2016 Annual Report

Annual Report
& Accounts

2016



Origins and Key Historical Milestones

From its incorporation as British Petroleum (Nigeria) in 1964, Forte Oil has emerged into a leading diversied energy
conglomerate, a publicly listed and widely owned corporation with one of the fastest growing business portfolios within
the energy sector.

Incorporation: Name Change: Core Investor sells Rebrand: New Frontiers:
stake while NNPC
As British Petroleum to Africa increases interest to Forte Oil with Consolidate Growth,
(Nigeria) Petroleum by converting new management build resilience and
Limited AP debt and 3-year turn-around entrench best
program practices

1964 1978-79 2000 2005 2007 2010-2011 2012-2015 2016-2020

Indigenization: Privatization: New Era: Transformation Program Results:

NNPC acquires NNPC divests Zenon Petroleum, Prots up 342%
60% stake, with 30% stake to led by Femi Otedola Share price up >1000%
Nigeria public core investor acquires a majority Included in the MSCI Index
buying 40% and 10% to interest from NNPC Acquired 414 MW Thermal IPP
Nigerian public ushering in a new Resumed dividend payments
era

C.O.R.R. Our Vision

Commited: We are passionate and committed about To be the foremost integrated energy solutions
everything we do; Committed to our values; to our provider in Nigeria.
mission; to customer satisfaction and to awless
execution of our individual roles and responsibilities at Our Mission
all times.
To build a long-term successful company, making
Open: We operate an open and transparent Forte Oil Plc the investment of choice through
communications with ourselves and every positive actions that boost investor condence at
stakeholder. We are transparent in our dealings and all times.
open in our engagements at all times. Open and
honest communications will give us a platform to Awards
create a feedback mechanism of ourselves and our
system. Best Performing Stock in the NSE in 2013

Respect: We believe that respect for fellow Inclusion of Forte Oil shares in the Morgan Stanley Capital
employees and stakeholders are sacrosanct and International Frontier Market May 2014
critical to actualizing the vision of the company.
Listed in the 2014 Top 100 most respected companies in Nigeria
Responsive: We are proud of our ability to do things in
a quick and different manner to generate results. We 2015 BusinessDay Top 25 CEO's Award for companies listed on The
move at break-neck speed (without violating policies Nigerian Stock Exchange
and guidelines) in getting things done so as to win
market share and continue to create value for our Best CSR marketing company of the year award and Most
shareholders. Innovative Retail Outlet of the Year at the second edition of the
prestigious Oil & Gas Innovation Awards at the BusinessDay/Oval
Annual Oil & Gas Awards 2016



TABLE OF CONTENTS

Corporate Information 2
Results at a Glance 3
Notice of Annual General Meeting 4
Chairman’s Statement 5
Group CEO’s Statement 7
Subsidiaries Reviews 9
Internal Control & Risk Management 12
Company’s Secretariat’s Report 13
Profile of Directors 19
Reports of Directors 23
Report of the Audit Committee 29
Report of Independent Auditors 32
Consolidated Statement of Financial Position 33
Consolidated Statement of Comprehensive Income 34
Consolidated Statement of Cash Flows 35
Consolidated Statement of Changes in Equity 36
Notes to the Consolidated Financial Statements 38
Consolidated Statement of Value Added 86
Financial Summary 87
Proxy Form 88
Admission Card 89
Postage 90
E-Dividend Mandate 91
Authority to Electronically Receive Corporate Information 92

2016 Group Financial Results at a Glance
for the year ended 31 December, 2016

Revenue 2016 2015
Cost of Sales N'000 N'000

Gross profit 148,605,261 124,617,238
(128,021,347) (106,255,812)
Profit before income tax
Income tax expense 20,583,914 18,361,426

Profit for the year 5,340,244 7,012,442
(2,449,814) (1,218,387)
Other comprehensive loss net of taxes
2,890,430 5,794,055
Total comprehensive income for the year
36,037 (9,886)
Total comprehensive income attributable to:
Owners of the company 2,926,467 5,784,169
Non controlling interests
2,637,605 4,482,520
Earnings per share 288,862 1,301,649
Basic/Diluted in (N) 2,926,467 5,784,169

