2023 Financials: further thoughts and notes10 Jun 2024 11:26
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Here are some further thoughts on the financials.
13. The average interest burden for the year was 14.1% (I’d expected 14.5-15%). While we’re paying interest at these types of rates, getting the debt burden down remains paramount. I always read comments about dividends on this bulletin board with some amazement.
14. The “Other operating income” of USD28.9m in respect of the FX true-up (which Porshefund kindly flagged): has it been paid?
15. Cashflow: cash at year end has fallen from USD241m to USD107m. When adjusted for the counterpart who paid USD98m in January, the cash fall becomes USD36m. Actually, this looks pretty good when the impact of the Naira collapse is taken into account.
16. Porsche - I’m also re-reading your note of Contract liabilities from 8 June. Since Contract liabilities have increased during the year (albeit by less than the 2022 increase as you helpfully point out), overall our customers have paid for more gas than they’ve taken, though of course some may be taking make-up gas whilst others clearly aren’t. There’s an important comment buried in the Audit committee considerations at the foot of page 116 under the title “Significant issues related to the financial statements”:
“- Appropriate recognition of oil and gas revenue -including ‘cut off’, recognition of contract liabilities and make-up gas utilisation”.
I think the risk of customers asking for a reduction in contracted gas remains, as occurred with Lafarge in 2020. But perhaps I’m stating the obvious.
I struggle with the expected credit loss calculation stuff and the note on page 192 is difficult to understand, for me at least. It’s comforting to know that I was never cut out to be a credit officer.
17. Page 97: The Transitional Facility. This, I really don’t understand! We seem to be borrowing NGN under this new TF which, apparently, we can draw down on and swap for USD in a limited amount, over time, to pay back our USD lenders (some of whom, one imagines, are the same parties in the five-bank TF consortium). We’ve got USD75m of (one assumes, mostly) NGN at year end (see segmental reporting note). Can’t we spot some of that for USD to repay some of the dollar debt? Or has the further weakening of NGN in 2024 meant that the balance is simply being kept for operating expenditure in-country?
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