1,480,211) (125,094) (112,990) (112,990)Proceeds from sale of property plant and equipment 1,711,094 1,693,083 112,087 95,647Interest received 871,336 507,155 456,453 308,661

Cash used in by investing activities (20,259,455) (1,018,841) (2,862,364) (2,397,070)

Cash flows from financing activitiesRepayment of long term loan (720,332) (135,000) (1,379,258) (270,000)Proceeds from long term loans 20,377,121 11,048,500 1,176,171 -Repayment of import finance facilities (2,134,438) (4,537,438) (18,153,061) (3,012,190)Share issue expenses (226,019) (226,019) - -Proceeds from finance lease 204,680 204,680 162,894 162,894Repayment of finance lease (506,833) (506,833) (482,899) (482,899)Proceeds from other short term loans 11,708,985 7,246,333 19,078,254 5,227,920(Decrease)/Increase in bank overdrafts (169,268) (1,198,414) 2,556,375 951,742Dividend paid (2,289,203) (2,289,203) (1,429,878) (1,429,878)Interest paid (1,273,646) (883,723) (2,141,435) (1,383,465)

Net cash from/(used in) financing activities 24,971,047 8,722,883 (612,837) (235,876)

Net change in cash and cash equivalents 9,551,676 7,391,831 (14,095) 424,429

Cash and cash equivalent at the beginning of the year 7,605,153 4,102,872 7,642,632 3,678,443

Exchange difference 52,568 - (23,384) -

Cash and cash equivalents at end of the year 17,209,397 11,494,703 7,605,153 4,102,872

Cash at year end is analysed as follows:Cash at bank and in hand 6,949,679 4,279,932 5,209,669 2,924,086Fixed deposits 10,259,718 7,214,771 2,395,484 1,178,786

17,209,397 11,494,703 7,605,153 4,102,872The accounting policies and notes on pages 58 to 86 form an integral part of these financial statements.


modified by the revaluation of certainproperty, plant and equipment.The preparation of financialstatements in conformity withgenerally accepted accountingprinciples requires the use ofestimates and assumptions thataffect the reported amounts ofassets and liabilities nd disclosureof contingent assets and liabilitiesat the date of the financialstatements and the reportedamounts of revenues and expensesduring the reporting period.Although these estimates are basedon the Directors’ best knowledgeof current events and actions, actualresults ultimately may differ fromthose estimates.

2.2 Consolidation(a) Subsidiaries

Subsidiaries include all entities(including special purpose entities)over which the Group has the powerto govern the financial andoperating policies generallyaccompanying a shareholding ofmore than one half of the votingrights. The existence and effect ofpotential voting rights that arecurrently exercisable or convertibleare considered when assessingwhether the Group controls anotherentity. Subsidiaries are fullyconsolidated from the date on whichcontrol is transferred to the Group.They are de-consolidated from thedate that control ceases.

The purchase method ofaccounting is used to account forthe acquisition of subsidiaries bythe Group. The cost of theacquisition is measured as the fairvalue of the assets given, equityinstruments issued and liabilitiesincurred or assumed and the date

1. General informationOando Plc (formerly UnipetrolNigeria Plc) was registered by aspecial resolution as a result of theacquisition of the shareholding ofEsso Africa Incorporated (principalshareholder of Esso StandardNigeria Limited) by the FederalGovernment of Nigeria. TheCompany was partially privatisedin 1991. It was however fullyprivatised in the year 2000consequent upon the sale of FederalGovernment’s 40% shareholding inthe Company. Thirty percent wassold to core investors (Ocean andOil Investments Limited) and theremaining 10% to the Nigerianpublic. In December 2002, theCompany merged with Agip NigeriaPlc following its acquisition of 60%Agip Petroli’s stake of Agip NigeriaPlc in August of the same year. TheCompany formally changed itsname from Unipetrol Nigeria Plc toOando Plc in December 2003.

Oando Plc (“the Company”) and itssubsidiaries (together “the Group”)have their primary listing on theLagos Stock Exchange. InNovember 2005, the Groupestablished a secondary listing onthe Johannesburg Stock Exchangein South Africa.

The Group has marketing anddistribution outlets in Nigeria, Ghanaand Togo and other smallermarkets along the West Africancoast. The Group also has fullcontrolling interests in two tradingcompanies Oando Trading(Bermuda) and Oando Supply andTrading (Nigeria). These entitiesmainly import and supply productsto marketing companies and largeindustrial customers. The other

investors, which previously owned49% respectively in thesesubsidiaries swapped thierownership right for stake in theGroup Company, Oando Plc witheffect from 31 August 2007 (note34).The Group also invested in a newsubsidiary, Oando EnergyServices, in January 2005 to carryout its energy services business,having 51% interest while theremaining 49% was owned byOcean and Oil Holdings (Nigeria)Limited. Also, with effect from 31August 2007, this is now a fullyowned subsidiary. Othersubsidiaries in which the Group hasequity interests include OandoProduction and DevelopmentCompany Limited 100% (2006:51%); Oando Lekki Refinery Limited(100%); Oando Port HarcourtRefinery Limited (100%) andOando Exploration and ProductionCompany 100% (2006: 51%). Non-controlling shareholders in thesesubsidiaries swapped thier interestfor increased stake in Oando Plc.All these subsidiaries are now fullyowned by the Group Company. Allsubsidiaries information areincluded in note 33.

2. Summary of significantaccounting policies

2.1 Basis of preparation

The financial statements areprepared in compliance withNigerian Statements of AccountingStandards (SAS). The financialstatements are presented in thefunctional currency, Nigeria Naira(N), rounded to the nearestthousand, and prepared under thehistorical cost convention as

NOTES TO THE FINANCIAL STATEMENTS


of exchange plus costs directlyattributable to the acquisition.Identifiable assets acquired andliabilities and contingent liabilitiesassumed in a business combinationare measured initially at their fairvalues at the acquisition dateirrespective of the extent of anyminority interest. The excess of thecost of acquisition over the fair valueof the Group’s share of theidentifiable net assets acquired isrecorded as goodwill. If the cost ofacquisition is less than the fair valueof the net assets of the subsidiaryacquired, the difference isrecognised directly in the equity ascapital reserve on consolidation.

All balances and unrealisedsurpluses and deficits ontransactions between groupcompanies have been eliminated.Where necessary, accountingpolicies for subsidiaries have beenchanged to ensure consistency withthe policies adopted by theCompany. Separate disclosure (inequity) is made of Minority Interests.

(b) AssociatesAssociates are all entities overwhich the Group has significantinfluence but not control, generallyaccompanying a shareholding ofbetween 20% and 50% of the votingrights. Investments in associatesare accounted for by the equitymethod of accounting and areinitially recognised at cost. TheGroup’s investment in associatesincludes goodwill (net of anyaccumulated impairment loss)identified on acquisition.

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 isrecognised in reserves. Thecumulative post-acquisitionmovements are adjusted againstthe carrying amount of theinvestment.When the Group’s share of lossesin an associate equals or exceedsits interest in the associate,including any other unsecuredreceivables, the Group does notrecognise further losses, unless ithas incurred obligations or madepayments on behalf of theassociate.Unrealised gains on transactionsbetween the Group and itsassociates are eliminated to theextent of the Group’s interest in theassociates. Unrealised losses arealso eliminated unless thetransaction provides evidence of animpairment of the asset transferred.

The accounting policies of theassociates are consistent with thepolicies adopted by the Group.All subsidiaries and associateshave uniform calendar year ends.

2.3 Segment reportingA business segment is a group ofassets and operations engaged inproviding products or services thatare subject to risks and returns thatare different from those of otherbusiness segments. A geographicalsegment is engaged in providingproducts or services within aparticular economic environmentthat are subject to risks and returnsthat are different from those ofsegments operating in othereconomic environments.

2.4 Foreign currency translation

(a) Transactions and balancesTransactions in foreign currenciesduring the year are converted intothe functional currency, NigerianNaira, using the exchange ratesprevailing at the dates of thetransactions. Foreign exchangegains and losses resulting from thesettlement of such transactions andfrom the translation at year-endexchange rates of monetary assetsand liabilities denominated in foreigncurrencies are recognised in theprofit and loss account.

(b) Group companiesIn accordance with the Statementof Accounting Standards (SAS 7)the financial statements of foreignentities, prior to consolidation, aretranslated into Naira using theClosing Rate Method as follows:

(a) assets and liabilities, bothmonetary and non-monetary aretranslated at the closing rate;

(b) income statement items aretranslated at the closing rate;

(c) the exchange differencesresulting from translating theopening net investment in theforeign entity at an exchange ratedifferent from that at which it waspreviously reported is taken to aCapital Reserve Account.

2.5 Property, Plant and EquipmentAll categories of property, plant andequipment are initially recorded atcost. Buildings and freehold landare subsequently shown at marketvalue, based on triennial valuationsby external independent valuers,less subsequent depreciation for


buildings. All other property, plantand equipment is stated at historicalcost less depreciation.

Subsequent costs are included inthe asset’s carrying amount orrecognised as a separate asset, asappropriate, only when it is probablethat future economic benefitsassociated with the item will flow tothe company and the cost of theitem can be measured reliably. Allother repairs and maintenance arecharged to the profit and lossaccount during the financial periodin 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 fair value reservesdirectly in equity; all otherdecreases are charged to theincome statement. An asset’scarrying amount is written downimmediately to its recoverableamount if the asset’s carryingamount is greater than its estimatedrecoverable amount.