1.99 4.11

Revenue Gross profit

19% 12%

04 FINANCIAL REPORT FOR FORTE OIL PLC
FOR THE YEAR ENDED DECEMBER 31, 2016

Corporate Information

Forte Oil Plc (The Company) is a leading Board of Directors
indigenous, integrated energy company in
Nigeria involved in petroleum marketing, power Femi Otedola (CON) - Chairman
generation and upstream oileld services. The Akin Akinfemiwa - Group Chief Executive Officer
company is quoted on the Nigerian Stock Exchange Julius B. Omodayo-Owotuga, FCA, CFA - Group Executive
(NSE) with ticker FO.
Director, Finance & Risk Mgt.
The Company operates a network of 500 outlets
spread across the Country with major petroleum Christopher Adeyemi - Non-Executive Director
storage installations at both Apapa (Lagos State) and Anil Dua - Independent Non Executive Director
Onne (Rivers State). Forte Oil Plc also provides aircraft Dr. Mairo Mandara - Independent Non Executive Director
refueling operations operating under the brand name Nicolaas A. Vervelde - Independent Non Executive Director
'Air FO' and its Aviation Joint User's hydrants in Ikeja Salamatu Suleiman - Independent Non Executive Director
and Joint Aviation depots in Abuja, Port Harcourt and Akinleye Olagbende - Company Secretary
Kano making the company one of Nigeria's leading
providers of aviation fuel for local and international Ukpai Okwara - Managing Director
airlines.
AP Oil and Gas Ghana Ltd
The company also manufactures and distributes a
wide range of quality lubricants, which include Synth Seye Alabi - Ag. Managing Director
10000, Super V, Visco 2000, Diesel Motor Oil from its
50,000 metric tonnes lubricating oil blending plant at Forte Upstream Services Ltd
Apapa terminal in Lagos.
Adeyemi Adenuga FNSE - Managing Director
In addition to its strategic retail and commercial
network in Nigeria, Forte Oil Plc is also has a foot print in Geregu Power Plc
Ghana under the trade name – AP Oil and Gas
Limited (APOG) consisting of a network of retail Registered Office
outlets, liqueed petroleum gas plants and a lubricant
blending arrangement with Tema Oil blending plant. 13, Walter Carrington Crescent, Victoria Island, Lagos.

The Company has established a reputation of Registrars and Transfer Office
efciency; servicing the upstream sector under the
trade name Forte Upstream Services Limited (FUS). The Veritas Registrars Limited
company currently holds a 29% stake in the 435 mw Plot 89A, Ajose Adeogun Street, Victoria Island, Lagos.
Geregu Power Plant leveraging on the recent
privatisation of the power sector to deliver a long term Auditors
returns for its shareholders.
PKF Professional Services Limited
Forte Oil Plc's business philosophy is premised on PKF House, 205A Ikorodu Road, Obanikoro, Lagos.
building a high-performance organization with world-
class business processes, strong corporate Bankers
governance and compliance at all levels, culture of
strong ethics and discipline and an enhanced safety, First Bank of Nigeria Ltd
health and sustainability policies embedded across its Guaranty Trust Bank Plc
value chain. Union Bank Plc
Zenith International Bank Plc

FINANCIAL REPORT FOR FORTE OIL PLC 04
FOR THE YEAR ENDED DECEMBER 31, 2016



















SUBSIDIARIES (Cont’d)

