pg1 CONTENT

Notice of Annual General Meeting 5 Financial Highlights 7 Chairman’s Report 8 Group Chief Executive’s Report 10 Report of the Directors 23 Report of the Audit Committee 50

pg2 Vision To be the premier company driven by exellence

Mission To be the leading integrated energy solutions provider

pg3 BOARD OF DIRECTORS PROFESSIONAL ADVISERS: BANKS

Major General M. Magoro (Rtd.) OFR, Chief Compliance Officer Access Bank PLC PSC, Chairman, Non-Executive Director & Company Secretary Access Bank, UK Galadiman Zuru Oredeji K. Delano (Mrs.) Afribank PLC BNP Paribas , Paris Mr. J.A. Tinubu Chief Financial Officer, Citibank, UK Group Chief Executive Mr. Olufemi Adeyemo Citibank Nigeria Limited Ecobank PLC Mr. O. Boyo Chief Legal Officer, Fidelity Bank PLC Deputy Group Chief Executive Mrs. Ronke Sokefun First Bank of Nigeria PLC First City Monument Bank PLC Mr. Mobolaji Osunsanya Registered Office: First Securities Discount House Limited (FSDH) Group Executive Director 2, Ajose Adeogun Street, Victoria Island, Lagos Guaranty Trust Bank PLC ING Bank N.V London Mr. A. Akinrele SAN Auditors: Intercontinental Bank PLC Non-Executive Director PricewaterhouseCoopers, Kakawa Discount House Limited (KDH) Oceanic International Bank PLC Chief F.N Atako JP 252 E, Muri Okunola Street, Victoria Island, Lagos Platinum Habib Bank PLC Non-Executive Director Standard Chartered Bank Nigeria Limited The Registrars & Transfer Offices: Standard Chartered Bank PLC, UK HRM Michael A. Gbadebo, CFR, StanbicIBTC Bank PLC The Alake of Egbaland First Registrars Nigeria Limited, Plot 2, Abebe Village Road, Iganmu, Lagos Standard Bank, London Non-Executive Director Sterling Bank PLC Computershare Investor Services Union Bank of Nigeria PLC Mr. Navaid Burney United Bank for Africa PLC Non-Executive Director (Proprietary) Limited, 70, Marshall Street, Johannesburg, 2001, P. O. Box 61051, Marshall United Bank for Africa, New York town, 2107, South Africa Unity Bank PLC Mr. V. O. Ibru WEMA Bank PLC Non-Executive Director Investor Relations Officer (Retail): Zenith Bank PLC Alhaji H. Mahmud Walin Mubi Ms. Adenike Olaniyan Non-Executive Director

Mr. O.P Okoloko Non-Executive Director

Mr. Ike Osakwe Non-Executive Director

pg4 NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the Thirty-Second Annual General Meeting of Oando Plc executive directors with effect from 1 January 2009; which fees are payable (the “Company”) will be held at Akwa Ibom State Hall (Ibom Hall), Babangida Avenue, Uyo, quarterly in arrears”. Akwa Ibom State on Thursday, the 30th day of July 2009 at 10:00 a.m. for the purposes of: (ii) To consider, and if approved, to pass with or without modification, the following special resolutions to alter the Articles of Association of the Company: 1. Transacting the following ordinary business: a) “It is hereby resolved that Article 140 of the Company’s Articles of Association 1.1 To present the annual financial statements of the Company and of the Group be and is hereby amended as follows: for the year ended 31 December 2008 and Reports of Directors and Auditors (i) the words “and or electronic” should be inserted after the word thereon; “printed”;

1.2 To receive the Report of the Audit Committee; (ii) the existing Article 140 be renumbered Article 140(a);

1.3 To declare the final dividend of N3.00 recommended by the directors of the (iii) a new Article 140(b) be inserted as follows: “Electronic copy means Company; a method of electronic communication which includes, but is not limited to, facsimile, electronic data message (including but not 1.4 To elect members of the Audit Committee; limited to e-mail), bulletin board communications, internet websites, ms-word, excel spreadsheet, print portable document file (pdf), 1.5 To re-appoint the Auditors; hypertext mark-up language (html) or similar text displayed via a web browser, electronic data interchange (EDI), Compact Disc, 1.6 To authorise the directors of the Company to fix the remuneration of the memory stick and computer network communications.” Auditors; b) “It is hereby resolved that Article 108 of the Articles of Association be deleted 1.7 To re-elect the following directors who in accordance with Articles 91 and 93 and the following Article be adopted as the new Article 108: of the Company’s Articles of Association, retire by rotation, but are eligible and offer themselves for re-election: “The quorum necessary for the transaction of the business of the Directors may be fixed by the Directors and unless so fixed shall be more than half of • Mr. Oboden Ibru the total number of Directors at any point in time, with at least half of the • Alhaji Hamidu Mahmud number present being non-executive directors”. • Mr. Onajite Okoloko (iii) To consider, and if approved, to pass with or without modification, the following (Please refer to pages 31 to 32 of the annual report of which this notice forms part sub-joined special resolution: for a brief curriculum vitae of each director). a. That pursuant to Article 84 of the Company’s Articles of Association, the 1.8 To appoint Mr. Olufemi Adeyemo as a director of the Company. Directors be and are hereby authorized to raise, whether by way of a public (Please refer to page 30 of the annual report of which this notice forms part for a offering or other methods, additional capital of up to N200,000,000,000 (Two brief curriculum vitae). Hundred Billion Naira) through the issuance of shares, convertible or non- convertible loans, medium term notes, notes, bonds and or any other 2 Transacting the following special business: instruments, in such tranches, series or proportions, at such coupon or interest rates, within such maturity periods, and on such other terms and (i) To consider, and if approved, to pass with or without modification, the following conditions; including through a book building process or other process all of ordinary resolution to fix the remuneration of the non-executive directors: which shall be as determined by the Directors, subject to obtaining the approvals of relevant regulatory authorities”. “It is hereby resolved that the fees payable to the non-executive directors of b. “That the Directors be and are hereby authorized to enter into any agreements the Company be increased from N850,000.00 per annum for the Chairman and or execute any other documents necessary for and or incidental to effecting and N750,000.00 each per annum for all other non-executive directors to resolution (a) above”. N1,000,000.00 per annum for the Chairman and N900,000.00 for all other non-

pg5 c. “That the Directors be and are hereby authorized to appoint such professional Dividend Payment parties and perform all such other acts and do all such other things as may be necessary for or incidental to effecting the above resolutions, including without If the dividend of N3.00 recommended is approved and declared, those shareholders limitation, complying with directives of any regulatory authority.” whose names appear in the Company’s Register of Members kept in Nigeria as at the close of business on 3rd of July, 2009, shall have dividend warrants posted to them or have their (iv) To consider, and if approved, to pass with or without modification, the following designated bank accounts credited directly on the 3rd day of August 2009. Dividends due as a special resolution: to Shareholders whose names appear on the South African Register of Members at the close of business on the 3rd of July 2009 (certificated or dematerialized), will, on the 3rd of “That the Directors be and are hereby authorized to divest and/or transfer up to 49% August 2009, either be electronically transferred to shareholders’ bank accounts or, in the of the Company’s shareholding in Oando Marketing Limited at such times, to such absence of suitable mandates have dividend cheques posted to them, or will have their persons and or entities and on such terms and conditions as may be determined by accounts, at their CSDP or broker credited. the Directors, in accordance with any applicable statutory and or regulatory requirements”. Closure of Registers of Members

Voting and Proxies The Registers of Members and Transfer Books of the Company (Nigerian and South African) will be closed between the 6th July and 10th July 2009 (both days inclusive) in terms On a show of hands, every member present in person or by proxy shall have one vote, and of the provisions of Section 89 of the Companies and Allied Matters Act Cap. C20 Laws of on a poll, every member shall have one vote for each share of which he is the holder. the Federation 2004 (the “Companies Act”).

A member of the Company entitled to attend and vote at the annual general meeting (the “Meeting”) is entitled to appoint a proxy to attend, speak and vote instead of that member. Nomination for the Audit Committee A proxy need not be a member of the Company. In accordance with Section 359 (5) of the Companies Act, any member may nominate a shareholder as a member of the Audit Committee, by giving notice in writing of such Registered holders of certificated shares and holders of dematerialised shares in their own nomination to the Company Secretary at least 21 days before the Meeting. name who are unable to attend the Meeting and who wish to be represented at the Meeting, must complete and return the attached form of proxy in accordance with the Dated this 3rd day of July 2009 instructions contained in the form of proxy so as to be received by the share registrars, First Registrars Nigeria Limited at Plot 2, Abebe Village Road, Iganmu, Lagos, or Computershare By the Order of the Board Investor Services (Proprietary) Limited, 70, Marshall Street, Johannesburg, 2001, P. O. Box 61051, Marshalltown, 2107,South Africa not less than 48 hours before the time of the Meeting.

Holders of the Company’s shares in South Africa (whether certificated or dematerialised) through a nominee should timeously make the necessary arrangements with that nominee Oredeji K. Delano (Mrs.) or, if applicable, Central Securities Depository Participant (“CSDP”) or broker to enable them to attend and vote at the Meeting or to enable their votes in respect of their shares Chief Compliance Officer & Company Secretary to be cast at the Meeting by that nominee or a proxy.

Registered Office 2, Ajose Adeogun Street Victoria Island, Lagos

pg6 FINANCIAL HIGHLIGHTS

2008 2007

N’000 N’000

Turnover 339,420,435 185,892,083

Profit on ordinary Activities before taxation 10,742,611 6,813,727

Profit After Tax 8,343,325 5,480,415

Attributable to group 8,339,273 4,755,009

Earnings per 50 k share (Naira) 9.22 7.51

*Dividend per 50 k share- proposed (Naira) 6 6

Net Assets per 50 k share 49.60 74.92

Dividend cover 1.54 1.25

*Note N6.00 represents interim and final dividend

pg7 CHAIRMAN’S REPORT

Highly Esteemed Shareholders,

It is with delight that I welcome you all to the thirty-second Annual General Meeting of your company.

In the year under review, we have cause to be proud of our achievements in spite of the tough global economic conditions. We recorded considerable progress and growth in our bottom line and this growth was essentially driven by the relatively successful implementation of our diversification strategy across the energy value chain. Our vision of being the premier company driven by excellence remains resolute and is evident in our results.

Operating Environment

The Macro-economic environment:

Global On the global scene, the year 2008 was a historic year in which the effect of the global economic and financial crises was felt across the world at various levels. The financial crisis severely affected economic activity and left developed, emerging and under developed countries at unprecedented levels of recession at year-end. The effects of the crisis on the US economy were more severe than anticipated. US GDP growth slowed to 1.2%, down from 2.0% in 2007. The EU zone had a 2.0% growth, while Japan’s growth was at -4% down from the 1.9% of 2007. Once again, the emerging economies witnessed most of the growth with China at 9.8%, India at 7.3% and Africa at 6%.

Crude oil prices also experienced high volatility. After hitting the record high of US$147 per barrel in July 2008, it dropped to US$30.28 per barrel in December.

Africa showed considerable growth Africa, amongst other emerging economies managed to maintain its GDP growth at 6%. Three African countries, Angola, Equatorial Guinea and São Tomé and Príncipe featured in the list of 2008’s most buoyant economies, with Angola at the top position. These countries have scaled the heights for two unsettling reasons: sky-high oil prices, which dominated the first half of the year, and a low starting-point, which suggests they have struggled of late and may not sustain the turnaround.

The Local Operating Environment The macroeconomic outcomes of the Nigerian economy in 2008 weakened slightly relative to the previous year largely due to the global financial crisis and the attendant economic meltdown. It is a major disappointment to the downstream that the government’s avowed belief in a deregulated downstream industry failed to translate into reality as price controls remain intact and the country expended in excess of N600 billion on fuel subsidies.. We believe that much needed investment in the downstream is only possible in a fully liberalized environment and urge the Government to take steps to actualize its commitment to a deregulated market.

As the Nigerian economy remains largely dependent on revenues from oil, falling oil prices, oil production quota cuts and prevailing unrest in the Niger Delta continued to affect Nigeria’s internal capacity to generate oil related revenues. Production levels fell below production quotas in 2008 and by the end of the year, crude oil production shut-in stood at 0.9mbbls/day, while the non oil sector recorded an average growth rate of 9%.

Rising inflation driven initially by high energy costs and then by high food prices, saw Year Over Year (YOY) inflation crossing the single digit mark and hitting 14.8% by November 2008. Interest rates shot upwards from the third quarter and remained elevated through November, but moderated in December. The Naira exchange rate was stable through October, but depreciated sharply from then till December following increased demand pressures. pg8 This is largely due to the boom of commodity prices experienced mid-year, and the Consolidation of Shareholder Accounts subsequent slump during the last two quarters of the year. Growth is expected to drop I implore all shareholders and stakeholders of this company to consolidate your numerous considerably in 2009 due to OPEC’s decision to reduce the production quota of African share accounts into a single share account to better the efficiency of the operators as well countries in order to stabilize crude prices. The forecast is based on the presumption that as reduce the costs of operations experienced by quoted companies in the printing and oil-producing countries will continue to depend solely on oil income. Nevertheless, the distribution of Accounts and notices, which will increase profits for the company. We also recovery of world economies hinges on the sustained growth of developing countries like request that all share certificates are dematerialised in order for the Central Security Clearing Nigeria. System (CSCS) to accurately capture investor positions.

Real GDP growth was held back by unrest in the Niger Delta region, coupled with the The Board global recession which is expected to persist through 2009-10. Although the problems in In compliance with Corporate Governance and best practices, two of our independent the Niger Delta may take many years to resolve, the recovery from the global slowdown directors, Chief Felix Atako (JP) and Mr. Ikeme Osakwe who have served on the Board from should be quicker, yielding robust levels of growth, led by the non-oil sector. 9th February 2000, nine years from the date of their first election, are not presenting themselves for re-election this year. Chief Atako was the Chairman of the Audit Committee and a member of the Strategic Planning & Finance Committee and Nominations Committee. Other economic indices Mr. Ike Osakwe was the Chairman of the Strategic Planning & Finance Committee and a Provisional figures from the Debt Management Office (DMO) showed that the total external member of the Audit and Remuneration Committees. debt increased slightly to $3.7bn, up from $3.39bn in 2007. The country’s apex bank, CBN, puts Nigeria’s external reserves figure at $53bn which was a sharp contrast to $62bn On behalf of the Board, and the Company I wish to express our sincere gratitude and during the first half of the year, and a marginal increase over 2007 figures which stood at appreciation for the contribution Chief Felix Atako and Mr. Ike Osakwe made to the Oando $52bn. The value of the Naira fell sharply towards the end of the year depreciating to Group during their tenure. We truly value their commitment and valuable contributions to N139.55 on the final day of trading. the success of Oando and wish them the very best in all their future endeavours. The stock markets ended the year on a poor note as well, as market capitalisation for 213 Furthermore, to ensure that the composition of the Board of Directors complies with listed equities accounted for N7trn of the aggregate, down from N10.3trn in the previous international best practices, the Company has engaged services of KPMG Professional year. Also, the total market value of the 301 securities listed on the Nigerian Stock Services (Executive Selection & Training Services) to identify potential independent Directors Exchange stood at N9.6trn, a 28% drop from N13.3trn in 2007. and conclude the selection of independent Directors for the Company by the end of the year. Growth in non-oil output increased from 7.8% in 2007 to 9.6% in 2008, and the manufacturing sector rose marginally to 2.7% from 2.2% in 2007. The 2009 Outlook In 2009, I am certain that we have what it takes to surpass our record of achievements. I am Performance Review confident that we are prepared to overcome the challenges of the coming year, and we In the year under review, Oando’s drive towards excellence and becoming the leading have never been stronger in the midst of challenges. With the right strategies, operational integrated energy solutions provider were spearheaded by the following key initiatives: framework and motivated manpower in place, we are poised to take charge in the years to come. • Talent management In 2008, managing the talent of the organization was the major preoccupation of the Thank you Human Capital Management (HCM) department. In this year we launched our performance management system on the Oracle platform called the Talent Management System (TMS). Oando went beyond the system requirements and implemented a competency based appraisal system. This meant that employees were appraised not only on business objectives but also on their competencies. Major General M. Magoro (Rtd.) • Hay Job Evaluation PSC, OFR, USAWC Also in 2008, Oando implemented the Hay Job Evaluation methodology. The benefits of Galadiman Zuru the Hay job Evaluation are numerous but amongst others, it enables Oando to benchmark Chairman jobs across organizations. This outcome simplifies the remuneration survey process, makes comparisons more accurate thus reducing to a large extent the margin of error.

pg9 GROUP CHIEF EXECUTIVE’S REPORT

Dear Esteemed Shareholders,

I am pleased to report that our Company’s overall performance for 2008. This year was characterized by the unpredictability of our operating environment both locally and internationally. We experienced crude oil prices reach a historical high as well as record low.

In accordance with our mission we experienced further growth in 2008 in all aspects and lines of our business and have been able to further strengthen our position as an integrated service provider. The year experienced the first dividends of our diversification from the downstream to the mid and upstream sectors of the oil industry. Our Upstream division contributed significantly to our earnings and profitability as we grew the group’s net profit from N5.48 billion in 2007 to N8.34 billion in 2008 and a 52% increase in Profit After Tax (PAT).

This remarkable result is attributable to the company’s improved operational efficiency and increased trade volumes. We also embarked on a number of programs to ensure our success and future domination of the Nigerian oil industry.

Leadership Development Program In 2008, leadership development became institutionalized with a clear definition of the organization’s Leadership Development Framework. The key elements of the framework are developing talent pool, assessing and managing the talent of the organization, effectively putting in place a process for easy identification of outstanding performers, assuring differentiation in reward and upward progression within the organization. The succession planning process was further strengthened with the compilation of succession plans from different entities and group/shared services functions. Our goal is to reduce the impact of unplanned exits on the organization to its barest minimum, thus creating leadership redundancy in our teams whilst ensuring that identified high achievers are appropriately mentored and trained.

Graduate Trainee Program (GTP) Oando has always focused on the development of its people and in 2008; we commenced our Graduate Trainee Program with eighteen (18) young graduates from diverse disciplines to constitute the maiden intakes for the scheme. Remaining competitive in our dynamic environment requires that we constantly source for newer and younger talented minds that can be trained and mentored for leadership positions in the organization and this is essentially what we hope to achieve with the GTP.

After a series of very rigorous assessments and interviews, the first set of graduate trainees came on board in February 2009 and has successfully spent the last 6 months working in the different businesses across the Group. Effective from 2009, the only means of hiring entry-level staff into Oando Plc and any of its subsidiaries will be through the GTP thereby ensuring that all new and young entrants into the company imbibe Oando’s core values of teamwork, respect, integrity, professionalism & passion (TRIPP).

Recognition for Environmental Compliance In the year under review, we received The Ako-Eko Green Environmental Award (Apapa Terminal) and the Green Ribbon Award for the Kaduna Lube Plant in recognition of our efforts to ensure we carry out our operations in an environmentally safe and friendly manner. We also took a lead role in the “plant–a–tree” initiative of the Lagos State Government. Our goal is to ensure that we positively impact the environments in which we operate in across Nigeria.

pg10 ‘Adopt-A-School’ Program Your company also boosted its Corporate Social Responsibility (CSR) initiative by including A major contributor to OML’s impressive performance is the Oracle platform which increases six (6) additional schools in its Adopt-A-School scheme. These schools are situated in operational efficiency and enables performance monitoring of the sales teams across the locations within Oando’s operating environments. nation.

Similarly, a total of 1,000 safety helmets were donated to okada riders in different regions Product Review of the country in a bid to promote safety. Premium Motor Spirit (PMS) Our performance by division: PMS volumes grew by 29% and it accounted for 63% of our revenue. This was as a result of our throughput efficiency and the newly expanded storage facility in the Port Harcourt Oando Marketing Limited Terminal. The unfortunate “ethanol” incident in the 1st quarter of 2008 negatively affected Oando Marketing Limited (OML) is the leading oil and gas marketing company with over our sales during that quarter but we were able to achieve budgeted volumes by half year 500 retail outlets and a commercial client base that cuts across all industry sectors such as 2008 and were ahead on our unit margins by the same period. manufacturing, construction, oil & gas and telecommunications in Nigeria and the West African sub region. OML markets and distributes a wide range of products including Automotive Gas Oil (AGO) Premium Motor Spirit (PMS), Automotive Gas Oil (AGO, also known as Diesel); House Hold AGO contributed 22% to OML’s turnover in 2008 and 25% to OML’s profitability in the same Kerosene (HHK); Aviation Turbine Kerosene (ATK); Low Pour Fuel Oil (LPFO), lubricating period. The product was negatively affected by supply constraints in the second quarter oils and greases; bitumen; Liquefied Petroleum Gas (LPG, also known as cooking gas) and this consequently had a negative impact on sales; and then a glut in the third and and insecticides. fourth quarters of the year which negatively affected margins. Local product supply from the refineries was intermittent at different times within the year further worsening the Review of 2008 imbalance of government supply to the major marketing companies. 2008 was characterised by extreme price swings for crude oil with prices surpassing $140/ barrel in July and falling below $40/barrel in the December. Production at the refineries HHK (notably Kaduna and Warri) increased by 81% in 2008 in comparison to 2007 as the HHK, a product that is mainly sourced locally, was able to deliver very strong margins for the refineries were in operation for longer periods. However, production was hampered by company. Volumes were higher than last year by 12%. The growth in volume was as a pipeline vandalism and frequent breakdown of equipment and as a result product importation result of improvement in supply of the product. was a key factor to the success of our business. ATK The financial crisis triggered by the housing meltdown in the US became apparent across ATK experienced an 8% growth in sales volume with stronger margins compared to last the world in the third quarter of 2008. This had an adverse effect on the Nigerian economy year. The company benefited immensely during the year from frequent stock out experienced as liquidity for most businesses dried up and banks increased their lending rate by up to by other marketers and the industrial unrest at Texaco. These issues led to OML taking up 60% in some instances. The overall effect on the business was the increase in working allocations of these other marketers. Bulk deliveries to our Contractors and Brokers capital requirements, increase in interest expense and decrease in sales volumes across contributed immensely to the sales volumes of ATK. most of the products, which all result in reduced profit margins. Other Products (Lubricants, Specialties): The Federal Government, the dominant player in the Nigerian economy was affected by falling crude prices as it had less revenue to support the economy. This affected the Lubricants allocation available to the states to carry out their businesses and pay their staff as well as Having been identified as a product with high potential, lubricants recorded a higher growth their ability to pay contractors for projects being carried out within the states and local than was achieved last year in terms of volume and margin. The strategic focus for expansion governments. in new non-forecourt channels enabled us to protect unit margins in a highly competitive environment. Promotional activities and especially tapping into the business opportunities Despite these circumstances Oando marketing’s turnover grew in 2008 by 32% to N173bn offered by the Eastern axis boosted sales volume. A large proportion of our sales was from compared to 2007, gross margin increased by 31% from N15.4bn in 2007 to N20.2bn the East where new markets were identified and serviced effectively. while profit after tax hit N3.2bn, a growth of 22% over the previous year.

pg11 Specialties Bitumen – Our performance was impressive as bitumen sales grew by 23% and we delivered higher than budgeted unit margin despite the perennial issue of supply disruption associated with the bitumen industry. Our ability to source right was largely responsible for this performance.

LPG - The product was characterised by very strong unit margins and restricted supply. The level of regulation was low which lead to major marketers also performing the role of retailer to increase their margins. However, supply constraint made it possible to achieve higher margins relative to last year. In addition, LPG sales volume grew by 25% compared to last year due to improved forecourt cylinder sales while holding firm on bulk LPG sales.

LPFO – There was a steady decline in LPFO demand as industries and factories have switched to natural gas for their power generation. In addition to this, a significant proportion of local product from the refineries went to independent marketers. Our strategy over the last two years has been to ensure consistent supply to our contract customers while continuing to seek cheaper sources for the product.

Looking Forward to 2009 OML’s aim for 2009 is to continue to deliver quality products and services to customers while delivering improved value to the Group and shareholders. This is of importance considering the benefits to be obtained from OML’s transition as a fully owned subsidiary of Oando Plc to a stand-alone Public Limited Company listed on the Nigerian Stock Exchange.

We expect to achieve our objectives despite the continued uncertainties surrounding Government Policies (especially as it pertains to deregulation and the role/relevance of the NNPC) and the current financial crisis.

Emphasis will be placed on efficiency which will underpin our value delivery approach in 2009. We will also continue to revisit our key business controls to ensure we are well protected against fraud, shortages, loss of products and theft of assets. The following initiatives will be the high points for 2009:

• Retail margin optimization; • Securing a greater percentage (80%) of our commercial business in VMI (a scheme by which we manage customers’ inventory at their locations thereby securing the business of a number of reputable industrial customers further increasing sales performance) or supply contracts; • Improved NFR Offering; • Exploiting LPG Opportunities – retailing of LPG at retail outlets through the Banner Gas Initiative;

pg12 • Reinvestment in Assets – Retail outlets and terminal; The trading business was able to achieve the above performance by taking advantage of • Effective Working Capital Management through TAR and stock management. Oando’s management of the Lister and Magcobar storage facilities. The aggressive sales of PMS out of these storage facilities enabled the company to trade substantial volumes of Oando’s Trading Business the product in 2008. Oando Supply and Trading Limited and Oando Trading Limited (Bermuda) represent the products trading arm of the Oando Group. Our business activities cover trading of refined Looking Forward to 2009 and unrefined petroleum products to refiners, marketing and trading companies worldwide. The company’s strategy for 2009 is to maximise supplies of PMS, AGO and HHK and to Oando Supply and Trading is responsible for the supply of refined petroleum products into strengthen its drive to expand market share by aggressively increasing its customer base in Nigeria, whilst Oando Trading is responsible for supply into other markets. Products traded Nigeria as well as West Africa. include gasoline, gas oils, kerosene, aviation fuel, distillates, naphtha, fuel oils, bitumen, base oils, bitumen and liquefied petroleum gas. Oando Gas & Power Limited Oando Gas & Power (OG&P) is responsible for Oando Plc’s gas and power businesses: The business also maintains a presence in the world’s products freight market in terms of Gaslink Nigeria Limited, Akute Power Limited (Akute), East Horizon Gas Company Limited vessels chartered on spot and time charter basis for delivery of oil and oil products to (EHGC), and other gas and power Special Purpose Vehicles (SPVs) are the companies various customers worldwide. under that pursuit.