Gains and losses on disposals aredetermined by comparing proceedswith carrying amount. These areincluded in the income statement.When revalued assets are sold, theamounts included in revaluationreserves are transferred to retainedearnings.

DepreciationDepreciation is calculated using thestraight-line method to allocate theircost or revalued amounts to theirresidual values over their estimateduseful lives, as follows:

%

Building 2 - 5

Bulk Plants, Terminal

and Equipment 5 - 121/2

Motor Vehicles 20 - 25

Other Assets and

Equipment 5 - 331/3

2.6 Intangible assets

(a) GoodwillGoodwill represents the excess ofthe cost of an acquisition over thefair value of the Group’s share ofthe net identifiable assets of theacquired subsidiary/associate atthe date of acquisition. Goodwill onacquisitions of subsidiaries isincluded in intangible assets.Goodwill on acquisitions ofassociates is included ininvestments in associates. Goodwillis tested annually for impairmentand carried at cost lessaccumulated impairment losses.Gains and losses on the disposalof an entity include the carryingamount of goodwill relating to theentity sold.Goodwill is allocated tocash-generating units for thepurpose of impairment testing. Eachof those cash-generating unitsrepresents the Group’s investmentin each country of operation byeach primary reporting segment.

Until 31 December 2005, goodwillwas amortised on a straight linebasis over a period between 5 to20 years and assessed for anindication of impairment at eachbalance sheet date. However, thegroup early adopted SAS 26 issued

by the Nigerian AccountingStandards Board and ceasedamortisation of goodwill from 1January 2006. Goodwill is nowtested for impairment annually, aswell as when there are indicationsof impairment.

(b) Computer softwareAcquired computer softwarelicences are capitalised on the basisof the costs incurred to acquire andbring to use the specific software.These costs are amortised overtheir estimated useful lives (threeto five years).Costs associated with maintainingcomputer software programmes arerecognised as an expense asincurred. Expenditure on internally-developed software is capitalised ifit meets the criteria for capitalisingdevelopment costs. Direct costsinclude the software development,employee costs and an appropriateportion of relevant overheads.Computer software developmentcosts recognised as assets areamortised over their estimateduseful lives (not exceeding fiveyears).

(c) Mineral rights acquisition costsIn accordance with SAS 14, all costsincurred on mineral rightsacquisition, exploration, appraisaland development activities arecapitalised initially on the basis ofwells, field or exploration costcenters, pending determination.Such costs are written off when it isdetermined that the well is dry.

M i n e r a lrights acquisition costs which havenot been allocated are amortisedover the remaining life of the license.Net book value of undepreciatedmineral rights acquisition costs are


reviewed annually for impairment ona well-by-well basis. Anyimpairment discovered is written off.

2.7 Long term receivable - pipelinecost recoveryLong term receivable in respect ofpipeline cost recovery is accountedfor at cost, less provision forimpairment. Provision forimpairment of the long termreceivable is established when thereis objective evidence that the Groupwill not be able to collect all amountsdue according to the original termsof the receivable.

2.8 Impairment of assetsAssets are reviewed for impairmentwhenever events or changes incircumstances indicate that thecarrying amount may not berecoverable. An impairment loss isrecognised for the amount by whichthe asset’s carrying amountexceeds its recoverable amount.The recoverable amount is thehigher of an asset’s fair value lesscosts to sell and value in use. Forthe purposes of assessingimpairment, assets are grouped atthe lowest levels for which thereare separately identifiable cashflows (cash-generating units).

2.9 InventoriesInventories are stated at lower ofcost and net realisable value. Costincludes expenditure incurred inacquiring and transporting theinventory to its present location.Cost is determined on using theweighted average method. Forfinished goods and work inprogress, raw materials, directlabour, other direct costs andrelated production overheads(based on normal operating

capacity). It excludes borrowingcosts. Net realisable value is theestimated sell ing price in theordinary course of business, lessapplicable variable sell ingexpenses.

2.10 Trade receivablesTrade receivables are stated afterprovisions have been made fordebts considered doubtful ofrecovery. A provision forimpairment of trade receivables isestablished when there is objectiveevidence that the Group will not beable to collect all amounts dueaccording to the original terms ofthe receivables. The amount of theprovision is recognised in theincome statement.

2.11 Cash and cash equivalentsCash and cash equivalents includescash in hand, deposits held at callwith banks and other short-termhighly liquid investments with originalmaturities of three months or less.

2.12 BorrowingsBorrowings are recognised initiallyat fair value, net of transaction costsincurred. Borrowings aresubsequently stated at amortisedcost; any difference between theproceeds (net of transaction costs)and the redemption value isrecognised in the income statementover the period of the borrowingsusing the effective interestmethod.Borrowings are classifiedas current liabilities unless theGroup has an unconditional right to

defer settlement of the liability for atleast 12 months after the balancesheet date.

Borrowing costsBorrowing costs are recognised asan expense in the period in whichthey are incurred, except when theyare directly attributable to theacquisition, construction orproduction of a qualifying asset.

2.13 Deferred income taxDeferred income tax is provided infull, using the liability method, ontemporary differences arisingbetween the tax bases of assetsand liabilities and their carryingamounts in the consolidatedfinancial statements. However, if thedeferred income tax arises frominitial recognition of an asset orliability in a transaction other than abusiness combination that at thetime of the transaction affectsneither accounting nor taxable profitor loss, it is not accounted for.Deferred income tax is determinedusing tax rates (and laws) that havebeen enacted or substantivelyenacted by the balance sheet dateand are expected to apply when therelated deferred income tax assetis realised or the deferred incometax liability is settled.

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


class of obligations may be small.Provisions are measured at thepresent value of management’sbest estimate of the expenditurerequired to settle the presentobligation at the balance sheet date.The discount rate used to determinethe present value reflects currentmarket assessments of the timevalue of money.

Decommissioning liabilitiesWith effect from 31 December 2006,a provision is recognised for thedecommissioning liabil it ies forunderground tanks. Based onmanagement estimation of the futurecash flows required for thedecommissioning of those assets,a provision is recognised and thecorresponding amount added to thecost of the asset under propertyplant and equipment. The presentvalues are determined using thecompany’s average cost ofborrowing. Subsequentdepreciation charges of the assetare accounted for in accordancewith the Company’s depreciationpolicy and the accretion of discount(i.e. the increase during the periodin the discounted amount ofprovision arising from the passageof time) included in finance costs.

2.16 Share capitalOrdinary shares are classified asequity. Incidental costs directlyattributable to the issue of newshares or options are shown inequity as a deduction, net of tax,from the proceeds.

2.17 Revenue recognitionRevenue comprises the fair valueof the sale of goods and services,net of value-added tax, rebates and

utilised.Deferred income tax has not beenprovided on temporary differencesarising on investments insubsidiaries and associates, as thetiming of the reversal of thetemporary difference is controlledby the Group and it is probable thatthe temporary difference will notreverse in the foreseeable future.Where this ceases to be the case,deferred tax will be provided for.

2.14 Employee benefitsAs at 31 December 2004, the Groupoperated a pension and gratuityscheme which was generallyfunded through payments totrustee-administered funds,determined by periodic actuarialcalculations. The plan (definedbenefit plan) specified an amountof pension benefit that an employeewould receive on retirement,usually dependent on one or morefactors such as age, years ofservice and compensation.

With effect from 1 January 2005,the Group adopted a new schemein view of the Pensions ReformsAct 2004 enacted by the NationalAssembly of the FederalGovernment of Nigeria. The Grouptherefore, in agreement with theEmployee Union, resolved that:

- the old scheme be discontinuedforthwith and the accrued benefitobligation as at that date bedetermined and funded over adeterminable period; and

- the new scheme, involvingpayment of defined contributions byboth employers and employees asstipulated in the Pensions ReformsAct 2004, be effective from 1January 2005.

Consequently, under the newscheme (effective 2005), the Grouppays fixed contributions into aseparate entity and has no legal orconstructive obligations to payfurther contributions if the fund doesnot hold sufficient assets to pay allemployees the benefits relating toemployee service in the currentand prior periods. This is a definedcontribution plan, in whichcontributions are recognised asemployee benefit expense whenthey are due.

2.15 ProvisionsIn accordance with SAS 23,provisions for environmentalrestoration, restructuring costs andlegal claims are recognised when:the Group has a present legal orconstructive obligation as a resultof past events; it is more likely thannot that an outflow of resources willbe required to settle the obligation;and the amount has been reliablyestimated. Restructuring provisionscomprise lease terminationpenalties and employee terminationpayments. Provisions are notrecognised for future operatinglosses.

Where there are a number of similarobligations, the likelihood that anoutflow will be required in settlementis determined by considering theclass of obligations as a whole. Aprovision is recognised even if thelikelihood of an outflow with respectto any one item included in the same


discounts and after eliminatingsales within the Group.Discounts are usually negotiatedwith commercial customers and aresometimes given on a transactionbasis or fixed per customer, subjectto subsequent reviews. The Groupalso gives rebates per l itre ofpetroleum products sold to retailerswho operate their own outlets.

Revenue is recognised as follows:

(a) Sale of productsRevenue from sale of petroleumproducts and gas is recognisedwhen a Group entity has deliveredproducts to the customer, thecustomer has accepted theproducts and collectibility of therelated receivables is reasonablyassured.

