The first-quarter results of Seplat Energy Plc delivered 20 percent returns for shareholders but that is not getting enough attention as crises within the company’s board leading to the resignation of top directors remain prominent in the news.
The revelation came in its unaudited statement of results for the first three months of 2023, which announced revenues up 37 percent to $331 million and the bottom line up by 189 percent to $57.5 million.
The company’s challenges have been described as stemming from external interference but sources close to the company tell BusinessDay they may be more nuanced. They point to disputes over investment decisions and management’s insistence on following best practices against the wishes of some internal stakeholders.
Seplat is one of Nigeria’s most successful companies, listed not just on the premium board of the Nigerian Exchange Limited (NGX) but also on the main board of the London Stock Exchange, where the highest standards of governance are demanded by investors.
Seplat Energy’s disclosure to the NGX on April 25 alluded to this, stating that: “Despite the recent targeted attacks aimed at derailing that process, the Board remains strong and resolute in completing the task.”
These ‘attacks’ started with a suit applying for the withdrawal of an immigration visa extended to Roger Brown, the company’s CEO, and some of the company’s staff initiated by the Nigerian government.
Some aggrieved parties with about 700 units of the company’s 600 million units of shares in issue, petitioned Rauf Aregbesola, Nigeria’s minister of interior, stating allegations of favouritism, racism, discrimination and breach of corporate governance against Brown, a British citizen.
Based on this petition, On March 3, the minister issued a letter to the company’s chairman Basil Omiyi, informing him of the withdrawal of the CEO’s work permit as well as his visa and residence permit.
The aggrieved members also sought a court order to enforce their wishes. In a ruling by a federal high court in Lagos restraining Brown, the company’s CEO, from carrying out his official duties pending the determination of a suit that bordered on racism, discrimination against Nigerian staff, and breach of good governance practices.
The court in April vacated the interim ex-parte order stopping Brown from acting as CEO. And on the 20th of April, it announced the withdrawal/discontinuance of the immigration case against the company, some of its directors, and officers, and is now focused on engagements with the Minister of Interior to bring closure to all outstanding issues.
The action resulted in the departure of Fabian Ajogwu, a senior advocate of Nigeria and foremost corporate governance expert, as an independent non-executive director.
“Prof. Ajogwu resigned from the Board citing recent events and deliberate external interferences which have prevented him from effectively discharging his fiduciary and statutory duties as an Independent Non-Executive Director to the highest standards of corporate governance he has written and subscribed to.
“He has confirmed in writing his support for the steps the company is taking to strengthen governance. He has also made known his dismay over the actions of those who have tried to damage Seplat Energy and derail its efforts to improve corporate governance,” Seplat Energy noted in corporate disclosure.
Despite these issues, the company said it will increase its quarterly dividend by 20 percent from US 2.5 cents per share to US 3.0 cents per share.
While revenues grew 37 percent, the company’s analysis reveals that the cost of sales rose by just 6.6 percent, meaning gross profits surged by 69 percent to $198.3 million at a margin of 60 percent compared to 48 percent in the first three months of 2022.
Read also: Seplat grows first quarter PBT to N39.5bn
Seplat reported delivery of average daily working interest production of 51,720 barrels of oil and gas equivalent and extending its safety record to 3.8 million person-hours without a single lost-time injury.
The company has increased the base level of its quarterly dividend to US 3.0 cents per share so soon after it announced a special dividend of US 5 cents at its full-year 2022 results in March, for a total dividend to shareholders of US 15 cents for the 2022 financial year.
Analysis shows that this is possible because of the strong cash generation the company achieves. Having started the year with $404 million in the bank, Seplat added more than $55 million in the first three months of the year, setting the stage for better returns at the end of the year.
In its statement to the Lagos and London stock exchanges, Omiyi thanked the company’s employees, 98 percent of whom are Nigerian, for their support.
He went on to reassure them “that the Board remains united in its determination to implement the strong corporate governance that will enable us to create a sustainable business that maximises returns for all stakeholders, while delivering an energy transition that drives social and economic benefits for all Nigerians”.