Review of 2008 Gaslink Nigeria Limited The economic environment for the year 2008 was challenging and largely unpredictable. Gaslink Nigeria Limited is the flag-ship company and main operating arm of Oando Gas & Unprecedented socio-economic events resulted in a series of global crises. However, Power Limited. The most outstanding achievement recorded during the year under review unlike previous economic crises, the casualties were not isolated to specific industries or was the completion of our 38km Greater Lagos 3 expansion project. It was conceived to countries; in contrast the entire global community has been hit hard. take gas to Tincan Island industrial complex through Creek Road and will increase the volume of gas supplied to customers in the Apapa area. We are witnessing the connection The first half of the year was marked by the spiraling of crude oil prices to the historical of several manufacturing companies located in the Apapa Industrial Cluster to the grid. height of $147/barrel in July, a climb of 320% over a 5-year period. The soaring cost of fuel, coupled with rising inflation, led to major price upswings for all commodities and A major challenge in the past year was the issue of correct pricing of natural gas due to services. rising and extreme volatility in crude oil, commodities and steel prices in the international market. The second half of the year witnessed the birth of the downward trend experienced today in the financial sector. Many banks and financial institutions started going bankrupt because After a prolonged national debate involving the National Assembly, the organized private they had hitherto carried “toxic assets” which they now had to write off. The loss of sector and our numerous customers, natural gas prices was marginally increased by 15%. confidence in the financial community sent the market into panic, forcing massive sell-offs However, the LPFO prices, which is the readily available alternative fuel benchmarked in thereby crashing the global equities and commodities markets. In line with the other our bilateral contracts increased by over 100%. Another major challenge was gas supply tumbling markets, crude oil prices began a dramatic free fall, depreciating at record rates security due to unplanned gas outages by the Nigerian Gas Company and general insecurity and at an unprecedented speed. in the Niger Delta area. The cumulative outages of 30 days for the year showed a marked improvement over last year’s figure of 57 days. The fall in prices in the oil market created a reprieve for the company within the third quarter. During this period, the company was able to maximize profits thereby enabling it The project was delayed by the complexity of construction within a built up area like Lagos meet the budget for the year. and bottlenecks at the entry ports for mission critical inputs. This meant that various projects had to be pushed back to the first quarter of 2009. Review of Financial Performance Despite the constraints of the year, the trading business delivered a remarkable turnover Akute Power Limited of N126.36bn in 2008, a rise of 75% above 2007 turnover of N72.3bn. Profit Before Tax Akute Power Limited and the Lagos State Water Corporation entered into a power purchase (PBT) also witnessed an increase of 56% over the previous year, resulting in a rise in Profit agreement for power provision to its main water works at Akute. The project is the first in a After Tax to N895.95m, 54.6% higher than the previous year. series of captive power projects that have been earmarked within the next few years. Akute ties in with our strategy of becoming a core investor in the current administrations deployment

pg13 of the Public Private Partnership (PPP) scheme as the main development framework for albeit very slowly. In the interim, we have spent time creating relationships with potential solving the country’s perennial power crisis. The outlook for the company is positive with partners in these countries. the guaranteed cash flow expected from operations upon completion. Looking Forward to 2009 In the year under review, Akute, which is over 60% complete, achieved several milestones The outlook for 2009 is positive mainly due to the relatively predictable, constant revenue and is expected to pass both completion and performance tests in the first quarter of stream, discretionary capital investments and strong underlying growth in demand. This is 2009. The project achieved financial closure following the execution of a bankable PPA in spite of the worsening economic conditions. While OG&P is not immune to the weakening with the project off-takers. We have also obtained all necessary regulatory approvals like in the global economy, we are well positioned as a result of the restructuring that we Right of Way for the gas pipeline to the power plant from both Lagos State and Ogun undertook in the past few years to refocus and improve our core businesses. State Governments, completed the FEED, selected EPC contractor, and took delivery of the generators and other accessories capable of generating 12 megawatts (MW) of The rising weighted average capital costs, extreme volatility in the commodities markets, electricity. ongoing global recession, depressed equity valuations coupled with the socio-political and regulatory uncertainties will be the main determinants of our outlook for 2009. Given East Horizon Gas Company Limited (EHGC) the weak global economic outlook, we expect significantly reduced energy and commodity EHGC was established as a Special Purpose Vehicle (SPV) to supply natural gas through consumption patterns which should lead to a revision in energy demand forecasts globally. an 18-inch pipeline from the existing Obigbo-ALSCON line to the United Cement Company However, we feel that local gas consumptions forecasts should still follow the long-term of Nigeria Limited at its Mfamosing plant in Cross-River state; a total distance of 128KM. projection pattern as the Nigerian economy is still expected to grow by over 6% and the The Federal Government and the Nigerian National Petroleum Corporation (NNPC) had bulk of this demand is driven by new gas power projects. In addition, less pressure on fuel, earlier given their approval to the NGC to enter into a Build-Operate-Transfer (BOT) labour rates and material will lead to marginally reduced operating costs. arrangement with EHGC for the project. With the initial approval in place, EHGC then obtained a commitment from NNPC for the supply of 22 million standard cubic feet per day As in previous years, the security situation in the Niger Delta region will still constitute a (mmscf/day) of natural gas being the required volume for the first phase of the project. major threat to gas supply security. In addition, the National Domestic Gas Supply & Pricing Policy; the implementation of the Gas Master Plan Infrastructure Blueprint and the A major milestone in the project was achieved following the execution of a long-term Gas operation of Multi Year Tariff Order (MYTO) (with multi-year rate freeze/cap provisions); will Sales Agreement with the off-taker-UNICEM. It is a testament of our good credit rating that increase our vulnerability to event risks related to regulatory and political reactions to rate EHGC was able to secure project finance loan under the prevailing adverse and challenging increase requests. financial environment. Other achievements include the conclusion of procurement of line pipes, completion of the Environmental Impact Assessment (EIA), granting of Pipeline Our objective is to ensure the continued strategic optimization of our existing assets in Right of Way by the Cross River State government, and start of construction for the Gaslink, Akute and EHGC; search for and acquire mature assets with excellent cash flow project. potentials; and aggressively look for greenfield projects in the gas & power industry to achieve the targeted minimum 50% Compounded Annual Growth Rate (CAGR) in overall With construction well in progress, the company should deliver the pipeline in the second PAT. The growing gas & power markets in Nigeria, and other West African countries will quarter of 2009. The next step will be in securing additional gas for the later expansion provide us with the opportunities to earn revenue by: phases of the project. • Establishing workable partnerships towards gas exports by utilizing new West African Operations technologies In a bid to take advantage of the growing business opportunities that the soon to be commissioned West African Gas Pipeline (WAGP) will provide, we have incorporated • Piloting a Compressed Natural Gas project within the Greater Lagos area under subsidiaries in the following West African countries: Benin Republic, Ghana and Togo to viable commercial terms leverage our experiences in gas distribution and power generation to provide energy solutions to industries along the WAGP route. Our strategy is to partner with local companies • Partnering with relevant stakeholders to play a dominant role in investment in and the national utility companies in these markets and be the dominant player in the West infrastructure development in the Nigerian Gas Master Plan Infrastructure African gas and power markets. Numerous delays in the final take off of the WAGP project Blueprint have meant that we have had to delay the start-up of all our projects in these markets. In addition, these countries are articulating and establishing appropriate rules and regulations, pg14 • Actively participating and partnering with renowned utility providers to invest We have commenced plans to increase our capacity by growing organically as we have in the power sector the platform for quick growth because of our existing contracts. We also embarked on several cost reduction measures in a bid to improve efficiency. • Optimizing and improving the value of our assets through fund hedging Oil Well Cementing We believe that 2009 will see the materialization of several of our projects as cash yielding In 2008 we exited this line of business because it was no longer profitable to the company. entities. We are also certain that the coming year will provide enormous opportunities and challenges for OG&P to execute its vision of providing affordable and reliable energy to its New Product Service Line customers. Drilling Rigs 2008 Financials in Perspective In line with OES’ strategic initiative of entering into value adding and higher margin services, Oando Gas and Power’s turnover was N6.5bn in the year under review, a 48% increase which fit into its profile, OES intends to continuously develop and grow its drilling rig over last year’s performance. 2008 recorded Profit After Tax of N475million, a slight business. As such, OES acquired a new swamp rig known as the Constitution. It is currently decline by 4% from N495 million in 2007. This was due to the pipeline development project the most sophisticated in West Africa and brings to a total of 3 drilling rigs in our asset embarked upon during the year. portfolio. We expect two of our units to commence 2-year contracts before the end of Q2 2009 while the third one undergoes refurbishment. OES is in the final stages of acquiring Oando Energy Services two additional drilling units which will bring our rig count to five. Oando Energy Services’ (OES) strategic initiative for 2008 was to reposition its portfolio of existing businesses as well as enter into new ones. Thus focus was on sustaining and We are constantly developing our technical capacity by ensuring that we hire and retain growing our drill bit business, realigning the drill fluids business as well starting up more competent, smart, highly motivated staff and ensure that they get adequate training. To profitable businesses and services such as the drilling rigs and drilling systems. support this initiative we have entered into a technical support agreement with a reputable international drilling company. Drill bits The drill bits business experienced continuous growth during the year under review. Drilling Systems (Measurement and Logging while Drilling, Directional Drilling) Presently our drill bits business is second in the industry in terms of our rig market share OES, in line with its objective of becoming an integrated energy service company, has and third in terms of revenue. These successes came despite problems with government entered into the drilling systems business. The estimated Nigeria market size is $320million. funding of the Joint Venture Agreement as well as the Niger Delta security crises (which Currently, an organic growth approach is being pursued. We expect that full operations will has led to a reduction in the drilling activities of a lot of our clients). We have consistently commence by end of the third quarter of 2009. increased the existing client base and deepened existing customer relationships. We have further consolidated on our position with major clients such as TOTAL and SNEPCO Looking Forward to 2009 by increasing our share and providing application engineering services with the bits supplied. We expect to see a steady increase in drilling activity in 2009 as the current economic downturn and the fall in oil prices stabilizes. OPEC’s decision not to further cut quota In the effort to further drive our success, we focused on the recruitment of experienced symbolizes its confidence in the prediction that recent cuts as well as the outcome of the and competent staff, embarked on training programs for staff and stocked adequate G20 summit will result in oil prices hovering between the US$45 and US$55 per barrel mark. products to service our clients and leverage on our existing network in the industry and relationship with our clients thus increasing our competitiveness within the sector. In addition to the above, it is clear that the government is also keen on playing an active role in boosting the confidence of both local and international players in the Nigerian oil and Drilling Fluids gas industry. This is evidenced by the increased attention placed on Local Content For the year under review, OES consolidated on its position in the drilling fluids market by participation and the government’s assistance in resolving ongoing issues in the Niger providing value-adding Drilling fluids services to existing customers such as SNEPCO, Delta. In OES we believe an increase in drilling activity will translate into a demand for Chevron and Exxon Mobil while increasing our contract base. We signed a new Technical services from strong and reputable companies. Support Agreement (TSA) with Baker Hughes which would enable us deliver quality mud services to the upstream companies. OES is positioning itself to take advantage of these opportunities. Our focus continues to be on providing superior service quality while maintaining safe and environmentally sound

pg15 operations at all times. We will leverage on existing technical partnerships (and seek new OML 56 ones) to enable us exceed clients expectations in areas of technical excellence. OPDC is in partnership with Energia, the operator of the Obodeti/Obodugwa marginal field. Obodugwa-1 was re-entered and is currently in production testing stage and the In our rigs business, we are working tirelessly to ensure a seamless start up of our two tests recovered about 4,800 barrels a day. contracts in 2009 while developing our strategy to ensure we have a long term contract for our three drilling assets beyond existing contract terms. OML 90 OEPL acquired a 30% working interest in OML 90 (Akepo) after signing a Financial, OES intends to increase its market share and revenue in the drill bits business and expand Technical and Management Services Agreement (FTMSA) with Sogenal Ltd and Exile our client base. Also we plan to increase our capacity in the drilling fluids business by Resources Inc. This marginal field is located in the shallow marine area of Delta State. acquiring or building a mud plant facility which would enable us work on deep offshore OML 90 (Akepo) is currently under evaluation and development of the field will soon projects. commence.

2008 Financials OPL 278 As a result of the global financial crisis and concerns over security in the Niger Delta, rig OEPL has a 60% working interest in this asset. The block is an exploration play and is activity in Nigeria experienced a drop of over 70% in 2008 and this impacted strongly on currently in its first phase of development. OEPL is actively pursuing rig opportunities in the service sector nationwide. preparation for the planned 2008 drilling campaign.

However, OES was able to achieve a turnover of N4.09bn in 2008, a decrease of 60.8% OPL 236 from 2007 turnover of N10.44bn. We should see much better revenues in 2009 as a result OEPL has a 52.75% working interest in this block. This block is also an exploration play of the newly acquired rigs. and is OEPL’s only gas asset. OEPL commenced preliminary work on the Environmental Impact Assessment EIA and signed a Global Memorandum of Understanding with the Upstream Division communities in the catchment area. Oando upstream division comprises Oando Exploration and Production Limited (OEPL) and Oando Production Development Company (OPDC), Oando OML 125 & 134. OEPL OPL 282 was incorporated to tap into the vast resources of the Niger Delta and other opportunities OEPL has a 4% working interest in this block. The Nigerian Agip Oil Company (Agip) is the within the Gulf of Guinea. operator of OPL 282. We are focused on shooting 3D seismic in order to kick start the development program of the field. 2008 proved to be a good year for our upstream division. As of today, OEPL has a portfolio of 7 assets namely; OPL 278 - with a 60% working interest; OPL 282 - with a 4% Looking Forward to 2009 interest as part of a Local Content Vehicle; 45% working interest in the Obodeti/Obodugwa Our outlook for 2009 and beyond looks very bright. Our upstream division is not an marginal field in OML 56 through OPDC; a 95% working interest in OPL 236 in which we opportunistic play for us but is a platform we intend to deliberately fund and grow as its act as the operator. margins are very high and is able to deliver value to all shareholders. We will therefore continue to invest in this division especially in near production assets to ensure our time to In the course of the year OEPL acquired a 30% interest in the Akepo field in OML 90 and production is short. finally the 15% interest each in Shell’s stake of 2 deepwater blocks OML 125 and OML 134. OML 125 experienced a daily average production of 18kbopd from its Abo Field. Over the years we have positioned ourselves to be the local content partner of choice and we expect this to yield fruits for you, our shareholders in 2009 and beyond. Review of 2008 Blocks 2008 Financials in Perspective Oando OML 125 and OML 134 We achieved a turnover of N13.89bn, as a result of production from the Abo field in OML Oando acquired a 15% participating interest in OML 125 and OML 134 in 2008. These 125. It is expected that the coming year will reflect the increased activity in the upstream blocks are operated by Agip and the blocks are located in the deep offshore of Nigeria. sector. OML 134 block is currently under development and is expected to start production in the next 18 months.

pg16 Refinery discover value in specialty products. LPG is destined to expand into a mainstream fuel, Oando’s Refinery and Terminals (OR&T) division is charged with solving the problem of the following clear government commitment to the private sector to utilize the vast quantities nation’s long-term dependence on imported petroleum products. Oando’s entry into refinery available from the nation’s NLNG projects domestically. LPG use in Nigeria is six times lower and terminals sectors complete its footprints in all segments of the energy value chain to per capita relative to the West African average and has been dogged by supply interruption, become Nigeria’s leading integrated energy solutions provider. a lack of shoreline storage and poor cylinder availability. Oando will participate aggressively along the entire value chain to lead the rebirth of LPG use and testament to this commitment OR&T is a development organization that will quickly transition from being a user of cash is the plan to establish over 9,000MT of LPG storage in Apapa by the end of 2010. to a major cash engine for the group by addressing the nation’s supply shortcomings in two distinctive phases, short/midterm and long term. In summary, the division has a tightly defined focus of infrastructure development and our capabilities and process enhancement will continue to ensure reliable world class delivery In response to the dire delays and consequent value destruction experienced at the of the identified projects while creating a platform to sequentially secure new opportunities Lagos ports (which at times account for the supply of over 80% of the nation’s petroleum as they arise, particularly with the government’s ongoing privatization drive. products consumption); Oando has completed the Front End Engineering & Design (FEED) of the Apapa Capacity Expansion Initiative. This initiative will reduce the congestion in the Conclusion Apapa port and significantly increase the tank turns of the major marketers’ existing Recovery of the global economy in 2009 will be slow, but we are certain that these are storage. The first phase of this project is expected to come on stream as early as the first surmountable obstacles, and are committed to delivering on our promise to exceed your half of 2011. expectations in the coming years.

In the midterm, we will develop and operate a state-of-the-art refined products import I thank you on behalf of the Management and staff of Oando Plc, for your unflinching terminal supported by the first privately operated Single Point Mooring (SPM) system in support and look forward to a successful year for the company and the shareholders. West Africa - an SPM is an offshore system used to discharge very large carriers into offshore tanks via a subsea pipeline. The logistics benefits of such an operation, coupled with the world class terminal operating systems planned for the 210KT capacity facility will make it the terminal of choice not only for OR&T’s sister company, Oando Supply & Trading but all other serious importers. The terminal, located in the Lekki Free trade Zone (LFTZ) is planned to come on stream early 2012.

Similarly, the division will take advantage of supply side opportunities that will reduce the Mr. J. A. Tinubu Group’s operating costs and enhance supply chain reliability. In this vein, the division is Group Chief Executive currently reviewing two significant development and acquisition opportunities in NW Europe that will complete the supply chain integration that will see Oando control product origination (from component blending ) to into-car sales.

The long-term solution will be the multi-billion dollar development of the first greenfield refinery development in Africa for over twenty years. The first phase of the proposed 360,000 barrels per day refinery will satisfy at least half of the nation’s import requirement and enhance shareholder value with strong distillates exports to meet severe deficits in the Atlantic Basin. Land has been secured in the LFTZ for the project and the viability of the project, which from a technical execution and cashflow perspective, will be much enhanced by the prior execution of the refined product import terminal which will serve as the finished product storage terminal of the refinery.

As the division strives to maintain focus on the highest value-delivering opportunities and show the highest return for scarce Group cashflows committed, we have still managed to

pg17 BOARD OF DIRECTORS

Major General M. Magoro (Rtd.) OFR, PSC, Mr. J.A. Tinubu Mr. O. Boyo Chairman, Non- Executive Director Group Chief Executive Deputy Group Chief Executive Galadiman Zuru

pg18 Mr. Mobolaji Osunsanya Mr. A. Akinrele SAN Chief F.N Atako JP Group Executive Director Non-Executive Director Non-Executive Director

pg19 HRM Michael A. Gbadebo, CFR, Mr. V. O. Ibru Mr. Navaid Burney The Alake of Egbaland Non-Executive Director Non-Executive Director Non-Executive Director

pg20 Alhaji H. Mahmud Walin Mubi Mr. Ike Osakwe Mr. O.P Okoloko Non-Executive Director Non-Executive Director Non-Executive Director

pg21 pg22 REPORT OF THE DIRECTORS

2008 2007

N’000 N’000

Turnover 339,420,435 185,892,083

Profit on ordinary Activities before taxation 10,742,611 6,813,727

Profit After Tax 8,343,325 5,480,415

Attributable to group 8,339,273 4,755,009

Earnings per 50 k share (Naira) 9.22 7.51

*Dividend per 50 k share- proposed (Naira) 6 6

Net Assets per 50 k share 49.60 74.92

Dividend cover 1.54 1.25

*Note N6.00 represents interim and final dividend

pg23 In accordance with the provisions of the Companies and Allied Matters Act, 2004, the Directors of Oando PLC hereby submit to the members of the Company the audited consolidated year ended 31 December 2008 accounts. Our Group of Companies The preparation of annual financial statements is the responsibility of the Board, which should give a true and fair view of the state of affairs of the Company.

The Directors declare that nothing has come to their attention to indicate that the Oando PLC Company will not remain a going concern for at least twelve months from the date of this report.

Legal Form Oando commenced operations in 1956 as a petroleum marketing company in Nigeria under the name ESSO West Africa Incorporated. It was then a subsidiary of Exxon Corporation of the USA. On 25 August 1969, the Company was incorporated under

Oando Oando Oando East Nigerian Law as Esso Standard Nigeria Limited. In 1976, the Nigerian Government Oando Oando Oando Oando Oando Gaslink Akute supply Exploration Production Horizon Oando Trading Energy PH Lekki Gas & Nigeria Power bought Exxon’s interest in the Company and it was re-branded Unipetrol Nigeria and and & dev. Gas & Marketing 100% Services Refinery Refinery Power Limited Limited Trading Production Company Company Limited Limited (“Unipetrol”). The Company became a public limited company in 1991, when 100% 100% 100% 100% 98% 100% 100% 100% 85% 100% 100% the Federal Government of Nigeria divested 60% of its shareholding to the general public. Its shares were listed on the Nigerian Stock Exchange in February 1992.

OES OES OES Respect Teamwork Integrity Oando Oando Oando Ocean & Oil Investments Limited acquired a 30% stake in Unipetrol from the Federal Limited Limited Limited Ghana Togo Benin Government of Nigeria in 2000 and thus became the core investor. 100% 100% 100% 82+% 75.3% 100% Bermuda Bermuda BVI In August 2002, Unipetrol acquired a 60% stake in Agip Nigeria Plc (“Agip”) by winning an international bid conducted by Agip Petroli International B.V. Unipetrol’s Oando Oando OML Terminals management team subsequently led the merger and integration of Agip with Unipetrol 125 &134 Apapa SPM & (BVI) and the combined entity was re-branded Oando Plc in 2003. In 2004, Oando Limited Logistics Limited 100% Limited consolidated its affiliate and subsidiary companies into an integrated energy group. 100%

In 2005, Oando Plc became the first African company to seek a cross-border inward Oando listing on the JSE Limited (JSE). The company was listed on November 25, 2005 with OML 125 & 134 the introduction of its entire issued share capital on the main board of the JSE, in the Limited Resources-Oil and Gas Sector. 100% Nature of the Business Oando over the years has re-engineered its strategies and transformed from being just a core local downstream oil marketing concern to becoming a leading integrated Energy Group with business tentacles spanning not just petroleum product marketing but also exploration & production of crude oil, international oil trading operations, gas & power solutions, and oil services support.

pg24 Petroleum Products Marketing: • Exploiting LPG opportunities Oando Marketing Limited (OML) is the leading oil-marketing retailer in Nigeria with • Improve NFR offering over 500 retail outlets also with operations in Ghana and Togo. The company’s • Reinvestment in assets – Retail outlets and terminals product ranges from Premium Motor Spirit (PMS), Automotive Gas Oil (AGO commonly • Increased utilisation of ERP platform referred to as Diesel), Dual Purpose Kerosene (DPK), Aviation Turbine Kerosene • Investment in human capabilities (ATK), Low Pour Fuel Oil (LPFO), Lubricating Oils and Greases, Insecticides, Bitumen, Chemicals and Liquefied Petroleum Gas (LPG, commonly referred to as Cooking Supply and Trading: Gas) Oando Supply and Trading Limited and Oando Trading Limited (Bermuda) represent the products trading arm of the Oando group. Business activity covers trading of Review of 2008 Operating Activities refined and unrefined petroleum products to Refiners, Marketing and Trading Companies worldwide. Supply and Trading is responsible for deliveries into Nigeria, OML has consciously moved to consolidate its position in the downstream petroleum whilst Trading is responsible for supply into other markets. Products traded include sector over the last few years to create value by maximising asset utilisation and gasoline, gas oils, kerosene, aviation fuel, distillates, naphtha, fuel oils, bitumen, base increasingly move into the higher margin product market, particularly deregulated oils, bitumen, liquefied petroleum gas. products. The business also maintains a presence in the world’s products freight market in OML had an impressive financial year posting 32% increase in revenue when terms of vessels chartered on spot and time charter basis for delivery of oil and oil compared to last year’s performance of Oando’s downstream activities. The gross products to various customers worldwide. margin in 2008 grew by 31% compared to 2007 while profit after tax grew by 22% despite the externalities which adversely affected the business during the year under S&T 2009 Outlook review. Consequently, the performance in 2008 can be attributable to improved The company’s strategy for 2009 is to maximise supplies of PMS, AGO and HHK and efficiency, effective monitoring and control. to strengthen its drive to expand market share by aggressively increasing its customer OML 2009 Outlook base in Nigeria as well as West Africa.