(b) Sale of servicesRevenue from sale of services,such as freight and through-putcharges, is recognised in theaccounting period in which theservices are rendered, byreference to completion of thespecific transaction assessed onthe basis of the actual serviceprovided as a proportion of the totalservices to be provided.

(c) Dividend incomeDividend income is recognisedwhen the right to receive paymentis established.

(d) Interest incomeInterest income is recognised on atime proportion basis using theeffective interest rate.

2.17 LeasesOperating leasesLeases in which a significant portionof the risks and rewards of

ownership are retained by thelessor are classified as operatingleases. Payments made underoperating leases (net of anyincentives received from the lessor)are charged to the incomestatement on a straight-line basisover the period of the lease.

Finance leasesLeases in which ownership, risksand rewards are transferred to thelessee, who is obligated to pay suchcosts as insurance, maintenanceand similar charges on the assetare classified as finance leases.Assets under finance lease arecapitalised and depreciated overtheir estimated useful lives in linewith the Group’s policy for assetsof the same class. Finance chargesare allocated over the lease term.

2.18 Dividend distributionDividend distribution to theCompany’s shareholders isrecognised as a liability in theGroup’s financial statements in theperiod in which the dividends areapproved by the Company’sshareholders.

3. Segment information

3.1 Primary reporting format -businesssegmentsThe Group is broadly organised ona worldwide basis into four mainbusiness segments within theenergy industry:

(i) Exploration and productionof oil and gas (E&P)This segment involves theexploration for and production of oiland gas through the acquisition ofrights in oil blocks on the Nigerian

continental shelf and deep offshore.

(ii) Refining and marketing ofpetroleum productsThis segment involves the refiningof crude and the marketing and saleof petroleum products. Over theyears, the Group had focusedprimarily on the marketing ofpetroleum products. Presently, theGroup is in the process of acquiringand developing a refinery business.The activit ies of the tradingcompanies are reported under thissegment.

(iii) Gas and powerThe Group through the activities ofits subsidiary, Gaslink and EastHorizon Gas company (incoporatedduring the year), is also involved inthe distribution of natural gas. TheGroup also incorporated a Powercompany to serve a niche inNigeria’s power sector, byproviding reliable power to industrialcustomers. The company ishowever yet to commenceoperations.

(iv) Energy servicesThis segment involves the provisionof services such as drilling andcompletion fluids and solid controlwaste management; oil-wellcementing and other services toupstream companies.


Exploration & Refining & Gas & EnergyProduction marketing Power Services Group

Total gross segment sales - 196,027,532 4,276,126 13,110,938 213,414,596Inter-segment sales - (4,335,658) - - (4,335,658)Sales - 191,691,874 4,276,126 13,110,938 209,078,938

Operating Profit - 4,971,113 521,493 442,920 5,935,526Finance cost - (1,753,671) (11,602) (376,162) (2,141,435)

Profit before income tax 3,794,091Income tax expense (719,023)Profit for the year 3,075,068

The segment results for the year ended 31 December 2006 are as follows:

Inter-segment revenue under refining & marketing represents sales to the energy services segment. Inter-segmenttransactions are entered into under the normal commercial terms and conditions that would also be available tounrelated third parties.

The segment assets and liabilities as at 31 December 2007 and capital expenditure for the year then ended areas follows:

The Group’s segment results at as 31 December 2007 are as follows

Exploration & Refining & Gas & Energy Production marketing Power Services Group

Total gross segment sales - 171,388,754 4,388,751 10,438,575 186,216,080Inter-segment sales - (323,997) - - (323,997)Sales - 171,064,757 4,388,751 10,438,575 185,892,083

Operating (loss)/Profit (166,448) 7,466,263 661,023 149,606 8,110,444Finance cost - (1,001,403) (14,323) (280,990) (1,296,716)

Profit before income tax 6,813,728Income tax expense (1,333,313)Profit for the year 5,480,415

N000



Assets 1,660,730 126,340,802 16,712,752 17,969,771 162,684,055

Liabilities 295,615 90,049,075 12,676,528 10,049,048 113,070,266

Capital Expenditure* 1,480,211 2,453,861 13,999 11,901,658 15,849,729

The segment assets and liabilities as at 31 December 2006 and capital expenditure for the year then endedare as follows:


Assets 234,021 80,253,445 6,502,722 5,446,331 92,436,519

Liabilities 227,921 56,844,354 3,722,809 5,256,960 66,052,044

Capital Expenditure 1,178,279 1,353,100 12,002 105,257 2,648,638

N000

Segment assets consist primarily ofproperty, plant and equipment, intangibleassets, investments, inventories,receivables and operating cash. Theyexclude deferred taxation.

Segment liabilities comprise operatingliabilities. They exclude corporate anddeferred taxation.

*Capital expenditure comprises additions toproperty, plant and equipment and intangibleassets (excluding revaluation surplus,decommisioning costs and goodwill)

3.2 Secondary reporting format -geographical segments

The Group’s four business segmentsoperate in three main geographical areas.

The home country of the Company - whichis also the main operating company - isNigeria. The areas of operation are primarilythe marketing and sale of petroleumproducts.

The Group’s sales are mainly in Nigeria andother countries within and outside the WestAfrican coast, namely, Ghana, Togo,Republic of Benin, and Sierra Leone.Segment information in respect of ‘othercountries’ is associated with the Tradingsubsidiary registered in Bermuda.



SalesWithin Nigeria - 146,140,002 4,276,126 13,110,938 163,527,066Other West African countries - 9,466,314 - - 9,466,314Other countries - 36,085,558 - - 36,085,558

- 191,691,874 4,276,126 13,110,938 209,078,938Total assetsWithin Nigeria 234,021 68,078,016 6,502,722 5,446,331 80,261,090Other West African countries - 1,817,411 - - 1,530,733Other countries - 10,358,018 - - 9,935,457

234,021 80,253,445 6,502,722 5,446,331 92,436,519Capital expenditureWithin Nigeria 1,178,279 1,340,677 12,002 105,257 2,636,215Other West African countries - 12,423 - - 12,423Other countries - - - - -

1,178,279 1,353,100 12,002 105,257 2,648,638

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

Segment information on a geographical basis for the year ended and as at 31 December 2006 are as follows:


SalesWithin Nigeria - 152,246,366 4,388,751 10,438,575 167,073,692Other West African countries - 8,038,206 - - 8,038,206Other countries - 10,780,185 - - 10,780,185

- 171,064,757 4,388,751 10,438,575 185,892,083Total assetsWithin Nigeria 1,660,730 106,320,469 16,712,752 17,969,771 142,663,722Other West African countries - 2,861,143 - - 2,861,143Other countries - 17,159,190 - - 17,159,190

1,660,730 126,340,802 16,712,752 17,969,771 162,684,055Capital expenditureWithin Nigeria 1,480,211 2,403,940 13,999 11,901,658 15,799,808Other West African countries - 49,921 - - 49,921Other countries - 40,561 - - 40,561

1,480,211 2,453,861 13,999 11,901,658 15,849,729

Segment information on a geographical basis for the year ended and as at 31 December 2007 are as follows:

N000


4 Property plant and equipment(4.1) Group Fixtures,

Land and Plant and Motor fittings, and Constructionbuildings machinery vehicles equipment in progress Total

Cost/ValuationAt 1 January 2007 9,461,358 5,568,687 968,975 1,847,377 2,349,442 20,195,839Additions 72,990 200,762 319,766 316,115 12,091,398 13,001,030Decommissioning assetaddition - 30,129 - - - 30,129Transfers/reclassification 75,842 (327,306) 100,708 319,713 (168,957)Disposals (688,583) (369,507) (280,266) (67,083) - (1,405,439)Revaluation reserve 7,971,277 257,736 - - - 8,229,013Transfer from accumulateddepreciation (revaluation)(2,272,332) (2,541,265) - - - (4,813,597)Exchange difference (11,972) (25,981) (4,019) (15,405) (1,395) (58,773)

At 31 December 2007 14,608,580 2,793,255 1,105,163 2,400,717 14,270,488 35,178,202

DepreciationAt 1 January 2007 1,798,172 2,502,161 588,669 910,834 - 5,799,836Charge for the year 543,249 291,806 175,929 469,940 - 1,480,924Disposals (46,884) (69,296) (173,792) (40,077) - (330,049)Transfer to cost(revaluation) (2,272,332) (2,541,265) - - - (4,813,597)Exchange difference (2,213) (15,951) (2,465) (8,127) - (28,756)

At 31 December 2007 19,992 167,455 588,341 1,332,570 - 2,108,358

Net book valueAt 31 December 2007 14,588,588 2,625,800 516,822 1,068,147 14,270,488 33,069,844At 31 December 2006 7,663,186 3,066,526 380,306 936,544 2,349,442 14,396,003

N000


Assets acquired under finance lease have beencapitalised and depreciated in accordance with therequirements of the Statement of AccountingStandard No. 11. Depreciation charges for the yearare included in administrative expenses.

RevaluationBuildings and freehold lands and Plant and

machinery were revalued at the balance sheet dateby Ubosi & Elleh, independent valuers. Valuationswere done on the basis of the open market value.The book values of the assets have been adjustedto the revaluations and the resultant surpluses, netof deffered income tax credited to the revaluationsurplus in shareholders equity.

