FORTE OIL'S EXPENSIVE ANCHOR


In the nine months to September 2016, Forte Oil PLC found anchor within the turbulent world of liquidity squeeze in short term loans but the bill was high.

According to the figures for the nine months released recently, as working capital deficit jumped to N7353.5m compared to N2571.4m previously in spite of 24.2% draw down of inventories to N7625.9m and as receivables rose by 20.4% to   N42013m, Forte Oil hung on to loans.

Forte Oil response to the squeeze was to almost double short term loans by 89.7% to N26096n while reducing more costly overdraft by 60.8% to N4026.7m.

This took its pound of flesh eventually as net finance bill jumped to N2233.9m from N292.7m previously.

This became the main factor that forced Forte Oil PLC to reap only 6.53% increase in profit before tax from a more healthy 29.8% rise in total income to N122378m propelled mainly by 32.2% increase in core revenue to N121083.3m.

Other factors that depressed profit growth  include 34.3% increase in cost of sale to N105587.9m; 37% rise in distribution costs to N2569.9m and 13.9% drop in other income to N2294.7m.

In fact, the only other factor that helped Forte Oil to absorb the finance bill hike was 10.2% decrease in administration expenses to N7353.3m.

In calculating the growth in profit though, N5.27m foreign exchange related loss was not included but will eventually be recognised as part of today's recurrent expense

FORTE OIL PLC: Nm nine months
                         2016.          2015
Total income 122378.0  94280.6
Core revenue 121083.3. 91615.6
Cost of sale.  105587.9. 78636.1
Distribution.    2569.9.      1876.5
Administration 7353.3.     8176.5
Net finance.    (2233.9).  (292.7)
Profit before tax 5633.1. 5288.0
Forex gain.          (5.27).   (0.50)
Working capital (7353.5) (2571.4)
ST loans          26096.0   13757.8
Overdraft           4026.7.  10268.4
Inventories       7625.9.   10059.9
Receivables    42013.2. 34896.6
Profit margin %   4.60.     5.61

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