The global financial crisis might lead to deregulation of the downstream sector in 2009 Support Services to Upstream E&P companies which might result in increased entry into the downstream business in the short run. The operating body for this business is the Oando Energy Services Limited (OES). Margin will be affected adversely during this period until the market stabilises and the The nature of its business line include supply of drilling products, completion fluids, downward trend in margin reverses. In spite of the expected uncertainty in 2009, base oils, drill bits and other input materials for oil field operations. It has currently in its Oando Marketing Limited will continue to deliver quality products and services to all Product Service Lines (PSL), Drilling Rigs and Swamp Rigs. its customers while delivering strong positive returns to all shareholders. We will continue to focus on effectively managing liquidity. Emphasis will be placed on Operations Review operational efficiency which will underpin our value delivery in 2009. We will also The year 2008 was a very challenging year for oilfield services in Nigeria. It was continue to revisit our key business controls to reduce and/or eliminate all risks i.e. primarily characterized by the following fraud, shortages, loss of products and theft of assets. The following initiatives will be • Disturbances in the Niger Delta the high points for 2009. • Reduction in activity either as result of the above or in response to other opportunities. Active rig count dropped from 40 in 2007 to 33 in 2008. This • Probable commencement of deregulation. drop in rig count had a corresponding effect on services provided to clients • Retail margin optimisation depending on activity type (either drilling or completions). • Organic growth in Lubricants

pg25 • Cash call problems with the Federal Government regulatory arm through Nigerian and East Horizon Gas Company Limited. In addition to these there remain numerous other projects being developed within the gas and power division. National Petroleum Corporation (NNPC)

Given the above scenario and with a thorough assessment and understanding of Gaslink Nigeria Limited economic cycle, the strategic thrust of Oando Energy Services Limited was hinged Gaslink Nigeria Limited (GNL) is the flagship and main operating arm of Oando’s Gas on three key areas: & Power Division. Several landmark achievements were recorded during the year under consideration chief among which was the completion of our 38km greater 1. Positioning the business unit to take advantage of improved business Lagos 3 expansion project. The expansion project was conceived to increase the environment gas volumes being supplied to the Apapa Industrial Cluster while also extending our 2. Ensuring that our asset acquisitions on the rigs and key service initiatives gas network to Tin Can Island. Its completion has led to an improvement in our on the drilling fluids were well positioned on the Contracting cycles of revenue by enabling manufacturing companies located in these clusters to either Exploration and production company activities start using gas or increase their consumption of natural gas. The exercise was not 3. Leveraging on alliances, particularly win-win ones. Such alliances provided without its challenges and the lessons learned from the complexity of constructing technical assistance which was responsible for sustaining our services in within a built up area like Lagos will be applied in future projects. areas that required high technology input towards providing solution like Natural gas pricing given its benchmark relationship to Low Pour Fuel Oil (LPFO) was the deep water drilling environment. a major challenge in 2008. The high price of Crude Oil recorded during the year led to a commensurate increase in the price of LPFO. This necessitated a significant OES Outlook for 2009 increase in gas prices to our consumers many of whose businesses were The global economic crises of which the softening of oil prices is a major index cannot subsequently threatened with collapse. After a prolonged debate involving the be ignored. In Nigeria, the Exploration and Production companies will focus on organized private sector, the NNPC, the Petroleum Products Pricing and Regulatory replaceable reserves despite the crash in oil prices. In order to do this exploration, Agency and the National Assembly, a marginal increase of 15%, instead of the over appraisal and development drilling activities will need to increase. The uncertainty 200% dictated by the LPFO index, was adopted. created by the Niger Delta crisis and accelerated by existing poor resource- Supply security remains a concern as unplanned gas outages from our sole supplier, management has led to minimal activity in the Swamps and created a wealth of the Nigerian Gas Company (NGC) as well as general instability in the Niger Delta opportunity. OES will seek to capture these opportunities and aims to be the leader continue to create concerns for our present and potential customers. The 30 outage in the swamp rigs market in Nigeria. To this end, the company will in the near term: days for the 2008 was an improvement over the 54 days of outages recorded in 2007. 1. Acquire additional rigs when the competitive advantage is clear and maintain dominance in the HPHT market (High Pressure High Temperature) 2. Build its Drilling Fluids business and migrate up to service provision Akute Power Limited 3. Continue to increase market share with good margins in Drill bits business The execution of a Power Purchase Agreement between Akute Power Limited (APL), Lagos State Government (LASG) and Lagos Water Corporation (LWC) means that Gas Distribution and Power Oando has now established a toe hold in the Nigerian Electricity Supply Industry. This PPA provides for the installation and operation of a 12MW power plant by OGP Oando Gas & Power Division and the supply of electricity from this power plant to the major water works of the The Oando Gas and Power (OG&P) business is in the distribution of Natural Gas Lagos State Water Corporation. and Power initiatives aimed at electricity generation in the Country. The major equipment and other long lead items have been procured and delivered to Oando’s Gas & Power division is continuing to deliver on its mandate as one of the site. It is expected that the company will begin commercial operations by the end of major drivers of growth in the Oando Group. In 2008, Oando Gas & Power division the first half of the new year. Upon completion and commissioning, OGP will have (OGP) focused on expanding its Lagos Franchise while concluding the development begun to achieve its short term goal of earning revenue from power projects while of a second gas franchise as well as a captive power plant. Presently, OGP has the supporting the government in its goal of addressing the nations power crisis. following entities as its business units: Gaslink Nigeria Limited, Akute Power Limited

pg26 East Horizon Gas Company Limited utilization rates and the government agenda for increased penetration in the domestic East Horizon Gas Company Limited (EHGC) is presently in the construction phase of market. its project to supply gas to the United Cement Plant in Calabar through a 128km pipeline. During the last quarter of 2008, EHGC secured the commitment of NGC for the supply of 22 million standard cubic feet per day (22mmscfd) of natural gas, OGP will pursue the opportunities created by the growing gas & power markets in enough to fulfil the requirement for phase 1 of the Cement plant by executing a Gas Nigeria, and other West African countries and achieve our revenue targets by: Supply and Purchase agreement for the same quantity. • Piloting a Compressed Natural Gas project within the Greater Lagos area under viable commercial terms It is a testament of our good credit rating that EHGC was able to secure a project finance loan under the prevailing adverse and challenging financial environment. • Partnering with relevant stakeholders to play a dominant role in investment in Other achievements include the conclusion of procurement of line pipes, completion infrastructure development in the Nigerian Gas Master-Plan Infrastructure of the Environmental Impact Assessment (EIA) and the granting of Right of Way by Blueprint the Cross River State Government. • Actively participating with renowned utility providers to invest in the power sector With construction well in progress, the company should deliver the pipeline in the 3rd quarter of 2009. The next challenge will be in securing additional gas for the later 2009 is expected to provide enormous opportunities and challenges for OG&P to expansion phases of the project. execute its vision of providing affordable and reliable energy to its customers.

West African Operations Refinery & Terminals In a bid to take advantage of the growing business opportunities that the soon to be Oando’s Refinery and Terminals (OR&T) division is charged with solving the nation’s commissioned West African Gas Pipeline (WAGP) will provide, we have incorporated long term dependence on imported petroleum products. subsidiaries in the following West African countries: Benin, Ghana and Togo to leverage our experiences in gas distribution and power generation to provide energy solutions OR&T is a development organization that will quickly transition from being a user of to industries along the WAGP route. Our strategy is to partner with local companies cash to a major cash engine for the group by addressing the nation’s supply and the national utility companies in these markets and be the dominant player in the shortcomings in two distinctive phases, short/midterm and long term. West African gas and power markets. Numerous delays in the final take off of the WAGP project have meant that we have had to delay the start-up of all our projects in In response to the dire delays and value destruction experienced at the Lagos ports these markets. In addition, these countries are articulating and establishing their (which at times account for the supply of over 80% of the nation’s petroleum products appropriate rules and regulations, albeit very slowly. In the interim, we have spent consumption); Oando has completed the Front End Engineering & Design (FEED) of time creating relationships with potential partners in these countries. the Apapa Capacity Expansion Initiative. This initiative, an ocean based Single Point Mooring and subsea pipeline system, will reduce the congestion in the Apapa port OG&P Outlook for 2009 and significantly increase the tank turns of the Major Marketers’ existing storage. The The outlook for OGP in 2009 is positive with two new subsidiaries, APL and EHGC, first phase of this project is expected to come on stream as early as the first half of projected to start contributing revenue during the period. These additional revenue 2011. streams will ensure that OGPs growth continues apace given the readily predictable revenue stream of the existing gas distribution business. In the midterm, we will develop and operate a state of the art refined product import terminal supported by the first privately operated Single Point Mooring (SPM) system Rising capital costs due to the ongoing global recession, depressed equity valuations in West Africa. An SPM is an offshore system used to discharge very large carriers and regulatory uncertainties are major concerns for OGP. In addition, the situation in into offshore tanks via a subsea pipeline. The logistics benefits of such an operation, the Niger Delta region, our source of gas supply, continues to constitute a major coupled with the world class terminal operating systems planned for the 210kT threat to gas supply security. However, local gas consumption forecasts are still capacity facility will make it the terminal of choice for not only OR&T’s sister company, expected to follow the long term growth projection pattern given the current low Oando Supply & Trading but all other serious importers. The terminal, located in the Lekki Free trade Zone (LFTZ) is planned to come on stream early 2012.

pg27 Similarly, the division will take advantage of supply side opportunities that will reduce bbls/day. The OML 134 block is still under development and is expected to start Group operating costs and enhance supply chain reliability. In this vein, the division producing within the next year. is currently reviewing two significant development and acquisition opportunities in NW Europe that will complete the supply chain integration that will see Oando control OML 56 product origination (from component blending ) to into-car sales. In partnership with Energia, the operator of the Obodeti/Obodugwa marginal field, OPDC re-entered the Obodugwa-1 well and retrieved the 2 tubing plugs in a rig The long term solution will be the multi-billion dollar development of the first greenfield less operation in early May 2007. The well was re-logged in June 2007 and is currently refinery development in Africa for over twenty years. The first phase of the proposed in production testing stage and the tests recovered about 4,800 barrels a day. 360,000 bpd refinery will satisfy at least half of the nation’s import requirement and enhance shareholder value with strong distillates exports to meet severe deficits in OML 90 the Atlantic Basin. Land has been secured in the LFTZ for the project and the viability OEPL acquired a 30% working interest on OML 90 (Akepo) after signing a Financial, of the project, from a technical execution and cashflow perspective, will be much Technical and Management Services Agreement (FTMSA) with Sogenal Ltd and Exile enhanced by the prior execution of the refined product import terminal which will Resources Inc. The field is located in the shallow marine area of Delta State and was serve as the finished product storage terminal of the refinery. awarded to Sogenal Ltd by NNPC in the 2003 Marginal Field Bid Round. OML 90 (Akepo) is currently under evaluation and development. As the division strives to maintain focus on the highest value delivering opportunities and show the highest return for scarce Group cashflows committed, we have still OPL 278 managed to discover value in specialty products. LPG is destined to expand into a Activity in OPL 278 has concentrated on evaluating the potential of the block using the mainstream fuel, following clear government commitment to the private sector to available data. This data consists of 3D seismic coverage on the eastern one-third of utilize the vast quantities available from the nation’s NLNG projects domestically. LPG the block, and a sparse coverage of 2D lines. use in Nigeria is six times lower per capita relative to the West African average and has been dogged by supply interruption, a lack of shoreline storage and poor cylinder In addition, OEPL is actively pursuing rig opportunities in preparation for the planned availability. Oando will participate aggressively along the entire value chain to lead 2008 drilling campaign. We are in the process of pre-qualifying suppliers for Wellheads the rebirth of LPG use and testament to this commitment is the plan to establish over and Oil Country Tubular Goods (OCTG’s), which are long-lead items required for 9,000 MT of LPG storage in Apapa by the end of 2010. drilling. We have also secured approvals to advertise for drilling-related services from NAPIMS and NCD. In summary, the division has a tightly defined focus of infrastructure development, development that is much in demand and cash generative. Internally, our capabilities OPL 236 and process enhancement has continued apace to ensure reliable world class delivery OEPL obtained the award letter for the block from DPR on 25 May 2007, and we have of the identified projects while creating a platform to sequentially secure new since then worked on the details of the PSC agreement. This agreement was recently opportunities as they arise, out of new insight and without doubt, the government’s signed by the Minister of State for Petroleum Resources. privatisation drive. The company commenced preliminary work on Community Relations and Exploration and production of Crude Oil Environmental Impact Assessment (EIA) last year. A full-fledged work program will Oando Exploration and Production Limited (OEPL) and Oando Petroleum and commence as soon as the PSC is signed. A Global Memorandum of Understanding Development Company (OPDC), are the Group’s vehicles for the possession of has been signed with the communities involved. upstream assets. OPL 282 Asset profile: The Nigerian Agip Oil Company, operator of OPL 282, focused on the planned 3D seismic acquisition as the main activity in 2007. The pre-qualification bids were opened OML 125 and OML 134 at the end of February, with 2 contractors qualifying for the technical stage. The OML 125 and OML 134 acquired a 15% participating interest in OML 125 and OML Technical “Invitation to Tender (ITT)” documents were approved by NAPIMS and 134 in 2008. These blocks are operated by Agip and the blocks are located in the NCD, and Agip is currently awaiting the incorporation of the NAOC PSC into the deep offshore of Nigeria. OML 125 block is currently producing in excess of 18,500 NIPEX portal in order to issue the ITT to the qualified contractors. pg28 pg29 In accordance with Section 259(1) and (2) of the Companies & Allied Matters Act Looking Forward to 2009 (CAMA), 2004 and Articles 92 & 93 of the Company’s articles of association, the Our outlook for 2009 and beyond looks very bright. Our Upstream division is not an following Directors, who are longest in office are retiring by rotation and will present opportunistic play for us, it is a platform we intend to deliberately fund and grow as its themselves for re-election at this meeting: margins are very high and is able to deliver value to all shareholders. We will therefore • Mr. Oboden Ibru continue to invest in this division especially in near production assets to ensure our time to production is as short as possible. • Alhaji Hamidu Mahmud • Mr. Onajite Okoloko Over the years we have positioned ourselves to be the local content partner of choice and we expect this to yield fruits for you, our shareholders in 2009 and beyond. The Directors are proposing Mr. Femi Adeyemo, the Chief Financial Officer, for election as a director. He holds a Master’s Degree in Finance from Dividend the London Business School, a Master of Science in Engineering (Metallurgy and The directors are pleased to recommend the payment of final dividend of N 3.00 kobo Material Science) from the University of Lagos and a Bachelor of Science in Engineering per ordinary share of fifty kobo each held. The recommended dividend is subject to from the University of Ibadan. Before joining Oando PLC, Mr. Adeyemo was an the deduction of appropriate withholding taxes. If the dividend recommended is Associate Principal at McKinsey Incorporated, one of the world’s leading consulting approved and declared, the dividend warrants will be posted or shareholders firms. Prior to joining McKinsey Incorporated, he was the Financial Controller/Head of accounts credited directly on the 3rd day of August 2009 to those shareholders, Operations at First Securities Discount House (FSDH), a leading investment house in whose names appear in the Company’s Register of Members (Nigerian & South Nigeria; he also worked with PricewaterhouseCoopers as a Consultant/Auditor. Femi Africa) at the close of business on 3rd day of July, 2009. has extensive experience in Strategic Consulting especially in areas of Mergers and Acquisitions (M&A), operations reviews, strategy development and implementation Any dividend payable on or in respect of an Oando share which is unclaimed may be as well as organization redesign and financial management. He is also an Associate invested or otherwise made use of by Oando, at the discretion of the directors, until member of the Institute of Chartered Accountants of Nigeria. claimed. Any dividends which remain unclaimed for a period of 12 years from the date when such dividends became due for payment shall, if the directors so resolve, The names of Directors who held office during the year and at the date of this report be forfeited to the Company. No unpaid dividend shall bear interest as against the are as follows: Company. Non-executive directors Oando has maintained an informal dividend policy as a result of extensive growth in 1. Major-General Mohammed Magoro (Rtd.), PSC, OFR, USAWC, Galadiman Zuru its businesses. As the Company transits from its aggressive growth phase to a consolidation phase, the directors will move to adopt a more formal dividend policy 2. Ademola Akinrele SAN which will balance steady dividend payments with adequate equity retention for future growth. In the interim, the Company has not entered into any arrangements for 3. Chief Felix Ndamati Atako JP‡ which future dividends have been or will be waived. 4. HRM Michael Adedotun Gbadebo, THE Alake of Egbaland Directors In accordance with corporate governance best practice, two of our directors, Chief 5. Valentine Oboden Ibru Felix Atako JP and Mr. Ikeme Osakwe who have served on the Board since 9th February 2000, nine (9) years from the date of their first election, are not presenting 6. Alhaji Hamidu Mahmud ‡ themselves for re-election. Chief Atako was the Chairman of the Audit Committee and a member of the Strategic Planning & Finance Committee and Nominations Committee. 7. Ike Osakwe ‡ Mr. Ikeme Osakwe was the Chairman of the Strategic Planning & Finance Committee and a member of the Audit Committee and Remuneration Committees. 8. Onajite Paul Okoloko

pg30 9. Navaid Burney Johannesburg office sourcing, transacting and monitoring investments in a number of high-growth sectors. Mr. Burney joined ECP in September 2000 from First • ‡ -Independent non-executive Merchant Bank of Zimbabwe where he had been General Manager of Investment Banking since 1997. From 1993 to 1997, he was Senior Investment Officer with the International Finance Corporation (IFC) where he focused on mining finance, Executive directors completed transactions and provided advisory services in Chile, Venezuela, Peru, Sierra Leone, Zimbabwe and Gabon. Prior to joining the IFC, Mr. Burney was an 10. Adewale Tinubu Associate Manager with Union Carbide Corporation’s treasury and had international banking experience from assignments in New York, Paris and Abu Dhabi. Mr. 11. Omamofe Boyo Burney serves on the Board of Directors of Starcomms Plc, Notore Ltd, Ocean & Oil Investments Ltd, Touch the Wild (Pty) Ltd and De Rust Olive Estates (Pty) Ltd 12. Mobolaji Osunsanya among others. Mr. Burney holds a B.S. in International Economics from Georgetown University and an MBA finance and Accounting from University of California at Berkeley. Brief Curriculum Vitae 5. HRM Michael Adedotun Gbadebo, CFR, The Alake of Egbaland Non-executive directors Prior to his coronation as the Alake of Egba Land in 2005, His Royal Majesty had a successful career in the Nigerian Army culminating in his appointment as the Principal Staff Officer to the Chief of Staff, Supreme Headquarters from January 1. Major-General Mohammed Magoro (Rtd.) OFR 1984-September 1985. The Alake holds a Bachelor of Arts degree from the premier A retired general of the Nigerian Army. He was one time Federal Commissioner university in Nigeria: University of Ibadan and has served on the boards of several of Transport, Minister of Internal Affairs and Member of the Supreme MilitaryCouncil. companies including: Ocean and Oil Services Limited, and Global Haulage In addition, he has served on the board of the National Maritime Authority. He Resources Limited. He was also awarded military honours such as the Forces currently sits on the boards of several other companies as well as the Board of Service Star (FSS) and the Defence Service Medal (DSM). Trustees, Peoples Democratic Party (“PDP”). He has held the position of Chairman of Oando since 2000. 6. Valentine Oboden Ibru Mr. Ibru holds a Bachelor of Science Degree in Finance and a Bachelor of Science 2. Ademola Akinrele SAN Degree in Decision Sciences, from the University of San Francisco, California, as Mr. Akinrele is a partner in the law firm F. O. Akinrele & Co. He holds a Bachelor of well as a Masters Degree in Business Administration from the International Graduate Laws Degree from University College, London and an LL.M from the University of School of Management (IESE), Navarra, Spain. Mr Ibru is currently the Managing Cambridge. He is a member of the Nigerian Bar Association, a Senior Advocate Director/Chief Executive Officer of Oceanic Capital Limited, a subsidiary of Oceanic of Nigeria and a Fellow of the Chartered Institute of Arbitrators in the United International Bank PLC, where he had worked for over 15 years in various Kingdom. capacities. Mr Ibru serves on the boards of Aero Contractors Nigeria Limited and Minet Insurance Brokers amongst others. 3. Chief Felix Ndamati Atako J.P ‡ Chief Atako is a seasoned financial analyst and a member of the Nigerian Stock Exchange and sits on the board of many companies. He obtained a Bachelor’s 7. Alhaji Hamidu Mahmud‡ Degree in Public Accountancy and an MBA in Finance & Investments from The He is the principal partner in the law firm of Mahmud Ahaneku & Co. Holds a Baruch College of the City University of New York, New York, USA. He served in Bachelor of Laws Degree from the Ahmadu Bello University, Zaria and is a member various capacities both in the private and public sectors. He is also a member of of the Nigerian Bar Association. He served on the board of the Gongola State the Institute of Directors (IoD). Broadcasting Corporation from where he was appointed to the Gongola State Executive Council. Alhaji Mahmud was a director of the Securities & Exchange 4. Mr. Navaid Burney Commission and a former Senator of the Federal government of Nigeria. He is also Mr. Navaid Burney is the Managing Director of Emerging Capital Partners (“ECP”), a member of the Institute of Directors (IoD). a leading Africa-focused private equity fund manager. He runs ECP’s

pg31 between the Nigerian National Petroleum Corporation and major international oil 8. Ikeme Osakwe‡ companies. He is one of the founding members of the Ocean and Oil Group, Mr. Osakwe is a Chartered Accountant as well as a Financial and Management where he developed and managed the operations department before his Consultant. He holds a Bachelor’s and a Masters Degree in Chemistry from the appointment in July 2001 as Executive Director, Marketing of Oando. Mr Boyo University of Oxford, England and is an associate Member of the Institute of serves on the boards of companies in the Oando group Chartered Accountants for England and Wales. Ike Osakwe has worked in various audit and consultancy firms and has carried out extensive management systems, 12. Mobolaji Olatunbosun Osunsanya operational and accounting review assignments within Nigeria and internationally. He is the Chief Executive Officer of Oando Gas & Power Limited. He holds a First He currently serves as chairman of Thomas Wyatt Nigeria Plc and sits on the Class bachelors degree in Economics from the University of Ife and a Masters boards of Notore Chemical Industries Ltd, and Leadway Pensure PFA. He has degree, also in economics, from the University of Lagos. He previously worked previously served on the boards of Fedex (Red Star Express) Limited, and also as a consultant with Arthur Andersen Nigeria (now KPMG professional services) as the Chairman of UBA Trustees Limited. with experience in the banking, oil & gas and manufacturing industries. Prior to joining Oando in August 2001, he was an assistant General Manager at Guaranty 9. Onajite Paul Okoloko Trust Bank Plc and later an Executive Director at Access bank PLC. Before his He was the Managing Director and Chief Executive Officer of Oando Energy appointment as CEO, Gaslink Nigeria, he was the Chief Marketing Officer, Services Limited from 2001 to 2006. Mr. Okoloko was one of the founding members Commercial, for Oando Marketing. of the Ocean and Oil Group and focused on the trading and energy services business lines. He holds a Bachelor of Science Degree in Economics from the Corporate Governance & Statement of Compliance University of Benin. He started his career working with Bounty Alarms, an Oando is dedicated to the protection and promotion of shareholders’ interest thus independent marketer of AT&T security systems in the United States of America, regularly updating and reviewing its structures and processes in order to have the where he rose to the position of Sales Training Manager. Mr. Okoloko is currently best business practice at all times and in turn exhibiting a value based performance. the Managing Director of Notore Chemical Industries Limited. The Company recognises the importance of adoption of best practice principles, its ‡ - Independent non-executive valuable contribution to long-term business prosperity and accountability to its shareholders. The Company is managed in a way that maximises long-term Group Executive Directors shareholder value and takes into account the interests of all of its stakeholders.

10. Adewale Tinubu Oando believes that full disclosure and transparency in its business operations are Mr. Adewale Tinubu is the Group Chief Executive, Oando Plc. He holds a Bachelor in line with good corporate governance and best practise principles and has applied of Laws Degree from the University of Liverpool and an LLM from the London principles set out in the Code of Corporate Governance issued by the Securities and School of Economics. He commenced his career with the law firm K. O. Tinubu & Exchange Commission, Nigeria, Code of Corporate Practice and Conduct contained Co. and was one of the founding members of the Ocean and Oil Group, where he in the 2002 King report and the Combined Code on Corporate Governance (2006) was responsible for the strategic expansion of that group. Prior to assuming his issued by the Financial Reporting Council, UK. present position, he served as Oando’s Executive Director, Finance and Administration. Mr. Tinubu is currently the Chairman of the boards of Gaslink Compliance Office Initiatives Nigeria and Tilca Nigeria Limited and sits on the boards of several other companies To demonstrate Oando’s fervent commitment to best business practice culture in line in the Oando Group. He is the Chairman of the CEOs of the major oil and marketing with the with the highest international standard, even where Oando is not obligated to companies meetings and a member of the Institute of Directors of Nigeria. do so, has implemented several Policies and Strategies in-house as outlined below: • ALL staff and Directors have been trained, certified and re-certified on the salient 11. Omamofe Boyo provisions of the Company’s Code of Business Conduct & Ethics using a web He is the Deputy Group Chief Executive. He obtained his Bachelor of Laws based training facility. Ethics training is also part of the induction on-boarding Degree from Kings College, University of London. He started his career with process for new staff. Chief Rotimi Williams’ Chambers, a leading Nigerian law firm, where he specialised in shipping and oil services and worked on several joint venture transactions pg32 All staff and Business partners will continually be enlightened and or trained on the importance of the implementation of the best business practices. • The Compliance and Ethics Office Publishes a monthly bulletin called the “Ethics Watch” to sensitize staff on the importance of ethical conduct. • Training for Business Partners on the Code of Business Conduct & Board of Directors’ Governance Structure Ethics is ongoing. The Board of Directors of the Company is responsible for setting the strategic direction of the company and for overseeing and monitoring its business affairs. The Board • The Company strongly believes in ensuring that it abides by the principles of ensures that the company is fully aware of its responsibility to all relevant stakeholders Corporate Governance and the institutionalization of best practice principles. in the conduct of its operations. The Board is responsible for the development and Insupport of this belief the Company embarked on the formulation and implementation of a sustainable policies, which reflect the company’s recognition of its implementation of the following policies, which were approved by the Board of responsibility to all stakeholders who are affected by the company in the performance Directors: of its operations which include, customers, employees, shareholders, communities and the environment.