Plant and Motormachinery vehicles Total

Cost 836,708 599,423 1,436,130Accumulated depreciation (215,867) (209,966) (425,834)

620,841 389,456 1,010,297

(4.2) CompanyFixtures,

Land and Plant and Motor fittings, and Constructionbuildings machinery vehicles equipment in progress Total

Cost/ValuationAt 1 January 2007 9,360,018 5,365,973 757,269 1,508,204 2,206,158 19,197,622Additions 72,990 178,137 211,315 283,289 9,659 755,389Decomm. asset addition - 30,129 - - - 30,129Reclassifications 75,842 (334,289) 93,995 317,225 (152,773) -Revaluation 7,971,277 257,736 - - - 8,229,013Disposals (688,583) (369,507) (243,388) (67,083) - (1,368,561)Transfer from acc. dep.(revaluation) (2,272,332) (2,541,265) - - - (4,813,597)

At 31 December 2007 14,519,212 2,586,914 819,191 2,041,635 2,063,044 22,029,996

DepreciationAt 1 January 2007 1,779,865 2,385,244 496,681 747,077 - 5,408,867Charge for the year 539,352 272,443 125,675 429,016 - 1,366,486Disposals (46,884) (69,296) (154,926) (40,077) - (311,183)

Transfer to cost(revaluation) (2,272,332) (2,541,265) - - - (4,813,597)

At 31 December 2007 - 47,126 467,430 1,136,016 - 1,650,573

Net book valueAt 31 December 2007 14,519,212 2,539,788 351,76 905,619 2,063,044 20,379,423At 31 December 2006 7,580,153 2,980,729 260,588 761,127 2,206,158 13,788,755

Property, plant and equipment include the following assets which were held under finance leases at year end.

N000


Additions to goodwill during the year relatesto acquisition of additional interest in certainsubsidiaries (See note 34.2). In accordancewith the group’s accounting policy, goodwillis no longer amortised but tested annuallyfor impairment.

Impairment testing of goodwillGoodwill is allocated to the Group’s cash-generating units (CGUs) identified accordingto the business segments. Impairmenttests were conducted as at the balancesheet date based on value in usecalculations. The calculations used cash

31-Dec-07 31-Dec-065. Intangible assets Group Company Group Company

Goodwill (note 5.1) 21,738,939 9,017,742 9,388,648 9,017,742Software costs (note 5.2) 725,832 682,072 13,599 -Mineral rights acquisition costs (note 5.3) 5,421,548 5,421,548 4,315,171 4,315,171Exploration costs (note 5.4) 1,827,222 238,084 347,011 112,990Pre-operational expenses - - 450,122 -

29,713,541 15,359,446 14,514,551 13,445,903

(5.1) GoodwillMovement in goodwill is analysed as follows:

CostAt 1 January 11,138,753 10,609,108 11,127,707 10,609,108Additions 12,350,291 - 11,046 -At 31 December 23,489,044 10,609,108 11,138,753 10,609,108

AmortisationAt 1 January 1,750,105 1,591,366 1,750,105 1,591,366Charge for the year - - - -At 31 December 1,750,105 1,591,366 1,750,105 1,591,366

Net book value at 31 December 21,738,939 9,017,742 9,388,648 9,017,742

N000


flow projections based on financialforecasts covering a five year-period. Thediscount rate used is the pre-tax interestrate that reflects the current marketassessment of the risks specific to thebusiness segment.

Based on the impairment test, the carryingamount of goodwill is not higher that the

recoverable value. Accordingly, noimpairment loss has been recognised.

(5.2) Software costsIn accordance with the Group’s accountingpolicy, deferred software costs areamortised over 5years. Current year chargeof N10.4million is included in otheradministrative expenses.

All mineral rights acquisition cost were made in the name of Oando plc to be subsequently transferredto Oando Exploration upon commencement of operation.

(5.4) Exploration costsExplorations costs comprise expenditures related to exploration activities, including technicalfeasibility and commercial viability studies, as well as borrowing costs relating to OPLS 278and 282. As at the balance sheet date, capitalised borrowing costs amounted to N217.2million(2006:N92.13million)

(5.3) Mineral rights acquisition costsMineral rights acquisition costs are analysed as follows:

Signature Bonus on OPL 278 3,427,903 3,427,903 3,427,903 3,427,903Signature Bonus on OPL 282 56,000 56,000 56,000 56,00025% Signature Bonus on OPL 236 1,494,506 1,494,506 388,129 388,129Capitalised borrowing costs on signature bonuses 443,139 443,139 443,139 443,139

5,421,548 5,421,548 4,315,171 4,315,171

N000

31-Dec-07 31-Dec-06


6 Long term investmentsGroup Company Group Company

Quoted sharesQuoted sharesTranscorp Plc 10,000 10,000 10,000 10,000Unquoted sharesUNITAB Nigeria Limited - 20,400 - 20,400Oando (Ghana) Limited - 146,743 - 146,743Gaslink Nigeria Limited - 6,933,124 - 1,422,663Unipetrol Sierra Leone - 4,400 - 4,400Oando Benin - 3,997 - 3,997Oando Supply and Trading Limited - 763,344 - 50,629Oando Trading Limited Bermuda - 2,894,333 - 260,755Oando Togo SA - 171,883 - 171,883Oando Gas & Power Limited - 1,000 - 1,000Oando Petroleum and DevelopmentCompany Limited - 3,315,775 - 5,100Oando Exploration and Production Limited - 2,039,152 - -East Horizon Gas Co. Ltd. - 10,000 - -Oando Energy Services Limited - 550,497 - 2,550Oando Port Harcourt Refinery Limited - 2,500 - 2,500Oando Lekki Refinery Limited - 2,500 - 2,500

10,000 16,869,648 10,000 2,105,120Provision for diminution in value - (24,800) - (24,800)

10,000 16,844,848 10,000 2,080,320

Provision for diminution in value percompany is analysed as follows:UNITAB Nigeria Limited 20,400 20,400Unipetrol Sierra Leone 4,400 4,400

24,800 24,800

7 Long term receivableLong term prepayment 321,443 318,391 326,654 326,654Pipeline Cost Recovery Account 10,817,003 - 4,285,388 -

11,138,446 318,391 4,612,042 326,654

N000

31-Dec-07 31-Dec-06


Pipeline Cost Recovery Account (PCRA) represents

accumulated costs incurred in respect of the design, funding

and construction of the pipeline infrastructure on behalf of the

Nigerian Gas Company by Gaslink Ltd and East Horizon Gas

Company, which are recoverable from gas sales over the

duration of the Natural Gas Sale and Purchase Agreement.

The PCRA includes land and building construction costs, plant

and equipment costs, work-in-progress, pipeline construction

costs, project vehicle costs, interest on borrowings, bank

charges and fees, pipeline insurance cost and other charges

relevant to the pipeline construction such as legal and

professional fees. This is stated at cost less amounts

recovered from gas purchases.

Movement in the PCRA is analysed as follows:

Group Company Group Company

At 1 January 4,285,388 3,513,122Additions during the year 7,657,559 1,924,818Capital recovered during the year (1,125,944) (1,152,552)At 31 December 10,817,003 4,285,388

8 InventoriesFinished products 19,475,839 5,096,017 10,002,487 4,871,208Products in transit 2,888,387 2,823,058 1,600,708 1,600,708

22,364,226 7,919,075 11,603,195 6,471,916Consumable materials and engineeringstocks 2,554,360 2,461,306 3,707,883 3,232,956

24,918,586 10,380,381 15,311,078 9,704,872Provision for slow moving and obsoletestocks (189,055) (189,055) (151,900) (151,900)

24,729,531 10,191,326 15,159,178 9,552,972

9 Debtors and prepayments

Trade debtors 29,934,020 6,235,992 19,970,271 4,223,724Bridging claims receivable 7,656,143 7,656,143 6,865,866 6,710,151Petroleum Support Fund - - 7,495,457 7,495,457Deposit for import 246,082 246,082 185,315 185,315Other debtors 7,146,973 2,587,339 2,158,163 1,485,708Amounts due from related companies 49,823 13,038,718 23,093 1,054,953Prepayments 3,099,947 1,509,126 484,382 404,538

48,132,988 31,273,400 37,182,547 21,559,846

Provision for doubtful bridging claimsreceivable (261,839) (261,839) (141,089) (141,089)Provision for doubtful trade and otherreceivables (1,057,853) (717,310) (901,866) (754,586)

46,813,296 30,294,251 36,139,592 20,664,171

N000

31-Dec-07 31-Dec-06


Import Finance Facilities relate to special short termfacilities obtained from banks, to finance letters of creditopened in respect of the importation of refined petroleumproducts. Other short term loans relate to variouscommercial papers and bankers acceptance obtainedfrom banks to finance working capital needs.The syndicated long term loan includes cumulative drawdown on a N1.956billion facility obtained by GaslinkNigeria Limited from a syndicate of six commercial bankson 15 September 2003, to finance the execution of theGreater Lagos Phase II gas distribution project. The loan

is repayable over 6 years inclusive of 3 years moratoriumperiod on principal repayment at a fixed interest rate of22% p.a. The moratorium expired in September 2005and first principal repayment was made in December2005. The loan is secured by the domiciliation in adedicated account of the proceeds of the sale of gasand a corporate guarantee of Oando Plc for the sum ofN1.956billion. Interest paid on this loan is recoveredthrough the pipeline cost recovery account.A new (five-year) gas project facility of N2.8billion wassecured in 2006 to finance the execution of greater Lagos

