Blames NPDC for N45bn loss in 2016
Three executive directors of Seplat Petroleum Development Company Plc earned $12.923 million, about N4.781 billion as remunerations, between 2015 and 2016.
The company, an independent indigenous upstream exploration and production company with focus on Nigeria and listed on the Nigerian and London Stock Exchanges, in its Annual Reports and Accounts for its 2016 financial year, disclosed that $6.162 million and $6.76 million were paid to the three executive directors in 2015 and 2016 respectively.
The company listed the executive directors, comprising one Nigerian and two expatriates, as Mr. Austin Avuru, Chief Executive Officer; Mr Stuart Connal, Chief Operating Officer; and Mr. Roger Brown, Chief Finance Officer.
The remunerations comprise salary, taxable benefits, bonus, Long-Term Incentive Plan (LTIP), pension and others.
The payments, notwithstanding, the company posted a loss after tax of N45.384 billion in the 2016 financial year, compared to a profit after tax of N12.99 billion recorded in 2015.
Giving a breakdown of the payments to the Executive Directors, the report stated that the highest paid director, Mr. Austin Avuru, received a total of $5.996 billion, about N2.219 billion in the two year period, broken down into $2.992 million and $3.004 million in 2016 and 2015 respectively.
On the other hand, Mr. Roger Brown, the Chief Financial Officer (CFO), earned $1.887 million in 2015 and $1.588 million in 2016, leading to total earnings of $3.475 million, about N1.286 billion over the two year period.
Mr. Stuart Connal, the Chief Operating Officer and least paid of the three executive directors, earned $3.452 million, about N1.286 billion over the two year period, comprising $1.870 million and $1.582 million in 2015 and 2016 respectively.
In addition, the report disclosed that Chairman of the company, Mr. Ambrosie Bryant Chukwueloka (ABC) Orjiako, received total emoluments of $1.116 million and $1.125 million, an equivalent of N412.92 million and N416.25 million in 2016 and 2015 respectively.
On the other hand, under its General and Administrative Expenses, the report noted that Non-Executive Directors of Seplat received total emoluments of $2.652 million and $2.708 million in 2016 and 2015 respectively, an equivalent of N981.24 million and N1.002 billion respectively.
The non-executive directors, apart from Orjiako, are: Michael Alexander;Michel Hochard; Macaulay Agbada Ofurhie; Basil Omiyi; Ifueko Omoigui Okauru; Charles Okeahalam; Lord Mark Malloch-Brown and Damian Dodo.
The company declared revenue of N63.384 billion in the 2016 financial year, dropping by 43.9 per cent from N112.972 billion recorded in 2015; while it posted an operating loss of N44.949 billion, compared to operating profit of N31.261 billion.
It also recorded loss before tax of N47.419 billion in 2016, as against a profit before tax of N17.243 billion in 2015; while it posted loss after tax of N45.384 billion, compared to profit after tax of N12.99 billion in 2015.
The dismal bottom line figure was partially as a result of a sharp rise in the company’s business development expenses from N33 million in 2015 to N3.362 billion in 2016.
It also recorded flights and other travel costs of N1.647 billion, compared to N1.5 billion in 2015; while it spent N1.38 billion on rentals in 2016, as against N680 million in 2015.
However, Chief Financial Officer of the company, Mr. Roger Brown, disclosed that included in the loss of the company is a charge of $101 million relating to unrealised foreign exchange losses principally on amounts owed by its joint venture partner, Nigerian Petroleum Development Company, NPDC.
According to him, historically, Naira balances have arisen on the receivable as a result of carrying NPDC on cash calls by converting US dollars to Naira and paying on its behalf.
He said, “Under the reconciliation with NPDC, the receivable is accounted for in US Dollar as the functional currency and the Naira balances are determined by converting USD using the weighted average USD/Naira exchange rate in the year the expenditure was incurred. These rates are set out in agreed reconciliation schedules signed off between the partners.”
He further stated that Seplat would continue to pursue amounts owed using this convention to avoid being in a currency loss position on account of funding partners cash calls.
“However, for the purposes of the 2016 results and in accordance with IFRS, we have used the year end 31 December 2016 closing rate to value the outstanding receivable. This has resulted in a foreign exchange loss of $77 million.
“In accordance with the provisions of the Joint Operating Agreement, we have also recognised finance income which has the effect of reducing the foreign exchange (FX) loss on the NPDC receivable (before impairment of US$10.3 million) to US$29 million,” Brown explained.
He added that a ‘Value for Money’ review is currently underway with NPDC and functional currency will form part of those discussions in ensuring that the Joint Venture has delivered value for money for each partner.