• Gifts and Benefits Policy The Oando Board of Directors Oando recognises the importance of best corporate Designed to inform employees on the Company’s position regarding the governance principles, its valuable contribution to long term business prosperity and accountability to its shareholders. giving and acceptance of gifts and benefits from persons or entities that deal directly or indirectly with Oando Plc. All staff are expected to declare Board Performance Evaluation all gifts received from business partners using a gift declaration form The Board undertakes, annually, a formal and rigorous evaluation of its own performance available on the intranet. and that of its Committees and individual Directors. This serves to continuously stimulate a high level of performance, identify the strengths and weaknesses of individual • Related Party Transactions Policies Directors and articulate ways to bridge identified gaps thereby leading to further Designed to provide clear guidelines on related party relationships and strengthening of the Board. The result of the evaluation is presented to the whole Board for consideration and adoption. transactions and to ensure that Oando employees and Directors fully understand their responsibilities and obligations in respect of disclosures In 2008, the Board completed a full assessment of its performance and that of its regarding related parties and related party transactions. All staff and Committees for the 2008 financial year. In addition, a Director Peer Appraisal exercise directors are required to declare all related party transactions & was conducted. The Board enlisted the services of an external consultant, KPMG relationships as soon as such occurs using the related party form available Professional Services, to carry out these appraisals. on the intranet. The findings of the external consultants were considered by the Board and certain • Whistle Blowing Policy actions have been noted for implementation. Designed to enable staff, business partners and all stakeholders make Feedback on the performance of the Board as a whole and that of its Committees was confidential reports about any unethical business conduct involving the shared with the Board, while the feedback on individual Directors was discussed with company or any of its staff or directors. the Chairman. The Chairman then held private meetings with each Director to discuss the results and agree on an action plan. To facilitate this process, the Company has engaged the services of an independent consultant KPMG Forensic Services to provide and operate The Board’s Authority an Ethics Hotline to enable staff and other stakeholders make confidential The Board of Directors scope of authority are set forth in the Company’s Delegation of and anonymous reports of unethical conduct involving the company or Authority in conformity with relevant legislation and best practice recommendations. any of its staff or directors. Staff and Business partners are presently being trained on the importance and the use of the ethics hotline facility.

pg33 There is a formal schedule of matters reserved for the decision of the Board, which is basis of relevant information. Each Director is expected to attend all Board of Directors reviewed regularly. This includes (inter alia): meetings and applicable committee meetings. • strategy and objectives; The Company shall not prohibit its Directors from serving on other Boards of Directors. • business plans and budgets; Directors are expected to ensure that other commitments do not interfere in the • changes in capital and corporate structure; discharge of their duties. Directors shall not divulge or use confidential or insider information about the Company. • accounting policies and financial reporting; • internal controls; The Board in discharging its duties adopts the best practice principles, some of which are highlighted thus: • major contracts; • The Company believes that the Chairman of the Board should be a non executive • capital projects; director. • acquisitions and disposals; • To maintain balance of interest and ensure transparency and impartiality, a number • communications with shareholders; and of the Directors are independent. The independent Directors are those who have no material relationship with the Company beyond their Directorship. • Board membership. • Directors abstain from action that may lead to conflict of interest and are to ensure they shall comply with the Company’s Policy on Related Party Transactions. Board’s Composition and Independence The Board of Directors has a broad range of expertise that covers the oil sector, the Training and access to Advisers Company’s main business and the geographical areas. Each individual Director has The Company has a set induction programme for new directors on the company’s experience knowledge, qualifications, expertise and integrity necessary to effectively business and other information that will assist them in discharging their duties effectively. discharge the duties of the Board of Directors. The Company believes in and provides continuous training and professional education to its Directors. The Board of Directors and Board Committees have the ability to The Company believes that experienced Directors with diverse industry background retain external counsels to advice on matters, as they deem necessary. are essential for the provision of successful and strategic direction for the Company. The composition, competencies and mix- of -skills are adequate for its oversight Working Procedures. duties and the development of the corporate vision and strategy. The Board of Directors meets according to a fixed schedule, set at the beginning of each year, which enables it to properly discharge its duties. As a rule, the Board of The Board of Directors through its Corporate Governance Committee establishes Directors meets at least five (5) times a year. which members are independent and it also recommends the appropriate size of the board. The size of the Board is predetermined by the Article 78 of the Company’s Non-executive Directors are required to meet separately from executive members Articles of Association. at least once a year. Re-election of Directors All Directors are expected to be provided with a concise but comprehensive set of A maximum of one third of the Directors, who are the longest in office since their last information by the Company Secretary in a timely manner, concurrently with the appointment are required to retire by rotation and are eligible for re-election. notice of the Board meeting, no less than fourteen (14) days before each meeting. This set of documents is to include: Board’s Duties & Responsibility Directors act in good faith, with due care and in the best interests of the Company and • an agenda; all its shareholders – and not in the interests of any particular shareholder – on the • minutes of the prior Board meeting;

pg34 • key performance indicators, including relevant financial information prepared executive directors. Further, the Company shall not provide stock options to its non- by management, and clear recommendations for action. executive Directors unless approved by shareholders in general meeting.

The Board of Directors through the Company Secretary keeps detailed minutes of its The Company Secretary is responsible to the Board, and is also available to individual meetings that adequately reflect Board discussions, signed by the Chairman and Directors for advice and services. included voting results on an individual basis where decisions are not unanimous. The Company keeps recordings of important Board decisions, such as the approval Oando’s exemplary standards of corporate governance has been commended by of extraordinary transactions. the Nigerian Stock Exchange with the “Quoted Company of the Year Award” and the “Best in the Downstream Petroleum Sector” for several years consecutively since Remuneration. 2003. The latest was the year 2007 award by the as the Nigerian Stock Exchange as The remuneration of non-executive Directors is competitive and is comprised of an “Best Company in the Downstream Petroleum Sector”. annual fee and a meeting attendance allowance. The remuneration package shall, however, not jeopardize a Director’s independence. Executive Directors are not paid fees beyond their executive remuneration package. The Board of Directors shall, The current composition of the Board and its Committees is as follows: through its remuneration committee, periodically review the remuneration paid to Attendance at board meetings during the year ended 31st December Directors. The Company publicly discloses the remuneration of each Director on an 2008 individual basis. The Company will not provide personal loans or credits to its non Board Committees

Director Audit Nomination Remuneration Strategic Corporate Environment, Planning & Governance Health & Safety Finance M. Magoro OFR J. A. Tinubu O. Boyo
M. Osunsanya
A. Akinrele SAN


F. N. Atako JP


N. Burney

HRM M.A. Gbadebo CFR
H. Mahmud

V. O. Ibru


O. P. Okoloko


pg35 I. Osakwe


The board has established six formal committees as outlined below:

Director 10-04-08 27-05-08 25-07-08 31-10-08 16-12-08 (109th ) (110th) (111th) (112th) (113th)

M. Magoro OFR




J. A. Tinubu




O. Boyo




M. Osunsanya




F. N. Atako JP




A. Akinrele SAN




N. Burney - -


HRM M.A. Gbadebo




H. Mahmud




V. O. Ibru




O. P. Okoloko




I. Osakwe

* Mr. N. Burney was elected at the Annual General Meeting of the Company held on 27 May 2008.

• Strategic Planning and Finance Committee All the Committees have terms of reference which guides them in the execution of their duties. Each Committee reports to the Board of Directors. Each Committee provides Corporate Governance Committee • draft recommendations to the Board on matters that fall within the Board’s ambit. • Remunerations Committee Strategic Planning & Finance Committee members: Audit Committee (a statutory Committee with shareholder members) • Mr. I. Osakwe (Chairman) • Nominations Committee Chief F. Atako JP • Environmental Health & Safety Committee pg36 Mr. N. Burney in performing its guidance and oversight functions effectively and efficiently, by Mr. O. Ibru specifically defining the Company’s strategic objectives, determine its financial and Mr. O. Okoloko operational priorities, making recommendations regarding the Company’s dividend policy, and evaluating the long-term productivity of the Company’s operations. The Strategic Planning & Finance Committee assists the board of directors in performing committee met on 5 (Five) occasions in 2008. its guidance and oversight functions effectively and efficiently, by specifically defining Alhajithe Company’s H. Mahmud Strategic Planning & Finance Committee assists the board of directors Attendance at meetings during the year ended 31st December 2008 Director 09-04-08 17-07-08 29-10-08Corporate Governance01-12-08 Committee members: 02-12-08 Mr. A. Akinrele SAN (Chairman)

I. Osakwe X



F. Atako JP




N. Burney -



O. Ibru
X


O. P. Okoloko XX
xx

Mr. O. Ibru Mr. O. Ibru

The corporate governance committee assists the Board of Directors in performing its guidance and oversight functions effectively and efficiently, and is specifically charged The remuneration committee is chaired by an independent director and comprises of with the development of, compliance with, and periodic review of the Company’s the Chairman and two non-executive directors. It assists the Board of Directors in corporate governance policies and practices. The Committee further monitors and performing its guidance and oversight functions effectively and efficiently, the committee reviews policies concerning shareholder rights, conflict resolution, ethics, disclosure is specifically charged with ensuring the Company’s remuneration policies and practices and transparency, evaluation, and the Company ’s internal documents (organisation support the successful recruitment, development, and retention of directors and and process). The committee is chaired by a non-executive director and comprises managers, and thus help the company realise its business objectives and sustainable of two non-executive directors, one of whom is an independent director. Even though economic development. Whilst the committee may meet whenever and as often as the Committee held one meeting in the financial year ended 31 December 2008, there necessary to properly carry out its functions and duties in a timely manner. The were various “virtual” meetings in which it reviewed various Policies electronically. committee held meeting once in 2008. Attendance at meetings during the year ended 31st December 2008 Attendance at meetings during the year ended 31st December 2008 Remuneration committee members: Nominations committee members: Mr. I. Osakwe (Chairman) Alhaji H. Mahmud (Chairman) Mr. A. Akinrele SAN Mr. A. Akinrele SAN

Director 24 July 2008 Director 13th February ‘08 A. Akinrele
I. Osakwe
H. Mahmud
A. Akinrele
O. Ibru
O. Ibru

pg37 Chief F. Atako JP Mr. Peter Eyanuku studied Mechanical Engineering and has served in various organizations in different capacities and has also served with the National Directorate The nominations committee assists the Board of Directors in performing its guidance of Employment, Lagos as well as the Lagos State Health Management Board. He was and oversight functions effectively and efficiently, and is specifically charged with a Member of the Audit Committee of the United Bank for Africa PLC and is presently identifying qualified directors and senior executives. It is to ensure the company’s also a Member of the Audit Committee of Airline Services & Logistics PLC. policies support the successful recruitment, development, and retention of directors and executives and thus help the company realise its business objectives and Chief (Mrs.) E. Fadayomi ƒ† sustainable economic development. The committee is chaired by an independent Chief (Mrs.) Fadayomi is the principal partner in a firm of Solicitor and Advocates – director and comprises of two independent directors and one non-executive director. Eniola Fadayomi & Co. She holds a Bachelor of Laws Degree from the University of The Committee held one meeting in year ended 31st December, 2008. Lagos, Nigeria. She is a member several professional associations including the Nigerian Bar Association, the Institute of Directors and the International Federation of Attendance at meetings during the year ended 31st December 2008 Women Lawyers. She has served as the Chairman on the board of several companies including Afribank Nigeria Plc, Millennium Harvest Ltd and Telegraphique. She also Director 29th February ‘08 served as a member of the board of directors in May and Baker. A. Akinrele
She was formerly the Attorney General & Commissioner for Justice in Lagos State, F. Atako
Commissioner for Establishment, Training and Pensions and First Commissioner for Women Affairs and Poverty Alleviation on the Lagos state cabinet. H. Mahmud
Mr. Job Onwughara ƒ† Statutory Committeeò: Mr. Onwughara holds a Master of Science degree in Banking and Finance from the Audit Committee members: University of Ibadan, Nigeria. He is a fellow of the Chartered Institute of Bankers, London/Nigeria, an Associate of the Institute of Credit Management, London and Chief Felix Atako JP (Chairman) Member of the British Institute of Management. He has served at various Managerial Chief Atako JP obtained a Bachelor’s Degree in Public Accountancy and an MBA in levels at Savannah Bank and Crown Flour Mill Limited. Finance & Investments from The Baruch College of the City University of New York, New York, USA. Chief Atako is a seasoned financial analyst, who served in various The audit committee of the Company is chaired by an independent director of the capacities both in the private and public sectors. He is a member of the Nigerian company and, in addition, comprises of another independent director and one non- Stock Exchange and Institute of Directors Nigeria, (An Affiliate of the Institute of executive director together with the three shareholder members as required by the Directors – UK.) Chief Atako also sits on the Board of many companies. Companies and Allied Matters Act, 2004. The Audit Committee members meet at least three times a year and the meetings are attended by appropriate company executives, Mr. I. Osakwe including the group chief financial officer and the internal control & audit manager. The Mr Osakwe is a Chartered Accountant as well as a Financial and Management committee’s duties include keeping under review the scope and results of the external Consultant. He holds a Bachelor’s and a Masters Degree in Chemistry from the audit, as well as the independence and objectivity of the auditors. The committee also University of Oxford, England and is an associate Member of the Institute of Chartered keeps under review internal financial controls, compliance with laws and regulations Accountants for England and Wales. Ike Osakwe has worked in various audit and and the safeguarding of assets. It also reviews the adequacy of the plan of the consultancy firms and has carried out extensive management systems, operational internal audit and reviews its audit reports. and accounting review assignments within Nigeria and internationally. He currently serves as chairman of Thomas Wyatt Nigeria Plc and sits on the board of Leadway The committee held three meetings in financial year ended December 31, 2008. Pensure PFA. He has previously served on the boards of Fedex (Red Star Express) òThe Companies and Allied Matters Act, 2004’s requires that every public company Limited, and also as the Chairman of UBA Trustees Limited. have an audit committee and stipulates that a number of shareholders equal to the director members of this committee must be members of the audit committee. Mr. Peter Eyanukuƒ†

pg38 ƒ Shareholder members * ceased being a member on May 27, 2008 † elected member on May 27, 2008 Directors declarations Attendance at meetings during the year ended 31st December 2008 None of the directors have: – ever been convicted of an offence resulting from dishonesty, fraud or Member 09 April ‘08 17 July ‘08 29 Oct ‘08 embezzlement; – ever been declared bankrupt or sequestrated in any jurisdiction;


– at any time been a party to a scheme of arrangement or made any other form F. Atako of compromise with their creditors; I. Osakwe X

– ever been found guilty in disciplinary proceedings by an employer or regulatory body, due to dishonest activities; P. Eyanuku -

– ever been involved in any receiverships, compulsory liquidations or creditors


voluntary liquidations; E. Fadayomi – ever been barred from entry into a profession or occupation; or M. Mar’afu*
--– ever been convicted in any jurisdiction of any criminal offence or an offence under any Nigerian or South African legislation. O. Okoloko X X
J. Onwughara

Directors’ shareholdings The holdings of ordinary shares by the directors of Oando at 31 December 2008, being the end of Oando’s immediately preceding financial year, are set out in the table below:

Director Share Total No shares (as of share capital)

Maj- Gen Magoro (RTD),OFR,PSC,USAWC FSS - - Galadiman Zuru Jubril Adewale Tinubu - - Mr. Omamofe Boyo - - Mr. Mobolaji Osunsanya 35,999 0.00 Mr. Ademola Akinrele 38,604 0.00 Chief Felix Atako JP 55,201 0.01 Mr. Navaid Burney - - HRM Oba Adedotun Gbadebo, 15,000 0.00 CFR, The Alake of Egbaland Mr. Oboden Ibru 151, 369 0.02 Alhaji Hamid Mahmud Wali Nubi 8,347 0.00 Mr. Onajite Okoloko - - Mr. Ike Osakwe 74,317 0.01

Changes in the holdings of Oando ordinary shares by the directors which occurred in 2008 were as a result of the Bonus issue declared in 2007.

pg39 The holdings of ordinary shares by the directors of Oando as at 4 June 2009, being the date the 2008 Audited Accounts were approved are set out in the table below:

Director Share Total No shares (as of share capital)

Maj- Gen Magoro (RTD),OFR,PSC,USAWC FSS - - Galadiman Zuru Jubril Adewale Tinubu - - Mr. Omamofe Boyo - - Mr. Mobolaji Osunsanya 35,999 0.00 Mr. Ademola Akinrele 38,604 0.00 Chief Felix Atako JP 55,201 0.01 Mr. Navaid Burney - - HRM Oba Adedotun Gbadebo, 1,230 0.00 CFR, The Alake of Egbaland Mr. Oboden Ibru 151, 369 0.02 Alhaji Hamid Mahmud Wali Nubi 8,347 0.00 Mr. Onajite Okoloko - - Mr. Ike Osakwe 74,317 0.01

Interests of Oando’s directors in terms of the equity incentive scheme 2. F. O. Akinrele & Co. The executive directors stand to benefit from the employee equity incentive scheme. F. O. Akinrele & Co. is a law firm based in Lagos, Nigeria, whose services are See paragraph titled Staff equity participation scheme below for details of the employed by the company. Mr. Ademola Akinrele SAN is a partner at F. O. Akinrele scheme. & Co and a director of Oando.

Directors’ interests in transactions 3. Oceanic Bank International Plc (“Oceanic Bank”) None of the directors had a direct material interest in any transactions that were Oceanic Bank is one of Nigeria’s leading financial institutions, whose financial effected by Oando during: services are employed by the company. Mr. Oboden Ibru is an executive director - the current or immediately preceding financial year; or of Oceanic Bank Plc as well as a director of Oando. – any preceding financial year and remain in any respect outstanding or unperformed. 4. Ocean and Oil Holdings (Nigeria) Limited (“OOH”) OOH is a diversified principal investment holding company with an indirect However, some of the directors hold directorships in other companies or are partners controlling stake in Oando held through Ocean and Oil Investments Limited. in firms with which Oando had material transactions during the current financial year, Oando’s directors who are also directors of OOH are Mr. Adewale Tinubu, Mr. as summarised below: Omamofe Boyo and Mr. Onajite Okoloko.

1. Avante Capital Partners Limited (“Avante Capital”) Avante Capital is an investment advisory firm based in Lagos, Nigeria. Oando’s directors who are also directors of Avante Capital Partners are Mr. Wale Tinubu, Mr. Jite Okoloko and Omamofe Boyo. pg40 The day-to-day operational management of the Group’s activities is delegated to the the comparison of detailed monthly management reports against budgets, Group Chief Executive, who has direct responsibility for all operations and activities. forecasts and prior years. In addition the Group Chief Executive and Chief He is supported in this by the Deputy Group Chief Executive and the Group Financial Officer prepare a quarterly report for the Board on key developments, Leadership Council which comprises, in addition to them, the Chief Executive Officers performance and issues in the business. of the operating subsidiaries, plus the Chief Financial Officer, Chief Human Resources • The identification and mitigation of major business risks is the responsibility of Officer, the Company Secretary & Chief Compliance Officer, the Chief Legal Officer operating company management. Each operating company maintains internal and the Chief, Corporate Services Officer. controls and procedures appropriate to its structure and business environment, whist complying with Group policies, standards and guidelines. Internal control and risk • Insurance cover is maintained to insure all the major risk areas of the Group The Directors have overall responsibility for ensuring that the Group maintains a based on the scale of the risk and the availability of cover in the external market. sound system of internal controls to provide them with reasonable assurance that all • The use of external professional advisers to carry out due diligence reviews of information used within the business and for external publication is adequate, including potential acquisitions. financial, operational and compliance control and risk management, and for ensuring that assets are safeguarded and therefore that shareholders’ investment is protected. Relations with shareholders There are limitations in any system of internal control and, accordingly, even the most effective system can provide only reasonable, and not absolute, assurance against Communications material misstatement or loss. The Board considers effective communication with its investors, whether institutional, private or employee shareholders, to be of uttermost importance. In line with past practice, the Company has an Internal Audit unit that carries out routine and random checks on the company’s operations, including fixed assets and The Company reports formally to shareholders four times a year, with the quarterly stocks. The unit is also responsible for investigating frauds and misuse or results announcement and the preliminary announcement of the full-year results. misappropriation of the company’s assets. Shareholders are issued with the full-year Report and Accounts in May. These reports are posted on the website. The company also has an Internal Control Unit, which lays down and tests the controls and processes to ensure that the assets of the company are safeguarded. The Unit The Company also makes other announcements from time to time, which can be found is currently headed by a manager with vast control and processes experience. on the website.

Members of the Group Leadership Council meet institutional investors on a regular The key procedures that the Board has established and which are designed to basis, providing an opportunity to discuss, in the context of publicly available provide effective internal control for the Group are: information, the progress of the business. Institutional investors and analysts are also • The Board sets out the Group authority procedures which are adopted by all the invited to attend briefings by the Company following the announcements of the full- subsidiary companies. and quarterly results. Copies of the presentations given at these briefings are posted • The issue of a Group accounting and procedures manual which sets out the on the website. Group’s accounting practices, revenue recognition rules, accounting under NASB and IFRS and bid approval processes. Constructive use of the Annual General Meeting • The application of a rigorous annual budgeting process following a detailed The notice of meeting is sent to shareholders at least 21 working days before the entity and Group strategy review. All budgets are subject to approval at Board AGM. The Directors encourage the participation of private shareholders at the AGM, level. and are available, both formally during the meeting and informally afterwards, for • The Group Leadership Council is responsible for reviewing the operational questions. The Chairmen of the Audit, Remuneration and Nomination Committees are results, communicating and application of Group-wide polices and procedures all available to answer questions at the AGM. and strategy on operational matters which are communicated both to the Board and down to the operating units. Compliance statement The formal monthly operational review by the Executive Directors together with The Company has complied with the Code of Best Practice throughout the financial the divisional management teams to assess the financial and operating year ended 31 December 2008. performance and discuss the ongoing development of each business unit and

pg41 Shareholder Range Analysis as at December 31, 2008

No of Holders % of Holders UNIT % Holding CUM TOTAL

1 - 1,000 209,877 80.47% 61,196,274 6.76 61,196,274 1001 - 10,000 45,852 17.58% 114,388,369 12.64 175,584,643 10001 - 100,000 4,742 1.82% 107,676,494 11.90 283,261,137 100001 - 1,000,000 298 11.00% 76,422,286 8.45 359,683,423 1000001 and Above 57 2.00% 545,201,205 60.25 904,884,628 260,826 100.00% 904,884,628 100.00%

DISTRIBUTION OF SHAREHOLDERS BANKS/INSURANCE 86 0.03 9,022,580 1.00 9,022,580 CLOSE CORPORATION 51,210 19.63 34,163,408 3.78 43,185,988 INDIVIDUALS 205,712 78.87 274,509,100 30.34 317,695,088 NOMINEES & TRUST PUBLIC COMPANIES 916 0.35 144,844,967 16.01 462,540,055 PUBLIC COMPANIES 2,902 1.11 442,344,573 48.88 904,884,628 260,826 100.00 904,884,628 100.00 CONTROL ACCOUNT 261,112 904,884,628

PUBLIC/NON-PUBLIC SHAREHOLDERS NON-PUBLIC SHAREHOLDERS 8 0.00 310,105,127 34.27 310,105,127 (DIRECTORS& ASSOCIATES OF THE COMPANY) PUBLIC SHAREHOLDERS 260,818 100.00 594,779,501 65.73 904,884,628 260,826 100.00 904,884,628 100

BENEFICIAL SHAREHOLDERS WITH 2% OR MORE NIGERIAN CONTROL ACCOUNT 260,826 99.89 893,989,975 99 893,989,975 SOUTH AFRICAN CONTROL ACCOUNT 286 0.11 10,894,653 1 904,884,628 TOTAL 261,112 100.00 904,884,628 100

OCEAN AND OIL INVESTMENT LIMITED 309,726,290 34.23 pg42 Share Capital History

Date Authorized (N’000) Issued and fully paid (N’000) Consideration Increase Cumulative Increase Cumulative 1969 0 4,000 0 4,000 Cash 1978 3,000 7,000 2,100 6,100 Cash 1987 43,000 50,000 33,900 40,000 Cash 1991 10,000 60,000 0 40,000 - 1993 40,000 100,000 10,000 50,000 Bonus (1:4) 1995 0 100,000 12,500 62,500 Cash 1998 0 100,000 15,625 78,125 Bonus (1:4) 1999 0 100,000 0 78,125 - 2000 0 100,000 0 78,125 - 2001 50,000 150,000 0 78,125 - 2002 150,000 300,000 70,129 148,254 Scrip, ICLS and Agip Conversion 2002 0 300,000 14,825 163,079 Bonus (1:4) 2003 0 300,000 40,770 203,849 Bonus (1:4) 2004 0 300,000 82,301 286,150 Cash 2005 100,000 400,000 0 286,150 - 2007 100,000 500,000 90,885 377,035 Scheme of Arrangement – OOI and 12 identified Shareholders of Gaslink 2008 500,000 75,407 452,442 Bonus issue (1:5)

2008 Corporate Social Responsibility Report (CSR) In a bid to taking Oando’s commitment to education further, the Adopt–A–School project was formally initiated in April, 2007 in partnership with the Ministry of Education In 2008, Oando PLC continued its commitment in sustainable development by as an avenue for Oando to support the growth of primary education in communities embarking on a number of community based projects. where they operate.

Education The project aims at supporting the development of selected schools for an agreed Oando PLC empowers communities where they operate through the provision of period of time through the renovation of facilities, provision of teaching aids and education. They intend to contribute towards the achievement of the Millennium books. Development Goals (MDGs), with a keen interest on achieving universal primary education by ensuring that in 2015 children everywhere, boys and girls alike will be Currently the following Government Primary schools have been adopted: able to complete a full course of primary schooling. 1. Metropolitan Primary School, Orile-Iganmu, Lagos 2. Government Primary School, Ekorinim, Calabar, Cross River State The Oando community based projects include: 3. Daura Primary School, Daura, Katsina 4. Bundu Ama Primary School, Bundu, Rivers State Adopt – A - School 5. Model Primary School, Ekara, Onne, Rivers State In 2004, Oando commenced the adoption of Bundu Ama Community Primary School 6. QIC Central Primary School, Ikot Akpa Nkuk, Akwa Ibom State with the renovation of the ‘A’ wing, with the view to providing an environment conducive 7. Central Primary School Udubo, Damaha, Bauchi State for learning. 8. Nasarawa Pimary School, Katsina, Katsina State 9. Clementina Ajigbeda Primary School, Lagos State pg43 Scholarships Social Development Oando has been actively involved in scholarship projects with a view to promoting Oando is actively involved in the provision of social amenities and improving the education for youths in Nigeria, with focus on primary and secondary schooling for quality of life in their host communities. In doing this, Oando recognizes the need to less privileged children. These projects include: drive development from inside out i.e. development should be based on identified • Providing scholarships for 12 secondary/primary school children in the Bundu pressing needs of the community as against the practice of instituting projects based and Onne communities in Rivers state. on the perceived needs of communities. To this end Oando has embarked on a • Sponsorship of 100 out-of-school children from communities where Gaslink number of projects based on the social needs of the communities. operates in Lagos. Sponsorships Economic Empowerment/Employment In addition to sponsoring various youth’s competitions, programmes and activities, In recognizing the global paradigm shift to sustainable development, Oando has golf sponsorships, etc. Oando has also been actively involved with the sponsorship literarily adopted the saying: Give a man a fish and you feed him for a day, teach a of Mohammed Muazu (a youth golfer). man how to fish and you feed him for a lifetime. For Oando, each community has its uniqueness and intricacies. What goes across Mohamed Muazu board however, is the need to empower individuals within the communities to be Mohammed Muazu was discovered at Ikoyi Club in 2005, where he was nursing the financially stable and gainfully employed. To this end, Oando has made it a part of dream of becoming a professional golfer. Oando has been supporting him through their staffing policy to recruit skilled, semi skilled and unskilled labour from host sponsorship of golf matches, provision of golf kits and pre-University exams funding. communities to fill suitable positions. He has since been a force to be reckoned with in amateur golfing, through his numerous victories. Oando intends to continue sponsoring Mohammed Muazu in the area of furthering his education in Golf and creating opportunities for him to compete at professional golf tournaments.