N000

Group Company Group Company10 Creditors and accruals

Trade creditors 26,892,424 10,547,277 13,622,469 8,154,398Other creditors 8,806,657 175,532 4,338,174 2,593,697Accruals 5,365,335 3,654,000 5,567,506 4,440,470Petroleum Support Fund 165,583 165,583 - -Amounts due to other related companies 49,367 6,234,391 - -Deferred income 130,153 130,153 72,164 72,164

41,409,519 20,906,936 23,600,313 15,260,729

11 Borrowings

CurrentBank overdrafts 9,504,583 6,728,717 9,673,851 7,927,131Import finance facilities 2,430,691 27,691 4,565,129 4,565,129Finance lease obligation 283,255 283,255 401,791 401,791Other short term loans 36,255,270 17,869,725 24,546,285 10,623,392Current portion of long term loans 4,160,883 3,314,550 866,667 135,000

52,634,682 28,223,938 40,053,723 23,652,443

Non-currentSyndicated/other gas project loans 9,804,794 - 1,176,171 -Finance lease obligation 191,608 191,608 375,225 375,225Other long term loan 7,733,950 7,733,950 - -

17,730,352 7,925,558 1,551,396 375,225

31-Dec-07 31-Dec-06


phase III gas distribution project of which total drawdown as at 31 December, 2007 was N2.027billion.Also during the year, Gaslink secured a twelve monthloan of N2.5billion from a commercial bank to refinanceequity contribution for gas project network infrastructure.The facility was obtained at a floating rate of 16%Interests paid on these gas project loans are receivedas part of the pipeline construction costs from NigerianGas Company.

Group Company Group Company12. Other non-current liabilities

Customers’ security deposits 726,853 673,734 706,448 655,957

Customer security deposits represent amounts deposited by dealers in respect of product supply,use of the Company’s equipment and retailing outlets. The deposits do not attract any interest andare refundable to the dealer less any amounts owed to the Company at the expiration of thedealership agreement.

13. Deferred taxationBalance, beginning of year 687,224 662,199 638,790 620,446Provision during the year (Note 26) 194,394 187,145 52,582 41,752Exchange difference 7,787 - (4,148) -

Balance, end of year 889,405 849,344 687,224 662,199

14. Retirement benefit obligationBalance, beginning of year 138,254 138,254 279,782 279,782Provision during the year 124,181 124,181 145,777 145,777Payments during the year (120,764) (120,764) (287,305) (287,305)

Balance, end of year 141,671 141,671 138,254 138,254

Reconciliation of minimum lease payments to present value of lease obligation

Minimum lease Future Present valuepayment finance of obligation

charges

Period not later than one year 328,860 45,605 283,255Period later than one year and not later than five years 220,395 28,787 191,608Period later than five years - - -

549,255 74,392 474,863

Other Long term loan relates to a three year loanobtained from a consortium of banks during the year tofinance the acquisition of upstream assets. The loanwas secured between August and September 2007 andhas a six months moratorium with an interest rate oflibor + 2.75%None of the borrowings is collateralised or securedagainst any of the Group’s assets.

N000

31-Dec-07 31-Dec-06


Following the enactment of a new Pensions Act in Nigeria, effective 1 January 2005, the Group inagreement with the employee union opted to discontinue the benefit plan effective 1 January 2005. Anindependent valuation conducted by HR Nigeria Limited put the total liability at N1.33billion as at 31December 2004. As at the balancesheet date, the liability date has been fully reconginised.

15. Provision for other liabilities & chargesBalance, beginning of year 372,079 372,079 - -Additions/Valuation change 30,129 30,129 372,079 372,079Accretion discount 23,071 23,071 - -

425,279 425,279 372,079 372,079

In accordance with the group accounting policy a provision is recognised in respect of undergroundtanks decommissioning obligation, at the present value of management’s best estimate of theexpenditure required to settle the present obligation at the balance sheet date. A correspondingamount is included under plant and machinery, and depreciated in accordance with the group policy.

16. Share capital

Authorised:1,000,000,000 Ordinary shares of 50k each 500,000 500,000 400,000 400,000

At the last AGM of 28 June, 2007, the shareholders approved an increase in the authorised sharecapital of the company through the creation of additional 200million units of shares valued at 50k pershare.

Issued and fully paid: At start of the year572,300,897 ordinary shares of 50k each 286,150 286,150 286,150 286,150

Additions during the year181,769,626 ordinary shares of 50k each 90,885 90,885 - -

At end of the year754,070,523 Ordinary shares of 50k each 377,035 377,035 286,150 286,150

17. Share premium accountAt start of the year 15,980,263 15,980,263 15,980,263 15,980,263Issue of shares 14,123,497 14,123,497 - -Share issue cost (226,019) (226,019) - -

At end of the year 29,877,741 29,877,741 15,980,263 15,980,263Increase in issued share capital and share premium arose from a share swap transaction with Oceanand Oil Investments, in which the latter’s interests in certain jointly owned subsidiaries were transferedto the group in exchange for new shares in Oando Plc. See notes 34

N000

Group Company Group Company31-Dec-07 31-Dec-06


18. Revaluation reserveAt start of the year 2,423,923 2,423,923 2,423,923 2,423,923Revaluation surplus during the year: - Land & building 7,971,277 7,971,277 - - - Plant & Machinery 257,736 257,736 - -

At end of the year 10,652,936 10,652,936 2,423,923 2,423,923

Revaluation reserve is not available for redistribution to shareholder until realised through sale ofrelated assets

19. Retained earnings

Balance at 1 January 3,853,399 3,423,584 2,607,931 2,500,659Exchange difference 1,935 - 3,844 -Prior year adjustment - - (53,104) -Group dividend (2,289,203) (2,289,203) (1,430,752) (1,430,752)Profit for the year 4,755,009 2,671,482 2,725,481 2,353,677

Balance at 31 December 6,321,140 3,805,863 3,853,399 3,423,584

Prior year adjustment relates to non-pioneer income taxes in respect of Gaslink.

20. Minority interest

Movement in minority interests during the year is as follows:

At start of the year 1,852,535 1,427,524Additions - increase in capital - 75,424Disposal of interests (1,689,146) -Profit for the year 24,036 349,587

At end of the year 187,425 1,852,535

21 Turnover

Analysis by geographical regionWithin Nigeria 167,073,692 131,007,169 163,527,066 132,397,373Other West African Countries 8,038,206 - 9,466,314 -Others 10,780,185 - 36,085,558 -

185,892,083 131,007,169 209,078,938 132,397,373

N000

31-Dec-07 31-Dec-06


Analysis by product/serviceFuels 157,394,853 124,331,325 188,297,509 129,252,387

Lubricants and other products 8,623,488 4,323,615 11,418,971 2,917,608Gas 4,765,485 276,950 4,714,765 226,677Non Fuel Revenue 11,056,780 618,205 700 700Others 4,051,477 1,457,074 4,646,993 1

185,892,083 131,007,169 209,078,938 132,397,37322 Administrative expenses

Repairs and maintenance 456,365 413,194 254,607 213,224Insurance 128,011 114,900 185,698 181,283Rent and other hiring costs 515,738 392,409 230,842 200,477Staff costs 2,451,957 1,855,901 2,133,775 1,737,424Depreciation 1,480,925 1,366,486 1,286,033 1,182,754Other administrative expenses 5,925,320 3,137,293 3,019,088 1,585,853

10,958,316 7,280,183 7,110,043 5,101,015

23 Other operating incomeRent 29,780 29,048 16,588 15,163Dividend income - - - 88,094Profit on sale of property plant and equipment 635,704 635,704 622,080 622,080Foreign exchange gain 1,384,649 866,222 92,349 11,872Demurrage Income - - 163,948 -Other income 420,869 176,959 410,993 234,059

2,471,002 1,707,933 1,305,958 971,268 24 Interest payable and similar charges

Interest on long term loan 354,986 354,986 961,968 -Interest on short term loans and overdrafts 918,660 528,737 1,179,468 1,383,465Total Interest on bank loans and overdrafts 1,273,646 883,723 2,141,435 1,383,465

Accretion charge 23,070 23,070 - -

Total interest payable and similar charges 1,296,716 906,793 2,141,435 1,383,465

N000



Other interests attributable to borrowings are distributed as follows:

(a) Included in cost of sales 2,374,585 - 1,475,544 -

(b) Capitalised during the year:

Included in property, plant and equipment 392,637 - - -Included in capitalised signature bonus - - 443,139 443,139Included in exploration costs 125,094 125,094 92,130 92,130Included in recoverable pipeline construction costs 406,399 - 356,399 -

924,130 125,094 535,269 535,269

25 Profit before taxationProfit before taxation is stated after charging: - Depreciation 1,480,925 1,366,486 1,286,033 1,182,754 - Auditors’ remuneration 55,200 18,000 35,736 18,500and after crediting:- Foreign exchange gain 1,384,649 866,222 92,349 11,872- Profit on sale of property plant and equipment 635,704 635,704 622,080 622,080

26 Taxation(a) Per profit & loss accountIncome tax 1,053,014 786,914 783,476 602,492Education tax 85,905 71,655 75,150 64,440

1,138,919 858,569 858,626 666,932Net overprovision for taxes - - (192,185) (206,770)Deferred tax (Note 13) 194,394 187,145 52,582 41,752

1,333,313 1,045,714 719,023 501,914(b) Per balance sheetBalance, 1 January 928,902 728,931 632,678 553,550Exchange difference - - (8,961) -Net overprovision for taxes (81,058) - (139,081) (206,770)Payments during the year (678,656) (567,057) (414,360) (284,780)Charge for the year 1,138,919 858,569 858,626 666,932

Balance, 31 December 1,308,107 1,020,443 928,902 728,931The Company applied for a roll over relief in respect of capital gains on exceptional disposal of land .Accordingly, capital gains tax of N140million has not been provided for in these financial statements.

N000



27 Earnings per share

BasicBasic earnings per share is calculated by dividing the profit attributable to the equity holders of theCompany by the weighted average number of shares in issue during the year.

DilutedDiluted earnings per share is calculated adjusting the weighted average number of ordinary sharesoutstanding to assume conversion of all dilutive potential ordinary shares.


Profit attributable to equity holders ofthe Company 4,755,009 2,671,482 2,725,481 2,353,677Weighted average number of shares inissue (thousands) 632,891 632,891 572,301 572,301

Basic earnings per share (kobo) 751 422 476 411

Diluted earnings per share (kobo) 751 422 476 411

28 Net cash flow from operating activitiesbefore changes in working capitalProfit on ordinary activities after taxation 5,480,415 2,671,482 3,075,068 2,353,677Adjustments for non-cash items and interests:- Taxation for the year 1,333,313 1,045,714 719,023 501,914- Overprovision for income taxes 81,058 - - -- Pre-acquisition profit (701,370) - - -- Depreciation 1,480,925 1,366,486 1,286,033 1,182,754- Profit on sale of property plant andequipment (635,704) (635,704) (622,080) (622,080)- Amortisation of software costs 10,419 - 7,410 -- Increase in provision for doubtful debts 276,737 83,474 18,393 22,973

N000

31-Dec-07 31-Dec-06


- Increase in provision for slow moving and obsolete stocks 37,155 37,155 10,336 10,336- Provision for staff gratuity 124,181 124,181 145,777 145,777- Provision for doubtful loan receivable - - 25,134 25,134- Interest expense 1,273,646 883,723 2,141,435 1,383,465- Accretion expense 23,070 23,070 - -- Interest received (871,336) (507,155) (456,453) (308,661)- Net adjustment to minority interest - - 75,424 -

7,912,509 5,092,426 6,425,500 4,695,28929 Net increase in working capital

- Increase in inventories (9,607,508) (675,509) (5,164,868) (2,644,160)- Increase in debtors and prepayments (10,950,441) (9,713,554) (2,116,883) (3,452,014)- Increase in creditors and accruals 17,809,206 5,646,207 5,576,714 5,351,564

(2,748,743) (4,742,856) (1,705,037) (744,610)

30 Directors and employees

(a) Directors’ remuneration: 31-Dec-07 31-Dec-06The remuneration paid to the directorsof the Company was as follows:

Fees paid to non executive directors:Chairman 600 600Others 4,125 4,950

4,725 5,550Executive directors’ salaries 123,785 94,619

128,510 100,169Other emoluments 67,669 13,185

196,179 113,354

The directors received emoluments (excluding pension contributions) in the following ranges:

Number NumberN1,000,000 - N1,750,000 - 9Above N5,000,000 12 2

Included in the above analysis is the highest paid director at N65.80million (2006: N45.38million).

N000



Group Company Group Company(b) Staff costsi. Employee costs during the yearamounted to:

Wages and salaries 1,660,747 1,116,386 1,689,460 1,327,532Employee benefits provision 133,863 126,459 145,777 145,777Welfare and training 499,481 481,979 185,595 157,139Other staff costs 157,866 131,077 112,943 106,976

2,451,957 1,855,901 2,133,775 1,737,424

ii. The average number of full-time persons employedby the Company during the year was as follows:

Number Number Number Number

Management staff 102 71 97 73Senior staff 329 254 353 304Junior staff 61 53 79 55

492 378 529 432

iii. Higher-paid employees of the Company, other than directors, whose duties were wholly ormainly discharged in Nigeria, received remuneration (excluding pension contributions) in thefollowing ranges:

Number Number Number Number

N50,001 - N500,000 - - 9 -N500,001 - N1,000,000 - - 34 22N1,000,001 - N1,500,000 26 16 37 36N1,500,001 - N2,000,000 147 132 209 195N2,000,001 - N2,500,000 116 99 100 72N2,500,001 - N3,000,000 53 32 28 21N3,000,001 - N3,500,000 25 22 19 18N3,500,001 - N4,000,000 18 5 6 6N4,000,001 - N4,500,000 24 15 25 16N4,500,001 - N5,000,000 13 12 13 8Above N5,000,000 70 45 49 38

N000

31-Dec-07 31-Dec-06



31. Capital commitment

Outstanding capital expenditure contractedbut not provided for in the accounts 106,643 106,643 10,900 10,900Capital expenditure approved by theBoard but not yet committed 12,803,363 12,803,363 900,000 900,000

12,910,006 12,910,006 910,900 910,900

32. Contingent liabilities

(32.1) Pending litigationThere are a number of legal suits outstanding against the Company for stated amounts of N355m(2006:N453.5million). On the advice of Counsel, the Board of Directors are of the opinion that nomaterial losses are expected to arise. Therefore, no provision has been made in the financial statements.

(32.2) Bonds and guaranteesGuarantees, performance bonds, and advance payment guarantees issued in favour of the Companyamounted to N2.09billion. On the other hand, the Company issued Guarantees in Favour of OandoGhana for $4million. The Company also guaranteed a loan of N1.956 billion from a commercial bank onbehalf of a subsidiary, Gaslink Nigeria Limited.

(32.3) Other claimsIn February 2008, the Federal High Court ruled that Oando Plc should pay NGN172.42million less 5% ofthe amount as additional income tax liability including Education tax of N23.28million . The additionalassessments relate to the financial year 2003. The company has instructed its lawyers to lodge an appealat the Federal Court of Appeal. In the opinion of the directors, the claim by the Federal Inland RevenueServices (FIRS) is unlikely to succeed at the higher courts and therefore no provision has been madein the financial statements.

33. Related party transactions

Significant related party transactions were in respect of intragroup purchase and sale of refined petroleumproducts on terms similar to such transactions entered into with third parties. Amounts in these regardhave been eliminated on consolidation. However, transactions relating to theCompany’s own financialstatements are as follows:

31-Dec-07 31-Dec-06Purchase of refined petroleum products from:Oando Supply and Trading Limited 46,178,145 23,002,695Oando Trading Limited 15,733,275 27,996,839

61,911,421 50,999,534

N00031-Dec-07 31-Dec-06


Amounts outstanding as of balance sheet date(included in trade creditors):Oando Supply and Trading Limited 5,369,227 2,618,708Oando Trading Limited 1,139,258 66,849

6,508,485 2,685,557

During the year, transactions were conducted between Oando Plc and other affiliate companies. These include:(a). Ocean and Oil Investment received N559.7million in respect of dividend declared at the end of

June 2007 Annual General Meeting (2006:329.8m)(b). Ocean and Oil Holding Nigeria Limited is entitled to N413 million (2006:N295million) for technical

and management services rendered(c). Avante Capital Partners, a subsidiary of Ocean and Oil Holdings received N98.5million for corporate advisory

services performed during the year

The amount payable relating to these affiliates at the balance sheet date amounted to:

31-Dec-07 31-Dec-06

Ocean and Oil Holdings Nigeria Limited 67,236 46,547

No transaction in respect of sale of goods or services was entered into with any key management personnel orshareholder.

Core investorOando Plc is an associate of Ocean and Oil Investments (Nigeria) Limited, a special purpose entity set up for thepurpose of acquiring significant interest in Unipetrol. As at the balance sheet date, Ocean and Oil Investmentsowned 34% of Oando Plc’s shares. Ocean and Oil Investments is a subsidiary of Ocean and Oil Holdings(Nigeria) Limited, which had 96% of its shares as at 31 December 2006. The ultimate holding company is Oceanand Oil Holdings (BVI) Limited, having 100% interest in Ocean and Oil Holdings (Nigeria) Limited.