Donations Oando has been involved in donating various Items to charities across Nigeria. Some of which are listed below:

DESCRIPTION AMOUNT 1 Sponsorship for the 2008 NUGA games – NUGA UNN FRC 10,000,000 2 A modern mammy boat (market women boat) – Abissa community in Akuku-Toru LGS of Rivers State 2,897,600 3 NYSC Lodge – Bille community Degema LGA of Rivers State 3,550,000 4 Passenger boat – KE community Degema LGA of Rivers State 1,830,000 5 Back-to-school Scholarships 100 children in Lagos (1st term 2008/9 session) 1,672,370 6 Lagos State communities – Agidingi, Omole, Keke Ogba, Wasimi-Maryland, Ikosi, Ojota, Oko Iya-Alaro, Ilupeju, Ijora, Oshodi, Orile Iganmu, Apapa, Obanikoro, Onipanu, Jibowu, Ojuelegba, TIncan and Isolo 1,136,200 7 Sponsorship of a chair in University of Ibadan – Aret Adams Foundations 1,000,000 8 Institute of Directors 1,500,000 9 Donation to International Women Society Day Nursery at Herbert Macaulay, Yaba, Lagos 1,000,000 10 75HP Yamaha Engine – Abissa community in AKuku-Toru LGS of Rivers State 1,000,000 11 Supply of plastic chairs, canopies and tables – Abissa community 1,000,000 12 Renovation of principal’s quarters of Governemnt Secondary School (GSS) KE 1,000,000 13 Back-to-School Scholarships 100 children in Lagos (3rd term 2007/8 session) 989,455 pg44 14 Back-to-School Scholarships 100 children in Lagos (2nd term 2007/8 session) 975,165 15 12 Secondary School scholarship payout for students at Bundu Ama and Onne community 960,000 16 Donations towards the NWIA skills acquisition – Nigerian West Indian Association 500,000 17 Donations for CAMCAM 2008 training programme 500,000 18 Sponsorship of the 3rd era nationals wheelchair championship – Nigerian Tennis foundation 500,000 19 Heritage Homes 482,000 20 Little Saints 307,200 21 Renovation of Daura Pry Sch – release of retention 269,105 22 Sponsorship – Medical Women’s Association of Nigeria 250,000 23 Donation for construction of NECA house – Nig Employment Consultative Association 250,000 24 Renovation of Metropolitan Pry Sch, Orile Iganmu, Lagos (phase 1), (Retention) 250,000 25 Donations for end of the year party at adopted schools 230,000 26 Financial Support towards the installation of the transformer at Port Harcourt warehouse community locality 150,000 27 School for handicapped, Epe garage, Ijebu Ode 50,000 28 Ogun State Hospital Management Board-hansens disease centre 50,000 29 Gwagwalada Motherless Babies Home, Abuja 50,000 30 Family Care Eduvision, Plot 114, Ebitu Ukiwe Street, Jabi, Abuja 50,000 31 Edo Orphanage Home, Benin 50,000 32 Oronsaye Orphanage Home, Benin 50,000 33 Motherless Babies Home Calabar 50,000 34 Motherless Babies Home Uyo 50,000 35 Golden Heart Orphanage, Enugu 50,000 36 Little Saint Orphanage, Enugu 50,000 37 Ibadan Home for Motherless Babies, beside Dental Clinic, UCH Ibadan 50,000 38 Christian Mission School for the deaf, Onireke, Ibadan 50,000 39 Handicapped, Kulende Area, Ilorin 50,000 40 Motherless Babies Home, Gakanbi Street, Ilorin 50,000 41 Gidam Bege, Zaria Rd, Jos 50,000 42 Rafiki Foundaion, Jos 50,000 43 Bethcorey Home, Zaria or Adonai Children Home, Kaduna 50,000 44 Arewa Orphanage, Kaduna 50,000 45 Torrey Homes Shahuchi, Kano 50,000 46 Torrey Homes at Tudun Maliki, Kano 50,000 47 Torrey Homes Nassarawa, Kano 50,000 48 Nassarawa Children’s Home, Kano 50,000

pg45 49 Beth Torrey Home, 160 Kirikiri Road, Olodi, Apapa, Lagos 50,000 50 Red Cross Orphanage Home, Ebute Metta, Lagos 50,000 51 SOS Children’s Orphanage, Lagos 50,000 52 Lagos State Rehabilitation Centre, Owutu, Ikorodu, Lagos 50,000 53 Old Peoples Home, Onike, Yaba, Lagos 50,000 54 Maiduguri Children’s Home, Maiduguri 50,000 55 Beneishek General Hospital, Maiduguri 50,000 56 Mama Ambayo Orphanage Makurdi 50,000 57 Bega Orphanage Home or Elshadal Orphanage Home, Makurdi 50,000 58 Handef Society for the Handicapped, Akure 50,000 59 Orphan and You Charity, Akure 50,000 60 Sisters of the needy Motherless Babies Home, Owerri 50,000 61 Owerri Motherless Babies Home, Owerri 50,000 62 Chesire Home, Creek Road PHC 50,000 63 School of the Less Priviledge, Trans Amadi or Elders’ Home, Harbour Road PHC 50,000 64 Sokoto State Orphanage Home, Sokoto 50,000 65 Ministry of Social Welfare Sport & Culture, Sokoto 50,000 66 Our Lady of Mercy Orphanage Home, Enerhen Road, Warri 50,000 67 Buwa Orphanage Home, Commercial Avenue, Sapele or Oreme Motherless Home, Ughelli 50,000 68 Yola Children Home, Yola 50,000 69 Motherless Babies Home, Gombe 50,000 70 Rilwan Abiodun (a blind boy) @ Society for the Blind School, Lagos 80,000 71 Nigerian Red Cross Society Abandoned and Motherless Babies Home, Adekunle, Lagos 50,000 36,479,395 Donation of Ethanol testing Equipment Talent Management Oando in its bid to ensure that the right petroleum products are sold in Nigeria, has Talent Management is the management of the talent of an organization. Talent donated a state of the art Ethanol Testing Equipment known as “Varian CP- encompasses employees’ skills, knowledge, cognitive abilities, potential, values and 3800 GC’ to the Department of Petroleum Resources(DPR). work habits amongst others. In 2008, managing the talent of the organization was the major pre-occupation of the HCM department. The Varian CP-3800 GC testing machines meet the 21st Century analytical requirements with practical solutions for simple and complex applications to determine the level of Performance Management – There is no credible organisation that can manage its all the chemical components present in fuel. talent successfully without a best practice approach to performance management. 2008 was the year we launched our performance management system on the Oracle Developments & Initiatives for Oando Human Capital platform. It is called the Talent Management System (TMS). Oando went beyond the In 2008 the following are the developments and initiatives of the Human Capital by the system requirements and implemented a competency based appraisal system. Company: Competencies look at the knowledge, skills and attitudes employees require to perform in their job functions. This meant that employees were measured not only against pg46 business objectives but on their competencies. The competencies are Organizational, are developing a talent pool, assessing and managing the talent of the organisation Managerial, Leadership, Behavioural and Functional. effectively, putting in place a process for easy identification of outstanding performers, assuring differentiation in reward and upward progression within the organisation, The TMS tool also assisted in defining the Corporate objectives with a functionality to focused and beneficial training and development activities to grow the talent pool and share and align objectives company wide. This means that all objectives are cascaded a structured coaching, mentoring and feedback process. to the lowest level in the organisation and full employee buy in and involvement are assured. The TMS tool is designed to run in two major performance cycles. We have The Succession planning process was further strengthened with the compilation of the mid and end year appraisal cycles. Specific scores are assigned to a merit rating succession plans from the different entities and Group/ Shared Services functions. and it then becomes quite convenient to ensure differentiation in overall performance These plans were discussed at the Group Leadership council, gaps identified and and help drive an equitable reward system. action plan put in place to bridge them.

Hay Job Evaluation Closely related to the succession planning process is the Accelerated Development Job evaluation in simple terms is concerned with ensuring a process is put in place pool. The pool employs a pseudo formal approach to identifying the high potential to determine the relative worth of every job in the organization. Hay Job evaluation employees in the organisation. Entity, Group and Shared Services heads are asked looks at the job irrespective of the performance of the job holder or the environment to nominate employees into the pool. Nomination is purely based on merit and consistent in which the job is being performed. This strict emphasis on the job requirements performance. The pool itself is subject to consistent audit and challenge at the group alone makes the Hay methodology stand out as a best practice tool. The need to leadership council level and continuous membership has to be maintained based on determine the relative worth of every job cannot be over emphasised. Firstly, it helps clear performance parameters. In addition to the other tools used in managing talent, to determine the hierarchy, which births the organisational structure. Secondly, it this enables the organization to focus on candidates who are in line to lead and chart presents an objective platform to assign rewards in an equitable and fair manner. the direction of the organization in the near future. Candidates benefit from an Thirdly, it aids succession planning and the high potential identification process. accelerated growth in their career, are assigned mentors and have their training and Lastly, it is the critical tool in achieving a manpower plan for the organization. development interventions strictly tailored to their identified potential.

In 2008, Oando implemented the Hay job evaluation methodology. The methodology Graduate Trainee Programme has two dimensions. For typical management positions, it employs the Hay guide In December 2008, the organisation took the bold step of selecting nineteen (19) charts. The charts are considered granular and the closest to a level of precision. young graduates in diverse disciplines to constitute the maiden intakes for the Oando This is so because the process of job evaluation itself is not scientific in the real sense Graduate Trainee programme (GTP). The candidates, who were taken through a but adopts an art form. Judgment is applied based on practice and jobs are thorough recruitment and selection process involving written aptitude tests, oral benchmarked across organizations. Thereafter, the results of the evaluation are interviews and an assessment centre, will become part of the Oando talent pool. subjected to internal and external validation. The Hay guide chart has been in use for Recruiting young graduates and putting them through a detailed training programme upwards of seventy (70) years and is the tool of choice for over 7000 blue chip covering all the functional areas of the organization is the best practice approach to organizations worldwide. The Decision Tree approach is used for typical non achieve home grown talent. They grow with a clear understanding of the ethos of the management positions. It is less granular and computer based, incorporating the organization and become the champions of the culture and behaviours the organization immediate feedback of the job holder and his/her supervisor. It addresses the would like to see entrenched. The GTP will be for a period of twelve (12) months concerns of the job holder at this level in the organisation and is considered transparent. culminating in a Group Chief Executive’s interview at the end of the training period. It is only success at this final stage that guarantees the trainee a position in the The benefits of the Hay job evaluation are numerous but amongst others, the ability to organisation. enable the organization benchmark jobs across organizations and different industries stands out. This outcome simplifies the remuneration survey process and makes Training and Development comparisons more accurate reducing to a large extent the margin of error. The Individual Development Plan (IDP) was implemented in the first and second quarters of 2008. Once the process is concluded between employee and supervisor, Leadership Development Framework it becomes the main input in determining training and development interventions in In 2008, leadership development became institutionalised with a clear definition of the the Company. It also helps to ensure that training and development execution has organisation’s leadership development framework. The key elements of the framework relevance to the needs of the employee and the organisation. The IDP assists in

pg47 mapping out a career path for the organization. The conversation between the Conclusion employee and supervisor is considered a critical part of the IDP process. It is an It would be apt to describe 2008 as a watershed year in the sense that most of the additional opportunity to manage expectations and define clear career goals. plans that had been conceptualised were finally executed and the direct benefits of their implementation became visible to the organisation. The Company continues to invest heavily in the training and development of her employees. Employees have access to a trove of information on the Oracle learning Environmental Health Safety and Quality platform online to choose diverse course covering a myriad of functional areas locally This report highlights Environmental Health Safety and Quality (EHSQ) activities for and overseas. 2008; it gives an overview of our Environment Health Safety and Quality achievements as a company in line with our EHSQ Business plan. Staff Equity Participation Scheme Vetiva Capital Management Limited was appointed as Trustee to the Oando Staff In 2008 we achieved zero fatality in our facilities, made a significant progress in Equity Incentive Scheme. A formal application was sent to the Securities and Exchange boosting our awareness campaigns and trainings. In addition, the company received Commission (“SEC”). SEC registered the securities on the 10th day of November, various awards on environmental compliance from government agencies. We were 2008. Further to SEC’s approval we submitted an application for the listing of the successful in carrying most of our EHS-MS audits/MFIs as scheduled in our EHSQ shares on the Nigerian Stock Exchange (“NSE”) and approval was granted on 12th business plan for 2008, with an immense commitment from management from day of March, 2009 to list the 40,000,000 shares in tranches after each Scheme participation in management facility inspection and other events. Cycle. In the first Cycle which ended in 2008, a total of 8,000,000 shares were offered to eligible employees, both as options and awards. Due to the current market price We experienced an increase in the reporting of hazard identification reports (HIRs) of N86.05 (as at 18th May, 2009), employees entitled to receive options under the amongst staff and a decrease in incidents those resulting in injuries (LTI). Some Scheme have not exercised their Options. members of staff were commended for their prompt reporting of EHS issues during our EHSQ week. Equal Opportunity Employer Oando has continuously demonstrated through its Quality Management System that Oando has a long-standing commitment to the principles of equal employment it is able to meet the quality needs of its clients. Oando Quality Management System opportunity. In keeping with this commitment, the company continues to recruit, has been effective with increased productivity and understanding of the processes, employ, compensate and set terms, conditions, and privileges of employment of reduction in errors and re- work. Quality improvement initiatives during the year qualified persons without regard to gender, race, age, sex, religion, ethnicity, national included customer survey response feedback, quality audits (both internal and origin, disability, status or sexual orientation. external) review of quality documents and processes as well as management review This commitment ensures that the company conducts all its employment practices in meetings. Trainings were conducted for internal quality auditors, appreciation courses a non-discriminatory manner. Employees are given fair consideration and are judged and internal quality auditors’ course for intending auditors were performed during the solely on their job-related aptitude, training, skills, and performance. year under review. Staff strength Oando has consistently provided superior quality service delivery thereby enhancing The Oando Group staff strength as at December 31, 2008 was 431(Four Hundred customer satisfaction through its laboratories. Quality service delivery included and Thirty One). The Group continues to show strong commitment towards the support product analysis before product receipt and before product loading both at our of various Industrial Training efforts as well as the mandatory National Youth Service terminal and 3rd party locations. Daily product-in-tank analysis, facility inspections Scheme. and prompt response to customer complaints were other activities carried out by the EHSQ team. Management Staff Senior Staff Junior Staff Executive Management Nevertheless, we still experienced a series of road accidents from third party contractors and in spite of increased awareness campaigns carried out. 100 322 7 2 Amongst all, most of our key achievements are listed below:

• Successful EHSQ Week • World Aids Day Commemoration pg48 • Conducted EHS case for most of our facilities KLP1, Apapa 1 & 2,Onne and The figure below illustrates the Oando PLC EHS Performance for 2008. AGI • Supported Lagos government green environment project by participation in OANDO PLC EHS ’08 PERFORMANCE REVIEW plant a tree exercise Acquisition of Own Shares • EHS –MS Audits, Management facility Inspection and follow up audits The Company did not acquire its own shares in year 2008. • Achieved series of awards for Environmental Compliance • Ako- Eko Green Environmental Award (Apapa terminal) Awards • Green Ribbon Award (Kaduna Lube plant) Oando was in year 2008 awarded the Nigerian Stock Exchange Presidential Merit • Deployment of the Drug and Alcohol policy. Award for “Best Quoted Company in the Downstream Petroleum Marketing • Trained 1774 staff/contractors: Trainings such as Managing Safely, Directing Sector” in 2007. Safely, Defensive Driving for drivers, Advanced Fire Fighting for Fire Marshals, ISO 14001 Environmental Management System and EHS Level 1, 2 & 3 The Nigerian Stock Exchange (NSE) award brings to five the number of times Oando trainings were conducted. has won the award. It won in 2001, 2003, 2004, 2006 and 2008. In 2003 and 2004 the • Carried out Environmental Evaluation Reports (EERs) for most of our service Company also won the coveted Best Quoted Company” by the NSE. stations • Built up a good relationship with our regulatory bodies The NSE award underpins the degree of professionalism and significance the Company commits to corporate governance. On the International scene, Oando was awarded the “Most Outstanding Independent Energy Firm” at the 15th African Upstream Conference in Cape Town, South Africa.

The international upstream award recognised Oando’s fast growing portfolios in the different areas of the Upstream Sector. Market Value of Fixed Assets

Substantial interest in shares Ocean & Oil Investments Limited is the highest single shareholder in the Company, holding 309,726,290 units representing 34.23% of the issued shares. No other shareholder holds 5% and above of the issued share capital of the Company. Auditors PriceWaterhouseCoopers, have indicated their willingness to 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

• Participated in national and international organized environmental programme. • Retention of the ISO 9001:2000 Certification for Oando Marketing • Pre-assessment ISO audit for Oando Gas & Power

The attainment of the Environmental awards has spurred our pursuit into achieving Oredeji K. Delano (Mrs.) ISO 14001 Certification for Environmental Management system come 2010. Company Secretary

pg49 REPORT OF THE AUDIT COMMITTEE

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

a. Reviewed the scope and planning of the audit requirements b. Reviewed the external Auditors’ Management Controls Report for the year ended December 31, 2008 as well as the Management response thereto,

And can ascertain that accounting and reporting policies of the company for the year ended December 31, 2008 are in accordance with legal requirements and agreed ethical practices.

Dated this 17 day of June 2009

Chief Felix N. Atako J.P Chairman, Audit Committee

pg50 Report of the Auditors 52

Statement of Directors Responsibilities 53

Balance Sheet 54

Profit and Loss Accounts 55

Statement of Cash Flows 56

Notes to the Financial Statement 57

Value added Statement 87

Five Year Financial Summary 88

Statement of Unclaimed/Returned Dividend Warrants 89

Proxy Form 91

Admission Card 93

pg51 PricewaterhouseCoopers Chartered Accountants 252E Muri Okunola Street Victoria Island P.O.Box 2419 Lagos, Nigeria

REPORT OF THE INDEPENDENT AUDITOR TO THE MEMBERS OF OANDO PLC control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the Report on the consolidated financial statements overall presentation of the financial statements.

We have audited the accompanying financial statements of Oando Plc (the Company) and its We believe that the audit evidence we have obtained is sufficient and appropriate to provide a subsidiaries (together, the ‘Group) which comprise of the consolidated balance sheet as of 31 basis for our opinion. December 2008 and the consolidated profit and loss account and consolidated cash flow statement for the year then ended and a summary of significant accounting policies and other Opinion explanatory notes. In our opinion the accompanying financial statements give a true and fair view of the financial Directors’ responsibility for the financial statements affairs of the group and of the company at 31 December 2008 and of the profit and cash flows of the group and of the company for the year then ended in accordance with the Nigerian The directors are responsible for the preparation and fair presentation of these financial statements Statement of Accounting Standards and the Companies and Allied Matters Act. in accordance with Nigerian Statements of Accounting Standards and with the requirements of the Companies and Allied Matters Act. This responsibility includes: designing, implementing and Report on other legal requirements maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying The Companies and Allied Matters Act requires that in carrying out our audit we consider and appropriate accounting policies; and making accounting estimates that are reasonable in the report to you on the following matters. We confirm that: circumstances. i. we have obtained all the information and explanations which to the best of our Auditor’s responsibility knowledge and belief were necessary for the purposes of our audit;

Our responsibility is to express an independent opinion on the financial statements based on our ii. in our opinion proper books of account have been kept by the Company and the audit. We conducted our audit in accordance with International Standards on Auditing. Those Group, so far as appears from our examination of those books; standards require that we comply with ethical requirements and plan and perform our audit to obtain reasonable assurance that the financial statements are free from material misstatement. iii. the Company and the Group’s balance sheet and profit and loss account are in agreement with the books of account. An audit involves performing procedures to obtain audit evidence about the amounts and 17 June 2009 disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal Chartered Accountants Lagos, Nigeria pg52 Statement of Directors’ Responsibilities as at31 December 2008

i. Responsibilities in Respect of the Financial Statements and controlling the Company and for monitoring activities of the executive The Companies and Allied Matters Act requires the directors to prepare financial management. The Board presents a balanced and understandable assess- statements for each financial year that give a true and fair view of the state of ment of the Company’s progress and prospects. The Board consists of the financial affairs of the Company at the end of the year and of its profit or loss. The Chairman, eight non-executive directors and three executive directors. The responsibilities include ensuring that the Company: non- executive directors are independent of management and free from any constraints, which could materially interfere with the exercise of their indepen- (a) keeps proper accounting records that disclose, with reasonable accuracy, the fi- dent judgment. They have experience and knowledge of the industry, mar- nancial position of the Company and comply with the requirements of the Compa- kets, financial and/or other business information to make a valuable contribu- nies and Allied Matters Act; tion to the Company’s progress. The Chief executive officer is a separate individual from the Chairman and he implements the management strategies (b) establishes adequate internal controls to safeguard its assets and to prevent and and policies adopted by the Board. They meet at least four times a year. detect fraud and other irregularities; and

(c) prepares its financial statements using suitable accounting policies supported by The Audit Committee reasonable and prudent judgments and estimates, and are consistently applied. The Audit Committee is made up of six members - three directors (all of whom are non-executive) and three shareholders. The Committee members meet at least thrice The directors accept responsibility for the annual financial statements, which have a year. been prepared using appropriate accounting policies supported by reasonable and Its duties include keeping under review the scope and results of the external prudent judgments and estimates, in conformity with Nigerian Accounting Stan- audit, as well as the independence and objectivity of the auditors. The Audit dards and the requirements of the Companies and Allied Matters Act. Committee also keeps under review internal financial controls, compliance with laws and regulations and the safeguarding of assets. It also reviews the ad- The directors are of the opinion that the financial statements give a true and fair equacy of the plan of the internal audit and reviews its audit reports. view of the state of the financial affairs of the Company and of its profit or loss. The directors further accept responsibility for the maintenance of accounting records Systems of Internal Control that may be relied upon in the preparation of financial statements, as well as ad- Oando Plc has well-established internal control systems for identifying, managing equate systems of internal financial control. and monitoring risks. These are designed to provide reasonable assurance that the Nothing has come to the attention of the directors to indicate that the Company risks facing the business are being controlled. The corporate internal audit function will not remain a going concern for at least twelve months from the date of this of the Company plays a key role in providing an objective view and continuing as- statement. sessment of the effectiveness of the internal control systems in the business. The systems of internal controls are implemented and monitored by appropriately trained ii. Responsibilities in Respect of Corporate Governance personnel and their duties and reporting lines are clearly defined. Introduction Oando Plc is committed to the principles and implementation of good corporate Code of Business Ethics governance. The Company recognises the valuable contribution that it makes to Management has communicated the principles in the Company’s Code of Conduct long-term business prosperity and to ensuring accountability to its shareholders. to its employees in the discharge of their duties. This code sets the professionalism The Company is managed in a way that maximises long term shareholder value and and integrity required for business operations which covers compliance with the takes into account the interests of all its stakeholders. Oando Plc believes that full law, conflicts of interest, environmental issues, reliability of financial reporting, brib- disclosure and transparency in its operations are in the interests of good gover- ery and strict adherence to the principles so as to eliminate the potential for illegal nance. As indicated in the statement of responsibilities of directors and notes to practices. the financial statements the business adopts standard accounting practices and ensures sound internal controls to facilitate the reliability of the financial statements.