Subsidiary information

Entity name Country of Nature of Issued share %incorporation business capital interest

held

Gaslink Nigeria Limited Nigeria Gas distribution 1,717,698 96.98%Eastern Horizon Gas Co. Ltd Nigeria Gas distribution 10,000 100.00%Gaslink Benin Limited Nigeria Gas distribution 2,618 100.00%Oando Ghana Limited Ghana Marketing and sale of

petroleum products 126,575 82.9%Oando Trading Limited Bermuda Supply of crude oil and

refined petroleum products 1,518 100%Oando Supply and Trading Limited Nigeria Supply of crude oil and refined

petroleum products 5,000 100%UNITAB Nigeria Limited Nigeria Marketing of automobile parts 40,000 51%

N00031-Dec-07 31-Dec-06


Oando Sierra Leone Limited Sierra Leone Marketing and sale ofpetroleum products 10,079 80%

Oando Benin Limited Benin Marketing and sale ofpetroleum products 14,832 100%

TRANSGAS Nigeria Gas distribution(100% owned by Gaslink) 8,077 97%

Oando Energy Services Limited Nigeria Provision of drilling and otherservices to upstream companies 5,000 100%

Oando Lekki Refinery Limited Nigeria Petroleum refining 2,500 100%Oando Exploration & Production Limited. Nigeria Exploration and production 5,000 100%Oando Port Harcourt Refinery Limited Nigeria Petroleum refining 2,500 100%Oando Production and DevelopmentCompany Limited Nigeria Exploration and production 10,000 95%Oando Togo SA Togo Marketing and sale of

petroleum products 186,288 75.3%

34. Business Combination

The Group (Oando Plc) acquired additional interests in certain subsidiaries during the year with effectfrom 31 August 2007. This arose from a share swap transaction between Ocean and Oil InvestmentsLimited (OOI), the minority interest holder in the subsidiaries as well as the major investor in the group.The decision was necessitated by the need to improve corporate governance, ensure transparency andeliminate potential conflict of interest between OOI and the Group and to further improve earning attributableto the Group’s shareholders. In consideration for the shares acquired, Oando Plc issued new shares toOOI (see notes 16 and 17 for increase in share capital and share premium). Share issue related costswere charged to share premium account (note 17). Details of the step acquisition in the subsidiaries areas follows:

Percentage of shares acquiredOando Supply and Trading 49%Oando Trading (Bermuda) Limited 49%Gaslink Nigeria Limited 45%Oando Energy Service Limited 49%Oando Production and Development Company (OPDC) 39%Oando Exploration and Production Company (OEPL) 49%

Oando Supply and Trading is involved in the delivery of petroleum production products in the NigerianMarket as well as providing freight services. The Group acquired 2,450,000 units of Minority holders inthe company valued at N3.72 in exchange for 9,102,864 units of Oando Plc valued at N73. The stepacquisition increased the Group’s holding in the company to 100%.

Oando Trading is involved in the trading of refined and unrefined petroleum products to refiners, marketingand trading companies in the USA, Europe and Far East. The company also maintains presence in theworld’s products freight market in term of vessels chartered for delivery of oil products to various customersworldwide. The Group acquired 5,880 units of Minority holders in the company valued at US$5,727 eachin exchange for 33,671,408 units of Oando Plc valued at N73. The step acquisition increased the Group’sholding in the company to 100%.


Gaslink is involved in the provision of cleaner, safer and cheaper alternative sources of energy throughan efficient pipeline distribution to industrial consumers in Ikeja and the Greater Lagos Area. The companyhas a combined distribution network of 70million standard cubic meter of gas per month. The Groupacquired additional shares of the company thereby increasing its shares in Gaslink to about 98% inexchange for 63,591,633 units of shares to twelve identified shareholders for which Ocean and Oilobtained 59,432,316 units of Oando shares valued at N73.

Oando Energy Services Limited is involved in the delivery Total fluid management (Drilling & CompletionFluids), Drill bits, Down-hole tools, Coring services, Oil-well cementing and Upstream fuels. The companyalso engages in the provision of rigs services. The Group acquired 2,450,000 units of Minority holders inthe Company valued at N2.86 in exchange for 7,007,000 units of Oando Plc valued at N73. The stepacquisition increased the Group’s holding in the company to 100%.

Oando Production and Development Company (OPDC) is involved in the exploration for opportunitiesin the upstream sector, particularly in the Niger delta region of Nigeria. The Group acquired 4,410,000units of Minority holders in the Company valued at N9.60 in exchange for 42,336,000 units of Oando Plcvalued at N73. The step acquisition increased the Group’s holding in the company to 95%.

Oando Exploration and Production Company (OEPL) is involved in the building of a portfolio of oil andgas assets. It was set to leverage on Oando’s brand and reputation to increase Oando’s participation inthe discovery, exploration and production of Oil and Gas. Oando acquired 2,450,000 units of Minorityholders in the Company valued at N10.63 in exchange for 26,043,500 units of Oando Plc valued at N73.The step acquisition increased the Group’s holding in the company to 100%.

The amounts recognised at the acquisition date for the acquiree’s assets and liabilities and profit or losssince the acquisition date are analysed below:

Value at Acquisition Carrying Amount Post(N’000) (N’000) Acquisition

Profit/(loss)

Total Total Total Total (N’000)Assets Liabilities Assets Liabilities

Oando Supply & Trading 22,861 22,794 22,861 22,794 47,113Oando Trading 21,638 20,229 21,638 20,229 488,008Gaslink 7,504 4,018 7,504 4,018 (15,409)Oando Energy Services 12,935 12,821 12,935 12,821 (53,826)OPDC 181,590 171,590 181,590 171,590 -OEPL 105,158 193,700 105,158 193,700 -

There were contingent liabilities outstanding against the acquirees at the acquisition date


The revenues and profits of the aquirees for the year are analysed as follows:

Revenue Profit/(loss)

Oando Supply & Trading 72,325,713 145,626Oando Trading 95,440,963 2,536,533Gaslink 4,388,751 495,326Oando Energy Services 10,438,575 (138,633)OPDC - -OEPL - -

The acquirees’ profits prior to acquisition date are analysed as follows:

Pre-Acquisition Profit

Oando Supply & Trading 12,920Oando Trading 517,303Gaslink 159,706Oando Energy Services 11,440OPDC -OEPL -

701,370

35. Technical and management service agreementThe Company is a party to subsisting agreements in respect of technical know-how, marketing, managementexpertise, strategic planning and consultancy services assistance. These agreements are between the Companyand 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% and4% where net profit before tax is over N2 billion). A total provision of N413 million (2006: N295million) has beenmade in respect of the Technical and Management Service fees for the year and included in administrativeexpenses disclosed in the financial statements.

36. Post balance sheet eventAs disclosed in note 33.3, the Federal High Court in February 2008 ruled against Oando Plc on matter in respectof additional tax assessments relating to 2003, with a gross exposure of N195.7million. The Company hasinstructed that the matter be challenged at a higher court as the directors are of the opinion that the claim isunlikely to succeed.

In February 2006, the Group acquired Shell Nigeria’s 49.8 per cent stake in two oil blocks for $625.7 million. Oandoemerged the preferred bidder of the two deepwater blocks offshore Nigeria Oil Mining Lease (OML) in aninternational competitive bidding process. The Group made an immediate payment of 10 per cent of the sum whilethe balance will be paid in instalments upon finalisation of the transaction.

37. Reclassification of prior year balancesCertain prior year balances have been reclassified to confirm with current year presentation format.

N000


31-Dec-07 31-Dec-06

Group Company Group CompanyN’000 % N’000 % N’000 % N’000 %

Turnover 185,892,083 131,007,169 209,078,938 132,397,373Other income 2,471,002 1,707,933 1,305,958 971,268Interest received 871,336 507,155 456,453 308,661

189,234,421 133,222,257 210,841,349 133,677,302

Bought-in materials andservices - Local purchases (132,911,056) (109,543,598) (147,332,739) (109,742,603) - Foreign purchases (45,004,479) (18,526,835) (54,989,522) (17,491,620)

Value added 11,318,886 100 5,151,824 100 8,519,088 100 6,443,079 100

Distributed as follows:

Employees:- To pay salaries, wages andother staff costs 2,451,957 22 1,855,901 36 2,133,775 25 1,737,424 27

Government:- To pay tax 1,138,919 10 858,569 17 858,626 10 666,932 10

Providers of capital:- To pay dividend - - - - 1,430,752 17 1,430,752 22- To pay interest onborrowings 1,273,646 11 883,723 17 2,141,435 25 1,383,465 21

Minority interests 24,036 - - - 349,587 4 - -

Maintenance and expansionof assets:- Deferred tax 194,394 2 187,145 4 52,582 1 41,752 1- Depreciation 1,480,925 13 1,366,486 27 1,286,033 15 1,182,754 18- Retained in the business 4,755,009 42 - 0 266,297 3 - -

Value distributed 11,318,886 100 5,151,824 100 8,519,088 100 6,443,079 100

Statement Of Value AddedFor the year ended 31 December 2007


Company 2007 2006 2005 2004 2003

Balance SheetProperty plant and equipment 20,379,423 13,788,755 13,149,388 11,415,060 11,474,700Intangible assets 15,359,446 13,445,903 12,501,645 9,548,197 10,078,653Investment in associates - - - 37,709 -Long term Invesatments 16,844,848 2,080,320 1,755,153 1,265,864 1,042,825Long term receivable 318,391 326,654 60,346 385,093 297,772Net current liabilities 1,827,053 (5,323,998) (3,925,513) (534,064) (11,013,652)Borrowings and other non-currentliabilities (9,024,571) (1,403,261) (1,449,796) (1,374,251) (5,066,457)Deferred taxation (849,344) (662,199) (620,446) (458,920) (443,556)Retirement benefit obligation (141,671) (138,254) (279,782) (460,830) (388,563)

44,713,575 22,113,920 21,190,995 19,823,858 5,981,722

Share capital 377,035 286,150 286,150 286,150 163,079Share premium 29,877,741 15,980,263 15,980,263 15,980,263 1,269,427Revaluation reserve 10,652,936 2,423,923 2,423,923 2,423,923 3,121,124Reserve for bonus issue - - - 40,770Retained earnings 3,805,863 3,423,584 2,500,659 1,133,522 1,387,322

44,713,575 22,113,920 21,190,995 19,823,858 5,981,722

Profit and loss accountTurnover 131,007,169 132,397,373 121,591,635 85,852,713 63,447,251

Profit/(loss) before taxationand exceptional item 3,717,196 2,855,591 2,102,921 (386,711) 37,345Exceptional item - - - 1,375,207 982,062Taxation (1,045,714) (501,914) (727,117) (97,694) (221,697)

Profit after taxation 2,671,482 2,353,677 1,375,804 890,802 797,710

Dividend* 2,289,203 1,430,752 1,144,602 652,319.00 -

Per share dataWeighted average number of shares 632,891 572,301 572,301 367,183 326,159Potential ordinary shares - - - - -Basic earnings per share (kobo) 422 411 240 243 245Diluted earnings per share 422 411 240 243 245Dividends per share (kobo) 400 250 312 200Net assets per share (kobo) 7,065 3,864 3,703 5,399 1,834Dividend cover - 1.17times 1.65 times 1.20 times 1.37 times -

Note: Earnings, dividend and net assets per share are based on the weighted average number of shares inissue for the year. After tax profits have been used as numerators for computing earnings per share.