The Board of Directors The Board is responsible for setting the Company’s strategic direction, for leading Director Director

pg53 BALANCE SHEET AS OF 31 DECEMBER 2008 N N’0000 31-Dec-08 31-Dec-07 NOTE Group Company Group Company Non-current assets Property, plant and equipment 4 89,903,189 1,539,035 40,318,614 26,039,055 Intangible assets 5 22,350,513 597,334 22,464,771 9,699,814 Long term Investments 6 2,000 32,131,055 10,000 16,844,848 Deferred tax asset 13 1,044,162 - - - Long term receivable 7 14,544,777 44,368 11,138,446 318,391

Current assets Inventories 8 16,068,840 33,942 24,729,531 10,191,326 Debtors and prepayments 9 93,702,949 121,366,073 46,813,296 30,294,251 Deferred tax asset 13 1,179,580 - - - Bank and cash balances 48,981,689 26,776,003 17,209,397 11,494,703 159,933,058 148,176,018 88,752,224 51,980,280 Current liabilities Creditors and accruals 10 45,242,536 74,011,951 41,409,519 20,906,936 Dividend payable 1,249 1,249 1,910 1,910 Deferred tax 13 437,329 - - - Current income tax liabilities 27 3,355,327 613,514 1,308,107 1,020,443 Borrowings 11 142,347,242 48,349,488 52,634,682 28,223,938 191,383,683 122,976,202 95,354,218 50,153,227

Net current (liabilities)/assets (31,450,625) 25,199,816 (6,601,994) 1,827,053

Non-current liabilities Borrowings 11 41,861,113 25,382,404 17,730,352 7,925,558 Other non-current liabilities 12 934,458 - 726,853 673,734 Deferred taxation 13 7,482,795 910,683 889,405 849,344 Retirement benefit obligation 14 - - 141,671 141,671 Provision for other liabilities & charges 15 1,236,917 - 425,279 425,279 51,515,283 26,293,087 19,913,560 10,015,586 Net Assets 44,878,733 33,218,521 47,416,277 44,713,575 Capital and Reserves attributable to equity holders Share capital 16 452,442 452,442 377,035 377,035 Share premium account 17 29,716,870 29,716,870 29,877,741 29,877,741 Revaluation reserve 18 7,215,257 217,242 10,652,936 10,652,936 Retained earnings 19 7,343,127 2,831,967 6,321,140 3,805,863 44,727,696 33,218,521 47,228,852 44,713,575 Minority interest 20 151,037 - 187,425 - Total Equity 44,878,733 33,218,521 47,416,277 44,713,575

The financial statements and notes on pages 54 to 88 were approved by the Board of Directors on 4 June 2009 and signed on its behalf by:

DIRECTORS: pg54 PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 DECEMBER 2008

N’000 31-Dec-08 31-Dec-07 NOTE Group Company Group Company

Turnover 21 339,420,435 6,837,741 185,892,083 131,007,169 Cost of sales (299,810,537) - (164,443,490) (115,595,914) Gross profit 39,609,898 6,837,741 21,448,593 15,411,255 Selling and marketing costs (7,144,126) - (5,722,171) (5,722,171) Administrative expenses 22 (17,420,675) (1,104,004) (10,958,316) (7,280,183) Interest received 23 4,548,759 4,308,339 871,336 507,155 Other operating income 24 1,816,444 365,029 2,471,002 1,707,933 Operating profit 21,410,300 10,407,105 8,110,444 4,623,989 Interest payable and similar charges 25 (10,667,689) (3,895,439) (1,296,716) (906,793) Profit before taxation 26 10,742,611 6,511,666 6,813,728 3,717,196 Taxation 27 (2,399,286) (168,099) (1,333,313) (1,045,714) Profit after taxation 8,343,325 6,343,567 5,480,415 2,671,482

Attributable to: Equity holders of the company 19 8,339,273 6,343,567 4,755,009 2,671,482 Pre acquisition profit 701,370 Minority interests 20 4,052 - 24,036 -

8,343,325 6,343,567 5,480,415 2,671,482

Earnings per share for profit attributable to equity holders of the company during the year:

Basic earnings per share (kobo) 28 922 701 751 422

Diluted earnings per share (kobo) 28 922 701 751 422

The accounting policies and notes on pages 57 to 86 form an integral part of these financial statements.

pg55 STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2008

N’000 31-Dec-08 31-Dec-07 NOTE Group Company Group Company Cash flows from operating activities Net cash flow from operating activities before changes in working capital 29 22,689,041 5,315,467 7,912,509 5,092,426 Net decrease in working capital 30 (34,210,938) (19,219,815) (2,723,127) (4,716,816) Decrease in pre-operational expenses - - 450,122 - Income tax paid 27 (2,105,695) (583,836) (678,656) (567,057) Staff gratuity paid 14 (141,671) (141,671) (120,764) (120,764)

Net cash (used in)/generated from operating activities (13,769,263) (14,629,855) 4,840,084 (312,211)

Cash flows from investing activities Purchase of property plant and equipment (51,771,163) (572,179) (13,001,030) (755,389) Purchase of software (67,957) (64,595) (722,652) (682,072) Investment in subsidiaries - (43,780) - - Additional consideration in subsidiary undertaking - - - (550,147) Payments relating to pipeline construction 7 (5,037,374) - (7,657,559) - Pipeline construction costs recovery 7 1,737,170 - 1,125,944 - Payment to acquire exploration rights in marginal fields - - (1,106,377) (1,106,377) Investment in exploration activities - - (1,480,211) (125,094) Proceeds from sale of property plant and equipment 250,812 - 1,711,094 1,693,083 Interest received 4,548,759 4,308,339 871,336 507,155

Cash (used in)/generated from investing activities (50,339,753) 3,627,785 (20,259,455) (1,018,841)

Cash flows from financing activities Repayment of long term loan (2,099,921) (6,929,875) (720,332) (135,000) Proceeds from long term loans 28,136,372 23,545,000 20,377,121 11,048,500 Repayment of import finance facilities (1,754,643) (27,691) (2,134,438) (4,537,438) Share issue expenses (160,871) (160,871) (226,019) (226,019) Proceeds from finance lease 103,899 17,060 204,680 204,680 Repayment of finance lease (247,407) (340,043) (506,833) (506,833) Proceeds from other short term loans 74,575,348 28,046,662 11,708,985 7,246,333 Increase/(decrease) in bank overdrafts 15,129,673 (6,728,717) (169,268) (1,198,414) Dividend paid (7,242,717) (7,242,717) (2,289,203) (2,289,203) Interest paid (10,640,046) (3,895,439) (1,273,646) (883,723)

Net cash from financing activities 95,799,687 26,283,369 24,971,047 8,722,883 Net change in cash and cash equivalents 31,690,671 15,281,300 9,551,676 7,391,831 Cash and cash equivalent at the beginning of the year 17,209,397 11,494,703 7,605,153 4,102,872 Exchange difference 81,621 - 52,568 - Cash and cash equivalents at end of the year 48,981,689 26,776,003 17,209,397 11,494,703

Cash at year end is analysed as follows: Cash at bank and in hand 16,947,560 1,719,086 6,949,679 4,279,932 Fixed deposits 32,034,129 25,056,917 10,259,718 7,214,771 48,981,689 26,776,003 17,209,397 11,494,703 pg56 The accounting policies and notes on pages 57 to 86 form an integral part of these financial statements. NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2008

1. General information statements and the reported amounts of revenues and expenses dur- ing the reporting period. Although these estimates are based on the Oando Plc (formerly Unipetrol Nigeria Plc) was registered by a special resolu- Directors’ best knowledge of current events and actions, actual results tion as a result of the acquisition of the shareholding of Esso Africa Incorpo- ultimately may differ from those estimates. rated (principal shareholder of Esso Standard Nigeria Limited) by the Federal Government of Nigeria. It was partially privatised in 1991 and fully privatised in 2.2 Consolidation the year 2000 following the disposal of the 40% shareholding of Federal Gov- (a) Subsidiaries ernment of Nigeria to Ocean and Oil Investments Limited and the Nigerian Subsidiaries include all entities (including special purpose entities) over public. In December 2002, the company merged with Agip Nigeria Plc following which the Group has the power to govern the financial and operating its acquisition of 60% of Agip Petroli’s stake in Agip Nigeria Plc. The Company policies generally accompanying a shareholding of more than one half formally changed its name from Unipetrol Nigeria Plc to Oando Plc in Decem- of the voting rights. The existence and effect of potential voting rights ber 2003. that are currently exercisable or convertible are considered when as- sessing whether the Group controls another entity. Subsidiaries are Oando Plc (“the Company”) and its subsidiaries (together “the Group”) have fully consolidated from the date on which control is transferred to the their primary listing on the Nigerian Stock Exchange (NSE) and its secondary Group. They are de-consolidated from the date that control ceases. listing on the JSE (Jobrog Stock Exchange). The Group has marketing and distribution outlets in Nigeria, Ghana and Togo and other smaller markets along The purchase method of accounting is used to account for the acquisi- the West African coast. During the year, Oando Plc transferred its petroleum tion of subsidiaries by the Group. The cost of the acquisition is mea- marketing business and equity interests in other marketing companies to a new sured as the fair value of the assets given, equity instruments issued fully owned subsidiary, Oando Marketing Limited. The Group has 100% inter- and liabilities incurred or assumed and the date of exchange plus costs ests respectively in two trading companies, Oando Trading (Bermuda) and directly attributable to the acquisition. Identifiable assets acquired and Oando Supply and Trading (Nigeria). These entities mainly supply petroleum liabilities and contingent liabilities assumed in a business combination products to marketing companies and large industrial customers. are measured initially at their fair values at the acquisition date irrespec- tive of the extent of any minority interest. The excess of the cost of The Group provides energy services to Exploration and Production (E&P) acquisition over the fair value of the Group’s share of the identifiable net companies through its fully owned subsidiary, Oando Energy Services. The assets acquired is recorded as goodwill. If the cost of acquisition is less Group also operates in the E&P sector through Oando Exploration and Pro- than the fair value of the net assets of the subsidiary acquired, the duction Limited (100%), Oando Production and Development Company (95%) difference is recognised directly in the equity as capital reserve on and, recently, OML 125 & 134 Limited. Other subsidiaries within the Group and consolidation. their respective lines of business, including Gas and Power, are shown in note 34. All balances and unrealised surpluses and deficits on transactions between 2. Summary of significant accounting policies group companies have been eliminated. Where necessary, accounting poli- 2.1 Basis of preparation cies for subsidiaries have been changed to ensure consistency with the The financial statements are prepared in compliance with Nigerian State- policies adopted by the Company. Separate disclosure (in equity) is made of ments of Accounting Standards (SAS). The financial statements are pre- Minority Interests. sented in the functional currency, Nigeria Naira (N), rounded to the nearest thousand, and prepared under the historical cost convention as modified (b) Associates by the revaluation of certain property, plant and equipment. Associates are all entities over which the Group has significant influence but not control, generally accompanying a shareholding of between 20% The preparation of financial statements in conformity with generally and 50% of the voting rights. Investments in associates are accounted for accepted accounting principles requires the use of estimates and as- by the equity method of accounting and are initially recognised at cost. The sumptions that affect the reported amounts of assets and liabilities and Group’s investment in associates includes goodwill (net of any accumu- disclosure of contingent assets and liabilities at the date of the financial lated impairment loss) identified on acquisition.

pg57 lated into Naira using the Closing Rate Method as follows:(a) assets The Group’s share of its associates’ post-acquisition profits or losses and liabilities, both monetary and non-monetary are translated at the is recognised in the income statement, and its share of post-acquisition closing rate;(b) income statement items are translated at the closing movements in reserves is recognised in reserves. The cumulative post- rate; (c) the exchange differences resulting from translating the open- acquisition movements are adjusted against the carrying amount of the ing net investment in the foreign entity at an exchange rate different investment. When the Group’s share of losses in an associate equals from that at which it was previously reported is taken to a Capital or exceeds its interest in the associate, including any other unsecured Reserve Account. receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate. 2.5 Property, Plant and Equipment Unrealised gains on transactions between the Group and its associ- All categories of property, plant and equipment are initially recorded at cost. ates are eliminated to the extent of the Group’s interest in the associ- Buildings and freehold land are subsequently shown at market value, based ates. Unrealised losses are also eliminated unless the transaction pro- on triennial valuations by external independent valuers, less subsequent vides evidence of an impairment of the asset transferred. depreciation for buildings. All other property, plant and equipment is stated at historical cost less depreciation. The accounting policies of the associates are consistent with the poli- cies adopted by the Group. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is prob- All subsidiaries and associates have uniform calendar year ends. able that future economic benefits associated with the item will flow to the company and the cost of the item can be measured reliably. All 2.3 Segment reporting other repairs and maintenance are charged to the profit and loss ac- A business segment is a group of assets and operations engaged in count during the financial period in which they are incurred. providing products or services that are subject to risks and returns Increases in the carrying amount arising on revaluation of land and that are different from those of other business segments. A geographi- buildings are credited to revaluation reserve in shareholders’ equity. cal segment is engaged in providing products or services within a Decreases that offset previous increases of the same asset are particular economic environment that are subject to risks and returns charged against fair value reserves directly in equity; all other de- that are different from those of segments operating in other economic creases are charged to the income statement. An asset’s carrying environments. amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable 2.4 Foreign currency translation amount. (a) Transactions and balances Transactions in foreign currencies during the year are converted into Gains and losses on disposals are determined by comparing pro- the functional currency, Nigeria Naira, using the exchange rates pre- ceeds with carrying amount. These are included in the income state- vailing at the dates of the transactions. Foreign exchange gains and ment. When revalued assets are sold, the amounts included in revalu- losses resulting from the settlement of such transactions and from the ation reserves are transferred to income statement. translation at year-end exchange rates of monetary assets and liabili- ties denominated in foreign currencies are recognised in the profit and Depreciation loss account. Depreciation is calculated using the straight-line method to allocate their cost or revalued amounts to their residual values over their estimated use- (b) Group companies ful lives, as follows: In accordance with the Statement of Accounting Standards (SAS 7) the financial statements of foreign entities, prior to consolidation, are trans-

pg58 Estimated site restoration and abandonment costs are based on cur- % rent requirements, technology and price levels and are stated at fair value, and the associated asset retirement costs are capitalized as Building 2 - 5 part of the carrying amount of the related tangible fixed assets. The Bulk Plants, Terminal and Equipment 5 - 121/2 fair value calculation of the liability is based on the economic life of the Motor Vehicles 20 - 25 production assets and discounted using the group’s average cost of Other Assets and Equipment 5 - 331/3 borrowing. The obligation is reflected under provisions in the balance sheet.

2.6 Upstream activities 2.7 Intangible assets The “full cost” concept is applied in accounting for all oil and gas explora- (a) Goodwill tion and development activities. All exploratory drilling and development Goodwill represents the excess of the cost of an acquisition over the costs are capitalised pending evaluation whether or not the activities result fair value of the Group’s share of the net identifiable assets of the in the discovery of producible reserves. Following such a determination, acquired subsidiary/associate at the date of acquisition. Goodwill on the capitalised costs are then amortised against the results of successful acquisitions of subsidiaries is included in intangible assets. Goodwill finds on a ‘unit of production’ basis. on acquisitions of associates is included in investments in associates. Goodwill is tested annually for impairment and carried at cost less Costs incurred in the production of crude oil from the Group’s properties accumulated impairment losses. Gains and losses on the disposal of are charged to the profit and loss account of the period in which they an entity include the carrying amount of goodwill relating to the entity are incurred. sold.

Ceiling tests are performed annually on a country-wide basis to determine Goodwill is allocated to cash-generating units for the purpose of im- whether the carrying amounts of capitalised costs exceeds the present value pairment testing. Each of those cash-generating units represents the of estimated discounted cash flows. Any excess of carrying amounts de- Group’s investment in each country of operation by each primary termined are written off to the profit and loss account of the period. reporting segment.

Tangible fixed assets related to oil and gas producing activities are Until 31 December 2005, goodwill was amortised on a straight line depleted on a unit of production basis over the proved developed re- basis over a period between 5 to 20 years and assessed for an serves of the field concerned except in the case of assets whose indication of impairment at each balance sheet date. However, the useful lives are shorter than the lifetime of the field, in which case the group early adopted SAS 26 issued by the Nigerian Accounting Stan- straight-line method is applied. Producible wells are not depleted until dards Board and ceased amortisation of goodwill from 1 January they form part of a producing field. 2006. Goodwill is now tested for impairment annually, as well as when there are indications of impairment. Rights and concessions are depleted on the unit-of-production basis over the total proved reserves of the relevant area.

pg59 (b) Computer software trade receivables is established when there is objective evidence that Acquired computer software licenses are capitalised on the basis of the Group will not be able to collect all amounts due according to the the costs incurred to acquire and bring to use the specific software. original terms of the receivables. The amount of the provision is These costs are amortised over their estimated useful lives (three to recognised in the income statement. five years). 2.12 Cash and cash equivalents Costs associated with maintaining computer software programmes Cash and cash equivalents includes cash in hand, deposits held at call with are recognised as an expense as incurred. Expenditure on internally- banks and other short-term highly liquid investments with original maturities developed software is capitalised if it meets the criteria for capitalising of three months or less. development costs. Direct costs include the software development, employee costs and an appropriate portion of relevant overheads. 2.13 Borrowings Computer software development costs recognised as assets are am- Borrowings are recognised initially at fair value, net of transaction costs ortised over their estimated useful lives (not exceeding five years). incurred. Borrowings are subsequently stated at amortised cost; any differ- ence between the proceeds (net of transaction costs) and the redemption 2.8 Long term receivable - pipeline cost recovery value is recognised in the income statement over the period of the borrow- Long term receivable in respect of pipeline cost recovery is accounted for ings using the effective interest method.Borrowings are classified as cur- at cost, less provision for impairment. Provision for impairment of the long rent liabilities unless the Group has an unconditional right to defer settle- term receivable is established when there is objective evidence that the ment of the liability for at least 12 months after the balance sheet date. Group will not be able to collect all amounts due according to the original terms of the receivable. Borrowing costs Borrowing costs are recognised as an expense in the period in which they 2.9 Impairment of assets are incurred, except when they are directly attributable to the acquisi- Assets are reviewed for impairment whenever events or changes in tion, construction or production of a qualifying asset. circumstances indicate that the carrying amount may not be recover- able. An impairment loss is recognised for the amount by which the 2.14 Deferred income tax asset’s carrying amount exceeds its recoverable amount. The recov- Deferred income tax is provided in full, using the liability method, on erable amount is the higher of an asset’s fair value less costs to sell temporary differences arising between the tax bases of assets and and value in use. For the purposes of assessing impairment, assets liabilities and their carrying amounts in the consolidated financial state- are grouped at the lowest levels for which there are separately identi- ments. However, if the deferred income tax arises from initial recogni- fiable cash flows (cash-generating units). tion of an asset or liability in a transaction other than a business combi- nation that at the time of the transaction affects neither accounting nor 2.10 Inventories taxable profit or loss, it is not accounted for. Deferred income tax is Inventories are stated at lower of cost and net realisable value. Cost determined using tax rates (and laws) that have been enacted or sub- includes expenditure incurred in acquiring and transporting the inven- stantively enacted by the balance sheet date and are expected to apply tory to its present location. Cost is determined on using the weighted when the related deferred income tax asset is realised or the deferred average method. For finished goods and work in progress, raw mate- income tax liability is settled. rials, direct labour, other direct costs and related production overheads (based on normal operating capacity). It excludes borrowing costs. Deferred income tax assets are recognised to the extent that it is prob- Net realisable value is the estimated selling price in the ordinary course able that future taxable profit will be available against which the tempo- of business, less applicable variable selling expenses. rary differences can be utilised.

2.11 Trade receivables Deferred income tax has not been provided on temporary differences Trade receivables are stated after provisions have been made for arising on investments in subsidiaries and associates, as the timing of debts considered doubtful of recovery. A provision for impairment of the reversal of the temporary difference is controlled by the Group and pg60 it is probable that the temporary difference will not reverse in the equipment. The present values are determined using the company’s foreseeable future. Where this ceases to be the case, deferred tax average cost of borrowing. Subsequent depreciation charges of the will be provided for. asset are accounted for in accordance with the Company’s deprecia- tion policy and the accretion of discount (i.e. the increase during the 2.15 Employee benefits period in the discounted amount of provision arising from the passage The Group operates a defined contribution retirement benefit scheme for of time) included in finance costs. its employees. A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. The Company 2.17 Share capital has no legal or constructive obligations to pay further contributions if the Ordinary shares are classified as equity. Incidental costs directly attribut- fund does not hold sufficient assets to pay all employees the benefits relat- able to the issue of new shares or options are shown in equity as a deduc- ing to employee service in the current and prior periods. tion, net of tax, from the proceeds.

The assets of all schemes are held in separate trustee administered funds, 2.18 Revenue recognition which are funded by contributions from both the company and employees. Revenue comprises the fair value of the sale of goods and services, The Company’s contributions to the defined contribution schemes are net of value-added tax, rebates and discounts and after eliminating charged to the profit and loss account in the year to which they relate. sales within the Group.

2.16 Provisions Discounts are usually negotiated with commercial customers and are some- In accordance with SAS 23, provisions for environmental restoration, re- times given on a transaction basis or fixed per customer, subject to subse- structuring costs and legal claims are recognised when: the Group has a quent reviews. The Group also gives rebates per litre of petroleum prod- present legal or constructive obligation as a result of past events; it is ucts sold to retailers who operate their own outlets. more likely than not that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Re- Revenue is recognised as follows: structuring provisions comprise lease termination penalties and em- (a) Sale of products ployee termination payments. Provisions are not recognised for future Revenue from sale of petroleum products and gas is recognised when a operating losses. Group entity has delivered products to the customer, the customer has accepted the products and collectability of the related receivables is Where there are a number of similar obligations, the likelihood that an reasonably assured. outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the (b) Sale of services likelihood of an outflow with respect to any one item included in the Revenue from sale of services, such as freight and through-put charges, is same class of obligations may be small. recognised in the accounting period in which the services are rendered, by reference to completion of the specific transaction assessed on the basis Provisions are measured at the present value of management’s best of the actual service provided as a proportion of the total services to be estimate of the expenditure required to settle the present obligation at provided. the balance sheet date. The discount rate used to determine the present value reflects current market assessments of the time value of money. (c) Dividend income Dividend income is recognised when the right to receive payment is estab- Decommissioning liabilities lished. With effect from 31 December 2006, a provision is recognised for the decommissioning liabilities for underground tanks. Based on manage- (d) Interest income ment estimation of the future cash flows required for the decommis- Interest income is recognised on a time proportion basis using the sioning of those assets, a provision is recognised and the correspond- effective interest rate. ing amount added to the cost of the asset under property plant and

pg61 2.19 Leases (i) Exploration and production of oil and gas (E&P) Operating leases This segment involves the exploration for and production of oil and gas Leases in which a significant portion of the risks and rewards of ownership through the acquisition of rights in oil blocks on the Nigerian continental are retained by the lessor are classified as operating leases. Pay- shelf and deep offshore. ments made under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straight-line (ii) Refining and marketing of petroleum products basis over the period of the lease. This segment involves the refining of crude and the marketing and sale of petroleum products. Over the years, the Group had focused primarily on Finance leases the marketing of petroleum products. Presently, the Group is in the process Leases in which ownership, risks and rewards are transferred to the les- of acquiring and developing a refinery business. The activities of the trading see, who is obligated to pay such costs as insurance, maintenance and companies are reported under this segment. similar charges on the asset are classified as finance leases. Assets under finance lease are capitalised and depreciated over their estimated use- (iii) Gas and Power ful lives in line with the Group’s policy for assets of the same class. The Group through the activities of its subsidiaries, Gaslink and East Hori- Finance charges are allocated over the lease term. zon Gas Company, is involved in the distribution of natural gas. The Group also incorporated a Power company to serve a niche in Nigeria’s power 2.20 Dividend distribution sector, by providing reliable power to industrial customers. Dividend distribution to the Company’s shareholders is recognised as a liability in the Group’s financial statements in the period in which the dividends are approved (iv) Energy services by the Company’s shareholders. This segment involves the provision of services such as drilling and comple- tion fluids and solid control waste management; oil-well cementing and other 3. Segment information services to upstream companies.

3.1 Primary reporting format - business segments (v) Corporate & others The Group is broadly organised on a worldwide basis into five main These include company activities that cannot be directly allocated to any of business segments within the energy industry. the above segments.

The segment results for the year ended 31 December 2008 are as follows:

N’000

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

Total gross segment sales 13,890,880 314,944,308 6,491,321 4,093,926 - 339,420,435 Inter-segment sales ------Sales 13,890,880 314,944,308 6,491,321 4,093,926 - 339,420,435

Operating profit/(loss) 4,993,783 13,825,841 504,535 (1,025,749) 3,111,890 21,410,300 Finance cost (911,994) (5,327,669) (255,394) (277,193) (3,895,439) (10,667,689)

Profit before income tax 10,742,611 Income tax expense (2,399,286) Profit for the year 8,343,325

pg62 The segment results for the year ended 31 December 2007 are as follows: N’000 Exploration Refining & Gas & Energy Corporate & & Production marketing Power Services Others Group

Total gross segment sales - 171,388,754 4,388,751 10,438,575 - 186,216,080 Inter-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 - 8,110,444 Finance cost - (1,001,403) (14,323) (280,990) - (1,296,716)

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

Inter-segment revenue under refining & marketing in 2007 represents sales to the energy services segment. Inter-segment transactions are entered into under the normal commercial terms and conditions that would also be available to unrelated third parties. There were no intersegment sales in current year.

The segment assets and liabilities as at 31 December 2008 and capital expenditure for the year then ended are as follows:

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

Assets 54,677,262 142,622,114 21,328,241 24,794,336 42,132,002 285,553,955 Liabilities 7,835,435 116,800,608 17,586,843 14,716,663 74,683,965 231,623,514

Capital Expenditure* 44,684,324 18,393,891 1,992,471 21,913,974 2,491,311 89,475,971

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

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

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

pg63 Segment assets consist primarily of property, plant and equipment, 3.2 Secondary reporting format - geographical segments intangible assets, investments, inventories, receivables and operating cash. They exclude deferred taxation. The Group’s business segments operate in three main geographical areas. Segment liabilities comprise operating liabilities. They exclude corpo- rate and deferred taxation. The home country of the Company - which is also the main operating company - is Nigeria. The Group’s sales are mainly in Nigeria and other *Capital expenditure comprises additions to property, plant and equip- countries within and outside the West African coast, namely, Ghana, ment and intangible assets (excluding revaluation surplus, decommis- Togo, and Liberia. ‘Other countries’ include Bermuda and the British sioning costs and goodwill). Virgin Island.

Segment information on a geographical basis for the year ended and as at 31 December 2008 are as follows: N’000 Exploration Refining & Gas & Energy Corporate & & Production marketing Power Services Others Group

Sales Within Nigeria 13,890,880 249,834,486 6,491,321 4,093,926 - 274,310,613 Other West African countries - 9,317,760 - - - 9,317,760 Other countries - 55,792,062 - - - 55,792,062

13,890,880 314,944,308 6,491,321 4,093,926 - 339,420,435

Total assets Within Nigeria 54,677,262 131,758,976 21,328,241 3,357,464 42,132,002 253,253,945 Other West African countries - 2,335,478 - - - 2,335,478 Other countries - 8,527,660 - 21,436,872 - 29,964,532

54,677,262 142,622,114 21,328,241 24,794,336 42,132,002 285,553,955

Capital expenditure Within Nigeria 44,684,324 18,156,468 1,992,471 21,913,974 2,491,311 89,238,548 Other West African countries 237,423 237,423 Other countries - 44,684,324 18,393,891 1,992,471 21,913,974 2,491,311 89,475,971

pg64 Segment information on a geographical basis for the year ended and as at 31 December 2007 are as follows: N’000 Exploration Refining & Gas & Energy Corporate & & Production marketing Power Services Others Group

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

- 171,064,757 4,388,751 10,438,575 - 185,892,083

Total assets Within Nigeria 1,660,730 106,320,469 16,712,752 17,969,771 - 142,663,722 Other West African countries - 2,861,143 - - - 2,861,143 Other countries - 17,159,190 - - - 17,159,190

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

Capital expenditure Within Nigeria 1,480,211 2,363,379 13,999 11,901,658 - 15,759,247 Other West African countries - 49,921 - - - 49,921 Other countries - 40,561 - - - 40,561

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

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

Capital expenditure is allocated based on where the assets are located.

pg65 4 Property, plant and equipment N’000 (4.1) Group Fixtures, Upstream Land and Plant and Motor fittings, and Construction Assets* buildings machinery vehicles equipment in progress Total

Cost/Valuation At 1 January 2008 7,248,770 14,608,580 2,793,255 1,105,163 2,400,717 14,270,487 42,426,972 Transfer/reclassification - 84,024 - (460) 101,526 (185,090) - Additions 41,531,993 55,094 365,285 436,721 197,180 12,967,524 55,553,797 Decommissioning asset addition 783,995 - - - - - 783,995 Reversal of revaluation surplus - (424,098) (257,506) - - - (681,604) Disposals (24,957) (2,936) (49,188) (115,247) (103,733) (296,061) Exchange difference - (9,831) (5,714) (3,833) 921 (2,802) (2,802)

At 31 December 2008 49,564,758 14,288,812 2,892,384 1,488,403 2,585,097 26,946,386 26,946,386

Depreciation At 1 January 2008 - 19,992 167,455 588,341 1,332,570 - 2,108,358 Transfer/reclassification - - (186) - 186 - - Charge for the year 4,096,408 625,519 588,723 269,399 212,916 - 5,792,965 Disposals - (1,640) (1,132) (24,614) (12,574) - (39,960) Exchange difference - (1,349) 1,061 (1,719) 3,295 1,288

At 31 December 2008 4,096,408 642,522 755,921 831,407 1,536,393 - 7,862,651

Net book value At 31 December 2008 45,468,350 13,646,290 2,136,463 656,996 1,048,704 26,946,387 89,903,189

At 31 December 2007 7,248,770 14,588,588 2,625,800 516,822 1,068,147 14,270,487 40,318,614

* Following the acquisition of tangible oil and gas producing assets during the year and the transfer of concession rights and related exploration costs to Oando Exploration and Production Limited, all exploration and production activities have been reclassified from intangible assets to property, plant and equipment. Detailed notes in respect of upstream activities and further analysis into various asset categories are shown in note 36. Prior year comparatives have also been restated.

Depreciation, depletion and amortisation of upstream assets for the year are included in cost of sales.

pg66 (4.2) Company

N’000

Upstream Land and Plant and Motor fittings, and Construction Assets* buildings machinery vehicles equipment in progress Total Cost/Valuation At 1 January 2008 5,659,632 14,519,212 2,586,914 819,190 2,041,635 2,063,044 27,689,627 Transfer/reclassification* (5,659,632) (13,526,724) (2,305,223) (631,061) (1,494,759) (1,877,058) (25,494,457) Additions - - 19,870 277,381 85,703 189,225 572,179 Revaluation surplus written off - (424,098) (257,506) - - - (681,604) Disposals ------

At 31 December 2008 - 568,390 44,055 465,510 632,579 375,211 2,085,745

Depreciation At 1 January 2008 - - 47,126 467,430 1,136,016 - 1,650,572 Transfer/reclassification - - (35,029) (397,618) (889,628) - (1,322,275) Charge for the year - 28,864 3,136 91,840 94,573 - 218,413 Disposals ------

At 31 December 2008 - 28,864 15,233 161,652 340,961 - 546,710

Net book value At 31 December 2008 - 539,526 28,822 303,858 291,618 375,211 1,539,035

At 31 December 2007 5,659,632 14,519,212 2,539,788 351,760 905,619 2,063,044 26,039,055

*Transfers/reclassifications are all to subsidiary entities.

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

Plant and Motor Total Machinery vehicles

Cost 836,708 684,604 1,521,312 Accumulated depreciation (320,455) (360,659) (681,114)

516,253 323,945 840,198

pg67 Assets acquired under finance lease have been capitalised and depreciated in accordance with the requirements of the Statement of Accounting Standard No. 11. Depreciation charges for the year are included in administrative expenses.

Revaluation Buildings and freehold land and Plant and machinery were revalued in 2007 by Ubosi & Elleh, independent valuers. Valuations were done on the basis of the open market value. The book values of the assets have been adjusted to the revaluations and the resultant surpluses, net of deferred income tax credited to the revaluation surplus in shareholders equity. N’000 31-Dec-08 31-Dec-07

5 Intangible assets Group Company Group Company

Goodwill (note 5.1) 21,706,057 - 21,738,939 9,017,742 Software costs (note 5.2) 644,456 597,334 725,832 682,072

22,350,513 597,334 22,464,771 9,699,814

31-Dec-08 31-Dec-07

(5.1) Goodwill Group Company Group Company Movement in goodwill is analysed as follows:

At 1 January Cost 23,489,044 10,609,108 11,138,753 10,609,108 Additions - - 12,350,291 - Transfer to Oando Marketing - (10,609,108) - - Write off* (32,882) - - -

At 31 December 23,456,162 - 23,489,044 10,609,108

Amortisation At 1 January 1,750,105 1,591,366 1,750,105 1,591,366 Transfer to Oando Marketing - (1,591,366) - -

At 31 December 1,750,105 - 1,750,105 1,591,366

Net book value at 31 December 21,706,057 - 21,738,939 9,017,742

In accordance with the group’s accounting policy, goodwill is not amortised but individually tested annually for impairment. *Write off relates to deferred cost previously included in goodwill now written off.

pg68 Impairment testing of goodwill Goodwill is allocated to the Group’s cash-generating units (CGUs) identified according to the business segments. Impairment tests were conducted as at the balance sheet date based on value in use calculations. The calculations used cash flow projections based on financial forecasts covering a five year-period. The discount rate used is the pre-tax interest rate that reflects the current market assessment of the risks specific to the business segment. Based on the impairment test, the carrying amount of goodwill is not higher than the recoverable value. Accordingly, no impairment loss has been recognised.

(5.2) Software costs In accordance with the Group’s accounting policy, deferred software costs are amortised over 5years. Current year charge of N149.3 million is included in other administrative expenses.

6 Long term investments N’000 31-Dec-08 31-Dec-07

Group Company Group Company

Transcorp Plc 10,000 10,000 10,000 10,000 Provision for diminution in value (8,000) (8,000) - -

2,000 2,000 10,000 10,000 Unquoted shares At 1 January - 16,834,848 - 2,080,320 Additions - 15,616,830 - 14,754,528 Transfer to Oando Marketing Limited - (322,623) - -

At 31December - 32,129,055 - 16,834,848

Total investments 2,000 32,131,055 10,000 16,844,848

On 28th June 2007, the shareholders of the company, through a court ordered meeting, approved the transfer of its downstream petroleum marketing assets, liabilities and undertak- ings to Oando Marketing Limited in exchange for shares in Oando Marketing. The company effected the transfer on 1 January 2008.

The total net assets transferred was N15.573billion in exchange for 350million ordinary shares of 0.50k each in Oando Marketing Limited.

The carrying amount of investments transferred are analysed as follows: UNITAB Nigeria Limited 20,400 Oando (Ghana) Limited 146,743 Unipetrol Sierra Leone 4,400 Oando Benin 3,997 Oando Togo SA 171,883

347,423 Provision for diminution in value (24,800)

322,623 pg69 N’000 31-Dec-08 31-Dec-07

Group Company Group Company Analysis of the companyís unquoted investment is as follows: Akute Power Limited - 2,500 - - Apapa SPM Limited - 19,125 - - East Horizon Gas Co. Ltd. - 10,000 - 10,000 Gaslink Nigeria Limited - 6,933,125 - 6,933,124 Oando Energy Services Limited - 550,497 - 550,497 Oando Exploration and Production Limited - 2,039,152 - 2,039,152 Oando Gas and Power Limited - 1,000 - 1,000 Oando Lekki Refinery Limited - 2,500 - 2,500 Oando Marketing Limited - 15,573,050 - - Oando Production and Development Company Limited - 3,315,775 - 3,315,775 Oando Port Harcourt refinery Limited - 2,500 - 2,500 Oando Properties Limited - 250 - - Oando Searex VI Limited - - - - Oando Searex XII Limited ---- Oando Supply and Trading Limited - 763,344 - 763,344 Oando Trading Limited Bermuda - 2,894,333 - 2,894,333 OML 112 & 117 Limited - 6,538 - - OML 125 & 134 BVI Limited - 6,328 - - OML 125 & 134 Limited - 2,500 - - UNITAB Nigeria Limited - - - 20,400 Oando (Ghana) Limited - - - 146,743 Oando Sierra Leone - - - 4,400 Oando Benin - - - 3,997 Oando Liberia - 6,538 - - Oando Togo SA - - - 171,883 - - -

- 32,129,055 - 16,859,648 Provision for diminution in value - - - (24,800)

- 32,129,055 - 16,834,848

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

- 24,800

pg70 N’000 7 Long term receivable Group Company Group Company

Long term prepayment 427,570 44,368 321,443 318,391 Pipeline Cost Recovery Account 14,117,207 - 10,817,003 -

14,544,777 44,368 11,138,446 318,391

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 and East Horizon, which are recoverable from gas sales over the duration of the respective Natural Gas Sale and Purchase Agreements.

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 10,817,003 - 4,285,388 - Additions during the year 5,037,374 - 7,657,559 - Capital recovered during the year (1,737,170) - (1,125,944) -

At 31 December 14,117,207 - 10,817,003 -

Group Company Group Company 8 Inventories Finished products 13,525,642 - 19,475,839 5,096,017 Products in transit 2,221,187 - 2,888,387 2,823,058

15,746,829 - 22,364,226 7,919,075 Consumable materials and engineering stocks 380,367 33,942 2,554,360 2,461,306

16,127,196 33,942 24,918,586 10,380,381 Provision for slow moving and obsolete stocks (58,356) - (189,055) (189,055)

16,068,840 33,942 24,729,531 10,191,326

pg71 N’000 31-Dec-08 31-Dec-07

Group Company Group Company 9 Debtors and prepayments Trade debtors 24,332,464 - 29,934,020 6,235,992 Bridging claims receivable 8,896,036 - 7,656,143 7,656,143 Petroleum Support Fund 44,828,923 - - - Deposit for import 635,087 - 246,082 246,082 Other debtors 15,153,328 457,522 7,146,973 2,587,339 Amounts due from related companies - 120,626,018 49,823 13,038,718 Prepayments 1,223,973 291,692 3,099,947 1,509,126

95,069,811 121,375,232 48,132,988 31,273,400 Provision for doubtful bridging claims receivable - - (261,839) (261,839) Provision for doubtful trade and other receivables (1,366,862) (9,159) (1,057,853) (717,310)

93,702,949 121,366,073 46,813,296 30,294,251 10 Creditors and accruals Trade creditors 27,083,287 54,631 26,892,424 10,547,277 Other creditors 15,119,587 313,439 8,806,657 175,532 Accruals 3,039,662 582,754 5,365,335 3,654,000 Petroleum Support Fund - - 165,583 165,583 Amounts due to other related companies - 73,061,127 49,367 6,234,391 Deferred income - - 130,153 130,153

45,242,536 74,011,951 41,409,519 20,906,936 11 Borrowings Current Bank overdrafts 24,634,256 - 9,504,583 6,728,717 Import finance facilities 676,048 - 2,430,691 27,691 Finance lease obligation 166,987 79,601 283,255 283,255 Other short term loans 110,830,618 45,916,387 36,255,270 17,869,725 Current portion of long term loans 6,039,333 2,353,500 4,160,883 3,314,550

142,347,242 48,349,488 52,634,682 28,223,938 Non-current Syndicated/other project loans 37,941,166 23,545,000 9,804,794 - Finance lease obligation 164,368 72,279 191,608 191,608 Other long term loans 3,755,579 1,765,125 7,733,950 7,733,950

41,861,113 25,382,404 17,730,352 7,925,558

pg72 Import finance facilities relate to special short term facilities obtained from d) A seven year project finance facility of $25.5million secured in April banks, to finance letters of credit opened in respect of the importation of 2008 to finance the construction of a 12.5 MW Independent Power Plant refined petroleum products. Other short term loans relate to various commer- for Akute Power Limited. The loan is secured by an all assets deben- cial papers and bankers acceptance obtained from banks to finance working ture over all the assets of Akute Power Limited. Interest on the loan is capital needs. LIBOR plus 3%. Syndicated long term loan relates to the following: Other long term loans are as follows: a) A five-year gas project facility of N2.8billion was secured in 2006 to a) A three-year receivable-backed term loan of $95million obtained in July finance the execution of Greater Lagos Phase III gas distribution project. 2007 from a consortium of banks to finance working capital of the group. The loan has an interest rate of libor + 2.75%. As at year end, the b) Two 1-3 three year loans of N2.5billion and N1.1billion respectively for outstanding balance on the loan was $66.5million. the execution of new customers’ connects for Gaslink. b) A two-year loan of $200million acquired to finance the acquisition of c) A seven year gas project facility of N11.4billion secured in July 2007 to upstream assets. The loan has an interest rate of 13.9%. The loan shall finance the execution of a gas pipeline for the UNICEMENT Company be repaid in full at the final maturity date. Calabar. The drawdown on the loan as at 31 December 2008 was N8.2billion.

Reconciliation of minimum lease payments to present value of lease obligation (group)

Minimum Future Present lease finance value payment charges of obligation

N’000

Period not later than one year 195,748 28,761 166,987 Period later than one year and not later than five years 186,135 21,767 164,368 Period later than five years - --

381,883 50,528 331,355

pg73 N’000

Group Company Group Company

12 Other non-current liabilities 934,458 - 726,853 673,734

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 and are refundable to the dealer less any amounts owed to the Company at the expiration of the dealership agreement.

13 Deferred taxation - non-current asset Balance, beginning of year -- - - Provision during the year (Note 27) 1,044,162 - - -

Balance, end of year 1,044,162 - - -

Deferred taxation - current asset Balance, beginning of year --- - Provision during the year (Note 27) 1,179,580 - - -

Balance, end of year 1,179,580 - - -

Deferred taxation - current liability Balance, beginning of year - - - - Provision during the year (Note 27) 437,329 - - -

Balance, end of year 437,329 - - -

Deferred taxation - non-current liability

Balance, beginning of year 889,405 849,344 687,224 662,199 Deferred tax transferred on acquisition of OML 125 & 134 3,782,634 Provision during the year (Note 27) 77,343 (8,808) 194,394 187,145 Revaluation surplus 2,756,075 70,147 - - Exchange difference (22,662) - 7,787 -

Balance, end of year 7,482,795 910,683 889,405 849,344

Deferred tax liability is as a result of accelerated capital allowances on existing property, plant and equipment and transferred liability in respect of Oando OML 125 & 134 acquired during the year. Deferred tax related to revaluation surplus is included in revaluation reserve within equity.

Deferred tax asset is as a result of unrelieved tax losses from Oando Energy Services, Oando Production and Development Company and Oando Exploration and Production Limited and unrealised exchange losses.

pg74 N’000 31-Dec-08 31-Dec-07

Group Company Group Company 14 Retirement benefit obligation Balance, beginning of year 141,671 141,671 138,254 138,254 Provision during the year - - 124,181 124,181 Payments during the year (141,671) (141,671) (120,764) (120,764)

Balance, end of year - - 141,671 141,671

15 Provision for other liabilities & charges Balance, beginning of year 425,279 425,279 372,079 372,079 Additions/Valuation change 783,995 - 30,129 30,130 Accretion discount 27,643 - 23,071 23,070 Transfer to Oando Marketing - (425,279) - -

Balance, end of year 1,236,917 - 425,279 425,279

In accordance with the group accounting policy a provision is recognised for obligations relating to underground tanks and oil fields decommissioning, restoration and abandonment, at the present value of management’s best estimate of the expenditure required to settle the present obligation at the balance sheet date. A corresponding amount is included under plant and machinery upon recognition, and depreciated in accordance with the Group’s policy.

16 Share capital Authorised:

1,000,000,000 Ordinary shares of 50k each 500,000 500,000 500,000 500,000 Issued and fully paid: At beginning of the year 754,070,523 ordinary shares of 50k each 377,035 377,035 286,150 286,150

Additions: 2007: 181,769,626 ordinary shares of 50k each - - 90,885 90,885 2008: 150,814,105 ordinary shares of 50k each - bonus 75,407 75,407

At end of the year 452,442 452,442 377,035 377,035 904,884,628 Ordinary shares of 50k each

Additions represent the bonus shares of 1 for 5 declared at the annual general meeting held on 27 May 2008.

pg75 N’000 31-Dec-08 31-Dec-07

Group Company Group Company 17 Share premium account At beginning of the year 29,877,741 29,877,741 15,980,263 15,980,263 Issue of shares - - 14,123,497 14,123,497 Share issue cost (160,871) (160,871) (226,019) (226,019)

At end of the year 29,716,870 29,716,870 29,877,741 29,877,741

Share issue cost relate to mainly charges and fees in respect of the issue of shares for the share swap exercise in 2007 which crystalised in 2008.

18 Revaluation reserve At beginning of the year (note 4) 10,652,936 10,652,936 2,423,923 2,423,923 Revaluation surplus during the year: - Land & building - - 7,971,277 7,971,277 - Plant & Machinery - - 257,736 257,736 Reversal of revaluation surplus (681,604) (681,604) - - Intragroup transfer (Oando Marketing) - (9,683,943) - - Deferred tax (2,756,075) (70,147) - -

At end of the year 7,215,257 217,242 10,652,936 10,652,936

Deferred tax on surplus on revaluation of property, plant and equipment has been recognised on an asset basis. This recognises the potential crystalisation of the liabilities in the event of disposal of the assets.

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

31-Dec-08 31-Dec-07

Group Company Group Company 19 Retained earnings At beginning of the year 6,321,140 3,805,863 3,853,399 3,423,584 Exchange difference 177 - 1,935 - Dividend: 2007 final (4,526,954) (4,526,954) (2,289,203) (2,289,203) 2007 bonus (75,407) (75,407) - - 2008 Interim (2,715,102) (2,715,102) - - Profit for the year 8,339,273 6,343,567 4,755,009 2,671,482

At end of the year 7,343,127 2,831,967 6,321,140 3,805,863

pg76 N’000 31-Dec-08 31-Dec-07

Group Company Group Company 20 Minority interest Movement in minority interests during the year is as follows: At start of year 187,425 1,852,535 Exchange difference (40,440) - Disposal of interests - (1,689,146) Profit for the year 4,052 24,036

At end of the year 151,037 187,425

21 Turnover Analysis by geographical region Within Nigeria 274,310,613 2,677,299 167,073,692 131,007,169 Other West African Countries 9,317,760 - 8,038,206 - Others 55,792,062 4,160,442 10,780,185 -

339,420,435 6,837,741 185,892,083 131,007,169 Analysis by product/type Crude Oil 13,890,880 - - - Fuels 294,497,485 - 159,278,392 124,331,325 Base oil, lubricants and other products 23,121,435 - 15,735,391 4,323,615 Gas 6,928,345 - 4,765,485 276,950 Barite, drill bits and oil well cement 548,368 1,383,748 - Non Fuel Revenue 116,692 - 677,590 618,205 Intragroup dividend - 6,837,741 - - Others 317,230 - 4,051,477 1,457,074

339,420,435 6,837,741 185,892,083 131,007,169

22 Administrative expenses Repairs and maintenance 219,134 - 456,365 413,194 Insurance 145,581 - 128,011 114,900 Rent and other hiring costs 317,945 - 515,738 392,409 Staff costs 3,092,217 326,235 2,451,957 1,855,901 Depreciation 1,69,558 218,413 1,480,925 1,366,486 Other administrative expenses 11,949,240 559,356 5,925,320 3,137,293

17,420,675 1,104,004 10,958,316 7,280,183 23 Interest received This represents interest income accruing from placements with commercial banks.

pg77 N’000 31-Dec-08 31-Dec-07

Group Company Group Company 24 Other operating income Rent 77,459 - 29,780 29,048 Profit on sale of property plant and equipment - - 635,704 635,704 Foreign exchange gain - - 1,384,649 866,222 Other income 1,738,985 365,029 420,869 176,959

1,816,444 365,029 2,471,002 1,707,933 25 Interest payable and similar charges Interest on long term loans 3,237,949 3,414,240 354,986 354,986 Interest on short term loans and overdrafts 4,885,213 - 918,660 528,737 Exchange loss 2,516,884 481,199 - -

Total interest on bank loans and overdrafts 10,640,046 3,895,439 1,273,640 883,723 Accretion charge 27,643 - 23,076 23,070

Total interest payable and similar charges 10,667,689 3,895,439 1,296,717 906,793 Other interests attributable to borrowings are distributed as follows: (a) Included in cost of sales 3,383,046 - 2,374,585 - (b) Capitalised during the year: Included in property, plant and equipment 3,317,089 - 392,637 - Included in exploration costs - - 125,094 125,094 Included in recoverable pipeline construction costs 2,465,960 - 406,399 -

5,783,049 - 924,130 125,094

26 Profit before taxation Profit before taxation is stated after charging: - Depreciation, depletion and amortisation of upstream assets 4,096,408 - - - - Depreciation - others 1,696,558 218,413 1,480,925 1,366,486 - Auditors’ remuneration 86,700 24,000 55,200 18,000 - Directors’ remuneration 372,816 189,344 201,637 196,179 - Foreign exchange loss 2,516,884 481,199 - - - Loss on sale of property plant and equipment 5,288 - - - and after crediting: - Foreign exchange gain - - 1,384,649 866,222 - Profit on sale of property plant and equipment - - 635,704 635,704

pg78 N’000 31-Dec-08 31-Dec-07

Group Company Group Company 27 Taxation (a) Per profit and loss account Charges for the year Income tax 3,815,575 175,419 1,053,014 786,914 Education tax 292,782 1,488 85,905 71,655

4,108,357 176,907 1,138,919 858,569 Deferred tax (Note 13) (1,709,071) (8,808) 194,394 187,145

2,399,286 168,099 1,333,313 1,045,714 (b) Per balance sheet Balance, 1 January 1,308,107 1,020,443 928,902 728,931 Over/(under) provision for taxes 44,558 - (81,058) - Payments during the year (2,105,695) (583,836) (678,656) (567,057) Charge for the year 4,108,357 176,907 1,138,919 858,569

Balance, 31 December 3,355,327 613,514 1,308,107 1,020,443

28 Earnings per share Basic Basic earnings per share is calculated by dividing the profit attributable to the equity holders of the Company by the weighted average number of shares in issue during the year.

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

Group Company Group Company

Profit attributable to equity holders of the Company 8,339,273 6,343,567 4,755,009 2,671,482 Weighted average number of shares in issue (thousands) 904,885 904,885 632,891 632,891 Basic earnings per share (kobo) 922 701 751 422

Diluted earnings per share (kobo) 922 701 751 422

For the purposes of earnings per share calculations, the bonus issue in the year is assumed to have been made on the first day of the financial year.

pg79 N’000 31-Dec-08 31-Dec-07

29 Net cash flow from operating activities Group Company Group Company before changes in working capital Profit on ordinary activities after taxation 8,343,325 6,343,567 5,480,415 2,671,482 Adjustments for non-cash items and interests: - Taxation for the year 2,399,286 168,099 1,333,313 1,045,714 - (Under)/overprovision for income taxes (44,558) - 81,058 - - Pre-acquisition profit - - (701,370) - - Depreciation, depletion and amortisation 5,792,966 218,413 1,480,925 1,366,486 - Loss/(profit) on sale of property plant and equipment 5,288 - (635,704) (635,704) - Amortisation of software costs 149,333 149,333 10,419 - - Impairment loss on investments 8,000 8,000 - Increase/(decrease) in provision for doubtful debts 47,170 (969,990) 276,737 83,474 - Decrease in provision for slow moving and obsolete stocks (130,699) (189,055) 37,155 37,155 - Provision for staff gratuity - - 124,181 124,181 - Interest expense 10,640,046 3,895,439 1,273,646 883,723 - Accretion expense 27,643 - 23,070 23,070 - Interest received (4,548,759) (4,308,339) (871,336) (507,155)

22,689,041 5,315,467 7,912,509 5,092,426 30 Net decrease in working capital - Decrease/(Increase) in inventories 8,791,390 10,346,439 (9,607,508) (675,509) - Increase in debtors and prepayments (46,936,823) (90,101,832) (10,950,441) (9,713,554) - Increase in creditors and accruals 3,833,017 53,105,015 17,809,206 5,646,207 - (Increase)/decrease in long term prepayments (106,127) 274,023 5,211 8,263 - Increase/(decrease) in customers’ security deposits 207,605 (673,734) 20,405 17,777 Adjusted for: - Intercompany transfer of assets* 5,674,306 - Working capital transferred to Oando Marketing Limited 2,155,968

(34,210,938) (19,219,815) (2,723,127) (4,716,816)

*Intercompany transfer of assets relate to land and building (N14.7million) and upstream assets (N5.7billion) transferred to Oando Property Limited and Oando Exploration and Production Limited respectively.

pg80 31 Directors and employees a) Directors’ remuneration: The remuneration paid to the directors of the Company was as follows: N’000 31-Dec-08 31-Dec-07

Group Company Group Company

Fees paid to non executive directors: Chairman 850 600 Others 6,969 4,125

7,819 4,725 Executive directors’ salaries 111,233 123,785

119,052 128,510 Other emoluments 70,292 67,669

189,344 196,179 The directors received emoluments (excluding pension contributions) in the following ranges:

Number Number N5,000,000 - N10,00,000 99 Above N10,000,000 33

Included in the above analysis is the highest paid director at N71.3 million (2007: N72.25million).