*Dividends are disclosed in the years declared at the Annual General Meeting.

Five-Year Financial Summary (2003 - 2007) N000


OANDO NIGERIA PLC PRE - MERGERSTATEMENT OF UNCLAIMED /RETURN DIVIDEND WARRANTS

PAYMENT NO BAL AS AT 31/12/2007 PAYABLE DATE5 1,057,430.80 AUGUST 9, 19966 929,830.26 DECEMBER 4, 19977 136,632.80 DECEMBER 4, 19978 5,175,459.11 DECEMBER 16, 19989 12,552,430.65 MARCH 6, 200010 16,761,328.90 SEPTEMBER 14, 200011 31,622,489.65 JUNE 21, 200112 31,526,143.64 JULY 31, 2002

TOTAL N99,761,745.81

EX-AGIP PLC PRE-MERGER ACCOUNT

PAYMENT NO. BAL. AS AT 31/12/2007 PAYABLE DATE19 2,940,117.79 APRIL 30, 199720 2,495,262.84 MAY 5, 199821 4,564,639.86 APRIL 26, 199922 11,044,122.64 MAY 3, 200023 8,874,616.95 OCTOBER 30, 200024 32,475,192.83 APRIL 25, 200125 10,976,314.40 SEPTEMBER 25, 200126 30,178,020.27 APRIL 30, 2002

TOTAL N103,548,287.58

OANDO NIGERIA PLC POST - MERGERSTATEMENT OF UNCLAIMED /RETURN DIVIDEND WARRANTS

PAYMENT NO BAL AS AT 31/12/2007 PAYABLE DATE13 66,680,717.40 JUNE 25, 200414 94,934,939.60 JUNE 28, 200515 186,960,048.25 JUNE 05, 200616 830,117,989.60 JUNE 29, 2007

TOTAL N1,178,693,694.85

Statement of Unclaimed/Returned Dividend Warrants


Notes


The Annual General Meeting of Oando Plc (the “Company”)will be held at the The Law School Auditorium,AdeolaHopewell Street, Victoria Island, Lagos, Nigeria onTuesday, the 27th day of May, 2008 at 10.00 a.m. (theMeeting).

I/WE*__________________________________________of_____________________________________________of________________________________ being a member/members of Oando Plc and holdersof_________________________ shares, hereby appoint**_______________________________________________or failing him/her, the Chairman of the Meeting as my/ourproxy to act and vote for me/us on my/our behalf at the Meetingof the Company to be held on Tuesday the 27th day of May,

PROXY FORM

2008, which will be held for the purposes of considering and, ifdeemed fit, passing with or without modification, the resolutionsto be proposed at the Meeting and at each adjournment ofsame and to vote for or against the resolutions in accordancewith the following instructions:

NOTEA member who is unable to attend the Annual General Meetingis entitled by law to vote by proxy. The proxy form has beenprepared to enable you exercise your right in case you cannotpersonally attend the Meeting.

The proxy form should not be completed if you will beattending the Meeting. If you are unable to attend the Meeting,read the following instructions carefully:

Proposed resolutions For Against

To declare the dividend recommended by the directors of the Company

To authorise the directors to fix the remuneration of the Auditors

To elect Mr. Navaid Burney

To re-elect Mr. Omamofe Boyo

To re-elect Major General Magoro (Rtd) PSC, OFR, Galadinma Zuru

To re-elect Mr. Ademola Akinrele SAN

To re-elect HRM Oba Micheal A. Gbadebo CFR, the Alake of Egbaland

“Resolved that the fees payable to the non-executive directors of the Companybe increased from N600,000.00 per annum for the Chairman and N550,000.00each per annum for all other non-executive directors to N850,000 per annum for theChairman and N750,000 for all other non- executive directors with effect from1 January 2008, payable quarterly in arrears”.

“Resolved that article 133 of the Articles of Association be deleted and the following Articlebe adopted as the new Article 133:

(133) Any dividend, interest or other moneys payable in cash in respect ofshares may be paid:

a) by cheque or warrant sent through the post directed to the registeredaddress of the holder or, in the case of joint holders, to the registeredaddress of that one of the joint holders which is first named on theRegister of Members or to such person and such address as the holderor joint holders may in writing direct. Every such cheque or w a r r a n tshall be made payable to the order of the person to whom it is sent. Any

Dividends to be

paid by method

directors consider

appropriate.


one of two or more joint holders may give effectual receipts for any dividends,bonuses or other moneys payable in respect of the share held by them asjoint holders;

(b) by any other method (including direct debit or bank transfer or other electronicmeans of funds transfer) which the directors consider appropriate.

“Resolved on the recommendation of the Directors and in accordance with Article 141 of the Articlesof Association of the Company, a sum of N75,407,052.50 out of the balance standing to the credit ofGeneral Reserve as at the year ended 31 December 2007 be capitalized and that the Directors beand are hereby authorized to appropriate the said capitalized sum of N75,407,052.50 to the membersholding shares of the company at the close of business on Friday, 9 May, 2008 in the proportion of 1ordinary share of 50 Kobo for every 5 Ordinary Shares of 50k each held by them on that day oncondition that the new capitalized sum of N75,407,052.50 be not paid in cash to members holdingOrdinary Shares but applied on their behalf in paying up in full at par 150,814,105 shares of 50k eachnow issued to be allotted, distributed and credited as fully paid up to and amongst the said membersin the proportion aforesaid.”

“Resolved that the directors be and are hereby authorized to sell a maximum of 49% of the Company’sshareholding in Oando Marketing Limited on terms, conditions and dates to be determined by theDirectors, agreed with the Issuing House and approved by the Regulatory Authorities”.

Signature:_______________________________

Dated this _________ day of ____________2008.

a. Write your name in BLOCK CAPITALS on the proxy formwhere marked*

b. Write the name of your proxy where marked**, and ensurethat the proxy form is dated and signed by you. The CommonSeal must be affixed on the proxy form if executed by acorporation.

Registered holders of certificated Oando Plc shares andholders of dematerialised Oando Plc shares in their own namewho are unable to attend the Meeting and who wish to berepresented at the Meeting, must complete and return theattached form of proxy in accordance with the instructionscontained in the form of proxy so as to be received by theregistrars, First Registrars Nigeria Limited at Plot 2, Abebe

Village Road, Iganmu, Lagos, or Computershare InvestorServices 2004 (Proprietary) Limited, 70, Marshall Street,Johannesburg, 2001, South Africa, PO Box 61051,Marshalltown, 2107, not less than 48 hours before the date ofthe Meeting.

Holders of Oando Plc shares in South Africa (whethercertificated or dematerialised) through a nominee shouldtimeously make the necessary arrangements with that nomineeor, if applicable, Central Securities Depository Participant(“CSDP”) or broker to enable them to attend and vote at theMeeting or to enable their votes in respect of their Oando Plcshares to be cast at the Meeting by that nominee or a proxy.


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

or

Computershare Investor Services(Proprietary) Limited,70 Marshall Street,Johannesburg, 2001, South AfricaPO Box 61051, Marshalltown, 2107


Admission Card

ANNUAL GENERAL MEETING TO BE HELD AANNUAL GENERAL MEETING TO BE HELD AANNUAL GENERAL MEETING TO BE HELD AANNUAL GENERAL MEETING TO BE HELD AANNUAL GENERAL MEETING TO BE HELD AT THET THET THET THET THENIGERIAN LANIGERIAN LANIGERIAN LANIGERIAN LANIGERIAN LAW SCHOOL, ADEOLA HOPEWELL STREETW SCHOOL, ADEOLA HOPEWELL STREETW SCHOOL, ADEOLA HOPEWELL STREETW SCHOOL, ADEOLA HOPEWELL STREETW SCHOOL, ADEOLA HOPEWELL STREET,,,,,

VICTORIA ISLAND, LAGOS, LAGOS STVICTORIA ISLAND, LAGOS, LAGOS STVICTORIA ISLAND, LAGOS, LAGOS STVICTORIA ISLAND, LAGOS, LAGOS STVICTORIA ISLAND, LAGOS, LAGOS STAAAAATE, NIGERIA.TE, NIGERIA.TE, NIGERIA.TE, NIGERIA.TE, NIGERIA.On Tuesday, May 27, 2008 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.

VISION - Oando PLC · 8 Oando PLC Annual Report 2007 2007 2006 N’000 N’000 Turnover 185,892,083 209,078,938 Profit on ordinary activities before taxation 6,813,728 3,794,091 Profit

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