Group Company Group Company (b) Staff costs i. Employee costs during the year amounted to: Wages and salaries 2,225,373 280,102 1,660,747 1,116,386 Employee benefits provision 360,808 - 133,863 126,459 Welfare and training 283,285 - 499,481 481,979 Other staff costs 222,751 46,133 157,866 131,077

3,092,217 326,235 2,451,957 1,855,901

pg81 ii. The average number of full-time persons employed by the Company during the year was as follows: N’000 31-Dec-08 31-Dec-07

Group Company Group Company Number Number Number Number Management staff 102 33 102 71 Senior staff 322 70 329 254 Junior staff 7 4 61 53

431 107 492 378

iii. Higher-paid employees of the Company, other thandirectors, whose duties were wholly or mainly discharged in Nigeria, received remuneration (excluding pension contributions) in the following ranges: Number Number Number Number

N1,000,001 - N1,500,000 4 4 26 16 N1,500,001 - N2,000,000 3 0 147 132 N2,000,001 - N2,500,000 67 35 116 99 N2,500,001 - N3,000,000 97 12 53 32 N3,000,001 - N3,500,000 81 14 25 22 N3,500,001 - N4,000,000 55 2 18 5 N4,000,001 - N4,500,000 22 4 24 15 N4,500,001 - N5,000,000 21 3 13 12 Above N5,000,000 81 33 70 45

32 Capital commitment N’000 N’000 N’000 N’000 Outstanding capital expenditure contracted but not provided for in the accounts 1,929,920 - 106,643 106,643 Capital expenditure approved by the Board but not yet committed 23,467,250 10,000,000 12,803,363 12,803,363 25,397,170 10,000,000 12,910,006 12,910,006 32 Contingent liabilities 32.1) Pending litigation There are a number of legal suits outstanding against the Company for stated amounts of N712 million (2007:N355million). On the advice of Counsel, the Board of Directors are of the opinion that no material losses are expected to arise. Therefore, no provision has been made in the financial statements. 32.2) Bonds and guarantees Guarantees, performance bonds, and advance payment guarantees issued in favour of the Company amounted to N1.813 billion. The Company also guaranteed a loan of N18.6 billion from a commercial bank on behalf of its gas subsidiaries. No guarantees were given on behalf of third parties. (32.3) Other claims In February 2008, the Federal High Court ruled that Oando Plc should pay N172.42million less 5% of the amount as additional income tax liability including Education tax of N23.28million. The additional assessments relate to the financial year 2003. The company has instituted an appeal at the Federal Court of Appeal. In the opinion of the directors, the claim by the Federal Inland Revenue Services is unlikely to succeed at the higher courts and therefore no provision has been made in the financial statements. pg82 34 Related party transactionsSignificant related party transactions were in respect of intragroup purchase and sale of refined petroleum products on terms similar to such transactions entered into with third parties. Amounts in these regard have been eliminated on consolidation. However, transactions relating to the Company’s own financial statements are as follows: N’000 31-Dec-08 31-Dec-07 Purchase of refined petroleum products from:

Oando Supply and Trading Limited - 46,178,145 Oando Trading Limited - 15,733,276 - 61,911,421 Amounts outstanding as of balance sheet date (included in trade creditors): Oando Supply and Trading Limited - 5,369,227 Oando Trading Limited - 1,139,258 - 6,508,485

The company provided funding to finance several projects on behalf of subsidiaries during the period. The funds are given interest free except when the funding is financed by borrowings in which case the bank interest is charged to the entity. Amounts in these regard have been eliminated on consolidation. Transactions relating to the company’s own financial statements are as follows: Oando Exploration & Production Limited 36,224,659 Oando Energy Services 8,836,903 Oando Supply & Trading 1,294,159 Oando Lekki Refinery 783,133 Oando Gas and Power 464,642 Apapa SPM 280,195 Oando Production & Development Company 90,930 Oando Properties 58,122 Oando Power-Miscellaneous 53,205 Gaslink Nigeria (26,285) Oando Marketing (499,905) Other Companies (2,367)

47,557,391

During the year, transactions were conducted between Oando Plc and other affiliate companies. These include: (a). Ocean and Oil Investment received N3,169 million in respect of dividend declared at the end of 2007 and interim dividend declared in August 2008 (2007:N559.7million) (b). Ocean and Oil Holdings Nigeria Limited is entitled to N994 million (2007:N413million) for technical and management services rendered. (c). Avante Capital Partners, a subsidiary of Ocean and Oil Holdings received N63.24 million (2007: N98.5 million) for corporate advisory services performed during the year. (d). Avante Property and Asset Management Limited, a subsidiary of Ocean and Oil Holdings received N98.6 million for professional services performed during the year.

pg83 The amount payable relating to these affiliates at the balance sheet date amounted to: N’000 31-Dec-08 1-Dec-031

Ocean and Oil Holdings Nigeria Limited 369,951 67,236

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

Core investor Ocean and Oil Investments (Nigeria) Limited, a special purpose entity set up for the purpose of acquiring significant interest in the then Unipetrol owned 34% of Oando Plc’s shares at the balance sheet date (2007:34%). Ocean and Oil Investments is owned by Ocean and Oil Mauritius. Ocean and Oil Mauritius is owned by Ocean and Oil Holdings (BVI) Limited. Subsidiary information Entity name Country of Nature of Issued share Percentage incorporation business capital interest held Akute Power Limited Nigeria Power generation 2,500 100% Apapa SPM Limited Nigeria Off shore submarine pipeline construction 19,125 100% East Horizon Gas Co. Ltd Nigeria Gas distribution 10,000 100% Gaslink Benin Limited Nigeria Gas distribution 2,618 100% Gaslink Nigeria Limited Nigeria Gas distribution 1,717,698 96.98% Oando Benin Limited Benin Marketing and sale of petroleum products 14,832 100% Oando Energy Services Limited Nigeria Provision of drilling and other services to upstream companies 5,000 100% Oando Exploration & Production Limited. Nigeria Exploration and production 5,000 100% Oando Gas and Power Limited Nigeria Gas and power generation and distribution 1,000 100% Oando Ghana Limited Ghana Marketing and sale of petroleum products (Subsidiary of Oando Marketing Limited) 126,575 82.9% Oando Lekki Refinery Limited Nigeria Petroleum refining 2,500 100% Oando Marketing Limited Nigeria Marketing and sale of petroleum products 175,000 100% Oando Port Harcourt Refinery Limited Nigeria Petroleum refining 2,500 100% Oando Production and Development Company Limited Nigeria Exploration and production 10,000 95% Oando Properties Limited Nigeria Property management services 250 100% Oando Searex VI Limited British Virgin Island Provision of drilling and other services to upstream companies 0.1 100% Oando Searex XII Limited British Virgin Island Provision of drilling and other services to upstream companies 0.1 100% Unipetrol Sierra Leone Limited Sierra Leone Marketing and sale of petroleum products (Subsidiary of Oando Marketing Limited) 10,079 80% Oando Supply and Trading Limited Nigeria Supply of crude oil and refined petroleum products 5,000 100% Oando Togo SA Togo Marketing and sale of petroleum products (Subsidiary of Oando Marketing Limited) 186,288 75.3% Oando Trading Limited Bermuda Supply of crude oil and refined petroleum products 1,518 100% Oando Liberia Liberia Marketing and sale of petroleum products (Subsidiary of Oando Marketing Limited) 6,538 100% OML 112 & 117 Limited British Virgin Island Provision of drilling and other services to upstream companies 6,538 100% Oando OML 125 & 134 BVI Limited British Virgin Island Exploration and production 6,329 100% Oando OML 125 & 134 Limited Nigeria Exploration and production (100% owned by OML 125 & 134 BVI) 2,500 100% TRANSGAS Nigeria Gas distribution (100% owned by Gaslink) 8,077 100% UNITAB Nigeria Limited Nigeria Marketing of automobile parts (Subsidiary of Oando Marketing Limited) 40,000 51% pg84 35 Technical and management service agreement The Company is a party to subsisting agreements in respect of technical know-how, marketing, management expertise, strategic planning and consultancy services assistance. These agreements are between the Company and Ocean and Oil Holdings Limited.The terms of the agreements include payment of Technical and Management Service fees of 4% and 3% respectively of the Company’s net profit before taxation, where net profit before tax is under N2 billion (or 5% and 4% where net profit before tax is over N2 billion). A total provision of N994million (2007: N413million) has been made in respect of the Technical and Management Service fees for the year and included in administrative expenses disclosed in the financial statements.

36 Upstream activities N’000 (35.1) Details of upstream assets Mineral rights Land and Expl. costs Capital Moveable Abandonment acquisition building & producing construction assets asset wells Total Cost As at 1 January 5,421,548 - 1,827,222 - - - 7,248,770 Transfers/reclassification 17,888 - 15,620 7,313 (40,821) - - Additions 24,461,108 23,750 11,641,808 5,239,084 166,243 783,995 42,315,988

As at 31 December 29,900,544 23,750 13,484,650 5,246,397 125,422 783,995 49,564,758

Depreciation / Amortisation As at 1 January ------Charge for the period (1,548,814) - (1,571,802) (953,366) (22,426) - (4,096,408)

As at 31 December (1,548,814) - (1,571,802) (953,366) (22,426) - (4,096,408)

Net Book Value As at 31 December 2008 28,351,730 23,750 11,912,848 4,293,031 102,996 783,995 45,468,350

As at 31 December 2007 5,421,548 - 1,827,222 - - - 7,248,770

On 30 December 2008, the Group acquired an undivided 15% interest in Oil Mining Leases (OMLs) 125 and 134 with effect from 1 July 2007. The OML 125 is currently in production, while further appraisal and development activities are ongoing in respect of OML 134. The Group’s share of the acquired assets and mineral rights acquisition costs are included as additions to upstream assets.

The Group’s share of total proved developed and undeveloped reserves in it’s various concessions were 12.3 and 7.8 million barrels of oil equivalent respectively.

The Group performed a ceiling test on the capitalised costs as at 31 December 2008 using a price of approximately N6,000 per barrel ($46/barrel). No amounts were written off as a result of this exercise.

As disclosed in note 15, the total recorded liability for restoration and abandonment was approximately N784 million.

pg85 Supplementary data, including the standardised measure of oil and gas activities are presented in line with Statement of Accounting Standard No. 14 in the relevant subsidiaries’ financial statements (35.2) Details of concessions

Expiration Subsidiary License Operator Nature Date Status

Oando OML 125 & 134 Ltd OML 125 NAE Offshore 04/07/2023 Producing Oando OML 125 & 134 Ltd OML 134 NAE Offshore 04/07/2023 Producing Oando Petroleum Development Company Ltd OML 56 ENERGIA Onshore 31/01/2023 Development Oando Exploration And Production Ltd OPL 236 OEPL Onshore 31/03/2013 Exploration Oando Exploration And Production Ltd OPL 278 OEPL Onshore 31/01/2011 Exploration

37 Post balance sheet events No events or transactions have occurred since the balance sheet date which would have a material effect upon the financial statement at that date or which need to be mentioned in the financial statements in other to make them not misleading as to the financial position or result of operations at the balance sheet date.

38 Reclassification of prior year balances Certain prior year balances have been reclassified to conform with current year presentation format.

pg86 STATEMENT OF VALUE ADDED FOR THE YEAR ENDED 31 DECEMBER 2008

31 Dec 08 31 Dec 07

Group Company Group Company N’000 % N’000 % N’000 % N’000 % Turnover 339,420,435 6,837,741 185,892,083 131,007,169 Other income 1,816,444 365,029 2,471,002 1,707,933 Interest received 4,548,759 4,308,339 871,336 507,155 345,785,638 11,511,109 189,234,421 133,222,257 Bought-in materials and services- Local purchases (255,607,646) (559,356) (132,911,056) (106,872,116) - Foreign purchases (59,882,508) - (45,004,479) (18,526,835)

Value added 30,295,484 100 10,951,753 100 11,318,886 100 7,823,306 100

Distributed as follows:

Employees: - To pay salaries, wages and other staff costs 3,092,217 10 326,235 3 2,451,957 22 1,855,901 24

Government:- To pay tax 4,108,357 14 176,907 2 1,138,919 10 858,569 11 Providers of capital: - To pay dividend 2,715,102 9 2,715,102 25 - - - - - To pay interest on borrowings 10,667,689 35 3,895,439 36 1,273,646 11 883,723 11 Minority interests 4,052 - - - 24,036 0 - -

Maintenance and expansion of assets: - Deferred tax (1,709,071) (6) (8,808) (0) 194,394 2 187,145 2 - Depreciation 5,792,966 19 218,413 2 1,480,925 13 1,366,486 17 - Retained in the business 5,624,172 19 3,628,465 33 4,755,009 42 2,671,482 34

Value distributed 30,295,484 100 10,951,753 100 11,318,886 100 7,823,306 100

pg87 FIVE-YEAR FINANCIAL SUMMARY (2004 - 2008)

Group

2008 2007 2006 2005 2004 Balance Sheet Property plant and equipment 89,903,189 40,318,614 14,396,003 13,689,809 11,702,542 Intangible assets 22,350,513 22,464,771 14,514,551 13,600,875 9,723,129 Investment in associates Long term Investments 2,000 10,000 10,000 - 54,183 Deferred tax asset 1,044,162 - - - Long term receivable 14,544,777 11,138,446 4,612,042 3,573,468 3,797,521 Net current assets/(liabilities) (31,450,625) (6,601,994) (5,680,925) (4,483,890) 285,935 Borrowings and other non-current liabilities (42,795,571) (18,457,205) (2,257,844) (2,735,899) (3,058,551) Deferred taxation (7,482,795) (889,405) (687,224) (638,790) (469,637) Retirement benefit obligation - (141,671) (138,254) (279,782) (470,447) Provision for other liabilities & charges (1,236,917) (425,279) (372,079) - -

44,878,733 47,416,277 24,396,270 22,725,791 21,564,675

Share capital 452,442 377,035 286,150 286,150 286,150 Share premium 29,716,870 29,877,741 15,980,263 15,980,263 15,980,263 Revaluation reserve 7,215,257 10,652,936 2,423,923 2,423,923 2,423,923 Retained earnings 7,343,127 6,321,140 3,853,399 2,607,931 1,469,153 Minority interest 151,037 187,425 1,825,535 1,427,524 1,405,186

44,878,733 47,416,277 24,369,270 22,725,791 21,564,675 Profit and loss account Turnover 339,420,435 185,892,083 209,078,938 182,763,434 103,062,711

Profit/(loss) before taxation 10,742,611 6,813,728 3,794,091 2,621,139 239,585 Exceptional item - - 1,375,207 Taxation (2,399,286) (1,333,313) (719,023) (847,496) (143,647)

Profit after taxation 8,343,325 5,480,415 3,075,068 1,773,643 1,471,145

Dividend* 7,242,056 2,289,203 1,430,752 1,144,602 652,319

Per share data Weighted average number of shares 904,885 632,891 572,301 572,301 367,183 Potential ordinary shares - - - - - Basic earnings per share (kobo) 922 751 411 265 243 Diluted earnings per share 922 751 411 265 243 Dividends per share (kobo) 800 362 250 200 178 Net assets per share (kobo) 4,960 7,492 4,258 3,971 5,873 Dividend cover 1.15 times 2.07 times 1.64 times 1.32 times 1.36 times

Note: Earnings, dividend and net assets per share are based on the weighted average number of shares in issue 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. pg88 FIVE-YEAR FINANCIAL SUMMARY (2004 - 2008)

Company 2008 2007 2006 2005 2004

Balance Sheet Property plant and equipment 1,539,035 26,039,055 13,788,755 13,149,388 11,415,060 Intangible assets 597,334 9,699,814 13,445,903 12,501,645 9,548,197 Investment in associates - - - - 37,709 Long term Investments 32,131,055 16,844,848 2,080,320 1,755,153 1,265,864 Deferred tax asset - - Long term receivable 44,368 318,391 326,654 60,346 385,093 Net current assets/(liabilities) 25,199,816 1,827,053 (5,323,998) (3,925,513) (534,064) Borrowings and other non-current liabilities (25,382,404) (9,024,571) (1,403,261) (1,449,796) (1,374,251) Deferred taxation (910,683) (849,344) (662,199) (620,446) (458,920) Retirement benefit obligation - (141,671) (138,254) (279,782) (460,830)

33,218,521 44,713,575 22,113,920 21,190,995 19,823,858

Share capital 452,442 377,035 286,150 286,150 286,150 Share premium 29,716,870 29,877,741 15,980,263 15,980,263 15,980,263 Revaluation reserve 217,242 10,652,936 2,423,923 2,423,923 2,423,923 Retained earnings 2,831,967 3,805,863 3,423,584 2,500,659 1,133,522

33,218,521 44,713,575 22,113,920 21,190,995 19,823,858

Profit and loss account Turnover 6,837,741 131,007,169 132,397,373 121,591,635 85,852,713

Profit/(loss) before taxation 6,511,666 3,717,196 2,855,591 2,102,921 (386,711) Exceptional item - - - - 1,375,207 Taxation (168,099) (1,045,714) (501,914) (727,117) (97,694)

Profit after taxation 6,343,567 2,671,482 2,353,677 1,375,804 890,802

Dividend* 7,242,056 2,289,203 1,430,752 1,144,602 652,319

Per share data Weighted average number of shares 904,885 632,891 572,301 572,301 367,183 Potential ordinary shares - - - - Basic earnings per share (kobo) 701 422 411 240 243 Diluted earnings per share 701 422 411 240 243 Dividends per share (kobo) 800 400 250 312 200 Net assets per share (kobo) 3,671 7,065 3,864 3,703 5,399 Dividend cover 0.87 times 1.17 times 1.65 times 1.20 times 1.37 times

* Dividends are disclosed in the years declared at the Annual General Meeting. Dividend comprises of interim dividend paid in the current year and dividend based on 2007 results declared in the current year which includes earnings from downstream operations transferred to Oando Marketing Limited in 2008. pg89 STATEMENT OF UNCLAIMED / RETURNED DIVIDEND WARRANTS

PAYMENT NO BAL.AS AT 31ST DECEMBER, 2008 PAYABLE DATE

6 862,354.56 DECEMBER 4, 1997 7 6,216.52 DECEMBER 4, 1997 8 5,027,632.82 DECEMBER 16, 1998 9 6,118,105.10 MARCH 6, 2000 10 9,802,386.72 SEPTEMBER 14, 2000 11 30,821,654.78 JUNNE 21, 2001 12 30,938,387.38 JULY 31, 2002 13 59,547,480.00 JUNE 25, 2004 14 109,763,789.60 JUNE 28, 2005 15 111,979,375.50 JUNE 05, 2006 16 310,802,570.80 JUNE 29, 2007

TOTAL 675,669,953.78

EX-AGIP PLC PRE MERGER ACCOUNT STATEMENT OF UNCLAIMED / RETURNED DIVIDEND WARRANTS PAYMENT NO BAL.AS AT 31ST DECEMBER, 2008 PAYABLE DATE

19 1,739,008.58 APRIL 30, 1997 20 1,442,339.17 MAY 5, 1998 21 2,656,042.28 APRIL 26, 1999 22 7,370,137.90 MAY 3, 2000 23 4,939,103.21 OCTOBER 30, 2000 24 19,805,076.78 APRIL 25, 2001 25 7,009,194.89 SEPTEMBER 25, 2001 26 20,735,358.27 APRIL 30, 2002

TOTAL 65,696,261.08

pg90 pg91 PROXY FORM

The Annual General Meeting of Oando Plc (the “Company”) will be held at the Akwa Ibom State Hall (Ibom Hall) Uyo, Akwa Ibom State, Nigeria on Thursday, the 30th day of July, 2009 at 10.00 a.m. (the Meeting). may be fixed by the Directors and unless so fixed shall be more than half of the total number of I/WE* of Directors at any point in time, with at least half of the number present being non-executive directors”.

being That pursuant to Article 84 of the Company’s Articles of Association, the Directors be and are hereby authorized to raise, whether by way of a public offering or other methods, additional capital of up to a member/members of Oando Plc and holders of shares, hereby appoint** or N200,000,000,000 (Two Hundred Billion Naira) through the issuance of shares, convertible or non- failing him/her, the Chairman of the Meeting as my/our proxy to act and vote for me/us on my/our behalf at the Meeting of convertible loans, medium term notes, notes, bonds and or any other instruments, in such tranches, the Company to be held on Thursday the 30th day of July, 2009, which will be held for the purposes of considering and, if series or proportions, at such coupon or interest rates, within such maturity periods, and on such deemed fit, passing with or without modification, the resolutions to be proposed at the Meeting and at each adjournment of other terms and conditions; including through a book building process or other process all of which same and to vote for or against the resolutions in accordance with the following instructions: shall be as determined by the Directors, subject to obtaining the approvals of relevant regulatory authorities”.”That the Directors be and are hereby authorized to enter into any agreements and or NOTE execute any other documents necessary for and or incidental to effecting resolution (a) above”. “That A member who is unable to attend the Annual General Meeting is entitled by law to vote by proxy. The proxy form has been the Directors be and are hereby authorized to appoint such professional parties and perform all such prepared to enable you exercise your right in case you cannot personally attend the Meeting. other acts and do all such other things as may be necessary for or incidental to effecting the above The proxy form should not be completed if you will be attending the Meeting. If you are unable to attend the Meeting, read resolutions, including without limitation, complying with directives of any regulatory authority.” the following instructions carefully: To consider, and if approved, to pass with or without modification, the following as a special resolution:”That the Directors be and are hereby authorized to divest and/or transfer up to 49% of the Company’s shareholding in Oando Marketing Limited at such times, to such persons and or entities Proposed resolutions For Against and on such terms and conditions as may be determined by the Directors, in accordance with any applicable statutory and or regulatory requirements”. To declare the dividend recommended by the directors of the Company To authorise the directors to fix the remuneration of the Auditors To re-elect Mr. Oboden Ibru a. Write your name in BLOCK CAPITALS on the proxy form where marked* To re-elect Mr. Alhaji Hamidu Mahmud To re-elect Mr. Onajite Okoloko b. Write the name of your proxy where marked**, and ensure that the proxy form is dated and To appoint Mr. Olufemi Adeyemo as a Director signed by you. The Common Seal must be affixed on the proxy form if executed by a corporation.

Resolved that the fees payable to the non-executive directors of the Company be increased from N850,000.00 per annum for the Chairman and N750,000.00 each per annum for all other non-execu- Registered holders of certificated Oando Plc shares and holders of dematerialised Oando Plc shares in their own name who tive directors to N1,000,000 per annum for the Chairman and N900,000 for all other non- executive are unable to attend the Meeting and who wish to be represented at the Meeting, must complete and return the attached form directors with effect from 1 January 2009; which fees are payable quarterly in arrears”. of proxy in accordance with the instructions contained in the form of proxy so as to be received by the share registrars, First Registrars Nigeria Limited at Plot 2, Abebe Village Road, Iganmu, Lagos, or Computershare Investor Services (Proprietary) Resolved that Article 140 of the Company’s Articles of Association be and is hereby amended as Limited, 70, Marshall Street, Johannesburg, 2001, South Africa, PO Box 61051, Marshalltown, 2107, not less than 48 hours follows: before the date of the Meeting.

(i) the words “and or electronic” should be inserted after the word “printed”; Holders of Oando Plc shares in South Africa (whether certificated or dematerialised) through a nominee should timeously make the necessary arrangements with that nominee or, if applicable, Central Securities Depository Participant (“CSDP”) or broker (ii) the existing Article 140 be numbered Article 140(a); to enable them to attend and vote at the Meeting or to enable their votes in respect of their Oando Plc shares to be cast at the Meeting by that nominee or a proxy. (iii) a new Article 140(b) be inserted as follows: “Electronic copy means a method of electronic communication which includes, but is not limited to, facsimile, electronic data message (including but not limited to e-mail), bulletin board communications, internet websites, ms-word, excel spreadsheet, print portable document file (pdf), hypertext mark-up language (html) or similar text displayed via a web browser, Signature: electronic data interchange (EDI), Compact Disc, memory stick and computer network communications. Dated this day of 2009. Resolved that Article 108 of the Articles of Association be deleted and the following Article be adopted as the new Article 108:”The quorum necessary for the transaction of the business of the Directors pg92 Please affix postage stamp

First Registrars Nigeria Limited Plot 2, Abebe Village Road, Iganmu, Lagos, or

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

pg93 ADMISSION CARD

ANNUAL GENERAL MEETING TO BE HELD AT AKWA IBOM STATE HALL

(IBOM HALL), BABANGIDA AVENUE, UYO, AKWA IBOM STATE,

NIGERIA.

On Thursday July 30, 2009 at 10.00 a.m

NAME OF SHAREHOLDER

______

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.

pg94 CONTACT DETAILS

HEAD OFFICE Canon’s Court (7th Floor) Muritala Mohammed Local Airport (5th, 7th-10th Floor) 22, Victoria Street 2, Ajose Adeogun Street , Victoria Opposite Aero contractors 2, Ajose Adeogun Street , Victoria Island Hamilton HM 12 Island Ikeja, Lagos Lagos, Nigeria Bermuda Lagos, Nigeria Nigeria Tel: 234-1-2702400; Tel: 441-295-1443 Tel: 234-1-2601293-5, 4619882 Tel: 234-1-4975888 E-mail: [email protected] Fax: 441-295-9216 Fax: 234-1-2625467 Website: www.oandoplc.com ABUJA AVIATION TERMINAL OANDO SUPPLY AND TRADING WEST AFRICAN OPERATIONS Oando Aviation SA Office Address (10th Floor) OANDO BENIN REPUBLIC Behind Julius Berger Yard Mettle House 2, Ajose Adeogun Street , Victoria Island OIBP 1093 Recette Principale Nnamdi Azikwe International Airport 32 Fricker Road Lagos, Nigeria Cotonou Abuja Illovo Tel: 234-1-2704400 Tel: 299-313679 Johannesburg Fax: 234- 1 – 2696758 BITUMEN PLANT South Africa . OANDO GHANA C/O Oando Div. Office Tel: 011 268 6235 GASLINK B35 Augostino Neto Road Reclamation Road (5th Floor) Airport Residential Area Port Harcourt GROUP LIAISON OFFICE 2, Ajose Adeogun Street , Victoria Island Accra, Ghana Rivers State First Floor Lagos, Nigeria Tel: 233-21-761196, 761520 Nigeria 50 Curzon Street Tel: 234-1-2702794-5 Tel: 234-84-234516 W1J 7UW Fax: 234-1-2713403 OANDO ( TOGO ) S.A. London E-mail: [email protected] 142, Rue 42 Enface De L’Hotel LUBRICANT BLENDING PLANT Tel: 44-207-297-4280-7 Website: www.gaslink.org Sakarawa Ablogame Rido Village Fax: 44-207-499-5375 Lome, Togo Off Kachia Road OANDO GAS & POWER Tel: 228-227-59-46, 227-04-22 PMB 2110 OANDO MARKETING (5th Floor) Kaduna State (8th Floor) 2, Ajose Adeogun Street , Victoria Island PLANTS/TERMINALS Nigeria 2, Ajose Adeogun Street , Victoria Island Lagos, Nigeria APAPA TERMINAL Tel: 234-62-516128, 236282 Lagos, Nigeria Tel: 234-1-2702794-5 Terminal Office ONNE TANK TERMINAL Tel: 234-1-2601290-9; 2702400 Fax: 234-1-2713403 Kayode Street Onne Terminal, Oando Plc E-mail: [email protected] Marine Beach Onne-NPA (flt) Road Website: www.oandoplc.com OANDO ENERGY SERVICES Apapa, Lagos Onne Oil and Gas Free Zone (7th Floor) Tel: 234-1-5870218 Port Harcourt, Nigeria ABUJA AREA OFFICE 2, Ajose Adeogun Street , Victoria Island Tel: 234-84-579940 Plot 252, Lagos, Nigeria LAGOS AVIATION TERMINAL Central Business District Tel: 234-1-2622311-4 Oando Aviation Opp. NNPC Towers Fax: 234-1-2622311 Federal Capital Territory Abuja, Nigeria OANDO EXPLORATION AND PRODUCTION Tel: 234-9-5235458-9

OANDO TRADING

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