AP Oil and Gas Ghana Ltd

PERFORMANCE REVIEW 13 (10 white product and 3 LPG stations) retail
stations.
AP Oil & Gas Ghana Ltd (APOG) is a licensed Oil
marketing company (OMC)/ Liquefied Gas APOG at date has a mixed portfolio of customer
marketing company (LPGMC) which has been base comprising of commercial customers and a
operating in Ghana since 2008. network of retail outlets in different parts of Ghana.
The Company currently operates from all depots
The general business environment in 2016 being an across the country and has a good working
election year was enveloped with much relationship with some of the leading Bulk distributor
uncertainty. The depreciation of the cedi, hike in companies (BDCs) in the industry.
government taxes, and increased credit
transactions due to buyer market scenario with The following are the composition of the retail
accompanying TAR challenges, price war and outlets:
difficulty in securing finance from the Banks
affected businesses in the region. 3 Company Owned, Company Operated (COCO)
3 Company Owned, Dealer Operated (CODO)
However, despite all these challenges, the 7 Dealer Owned, Dealer Operated (DODO)
company remained focused on its retail
expansion drive which saw an increase from 8 to

FINANCIAL REPORT FOR FORTE OIL PLC 04
FOR THE YEAR ENDED DECEMBER 31, 2016

CORPORATE
GOVERNANCE

The Board of Forte Oil Plc believes that the participation in the Corporate Governance
proper application of best corporate Rating System evaluation conducted by the
governance practice is a key pillar toward Convention on Business Integrity and the Nigerian
achieving long term value for all our shareholders Stock Exchange. At Forte Oil Plc, we believe that
and stakeholders. The Board is committed towards sound Corporate Governance goes beyond
ensuring that all business conducted by the adhering to rules and policies of the regulators, it is
Company is in compliance with all applicable about accountability and stakeholder
laws, regulations of the Nigerian Stock Exchange engagement at all times.
and the Securities and Exchange Code of
Corporate Governance. The Board continues to The Board of Directors during the year under
ensure its compliance with Corporate review complied with the Corporate Governance
Governance best practices evidenced by its requirements as set out in the report below.

The Board of Directors

This is the highest decision making body of the Company. It is responsible for the overall long-term
success and the strategic direction of the Company as well as providing effective oversight to ensure
the delivery of long term value to shareholders and stakeholders.

Board Composition

The Board is made up of Eight (8) members which include the Chairman, One (1) Non-Executive
Director, Two (2) Executive Directors and Four (4) Independent Non-Executive Directors in line with the
Code of Corporate Governance.

Symbol Meaning

NYM Present
LTB Absent
Not Yet A Member
Left The Board

Board Meeting Attendance

S/N Name Position January April July October October December
1. Mr. Femi Otedola (CON) Chairman 28,2016 25,2016 28,2016 12,2016 31,2016 21,2016
2. Mr. Akin Akinfemiwa Director
3. Mr. Julius Omodayo-Owotuga Director LTB LTB LTB
4. Rev. (Mrs.) Grace Ekpenyong* Director
5. Deacon. Phillip Akinola** Director NYM NYM NYM NYM
6. Dr. (Mrs.) Mairo Mandara*** Director NYM NYM NYM NYM
7. Mrs. Salamatu Suleiman*** Director
8. Mr. Christoper Adeyemi Director
9. Mr. Anil Dua Director

*Retired with effect from July 28 2016.
**Retired with effect from December 21, 2016.
*** Appointed with effect from October 31, 2016.

FINANCIAL REPORT FOR FORTE OIL PLC 04
FOR THE YEAR ENDED DECEMBER 31, 2016

The Board Committees

The Board implements it oversight function through Board Committees with each Committee
addressing specific topics based on its charter. The Charter for each Committee sets out its
composition, agenda and frequency of meetings. The Committees of the Board include:

Statutory Audit Finance & Strategy Remuneration and Risk Management
Committee Committee Governance Committee
Committee

Each Committee meets on a quarterly basis to discuss matters in accordance with its charter, in addition
to regular reports provided through the Company Secretariat on any significant issues to be considered by
the Committee.

Outside of these Board Committees, there are other several management committees namely the
Executive Management Committee, Management Committee, Risk Committee, Credit Risk Committee,
Crystalized Assets Committee.

Corporate Governance and Remuneration Committee

The Corporate Governance and Remuneration Committee’s role is to assist the Board in fulfilling its
responsibilities in relation to Corporate Governance and Remuneration. The Committee comprises of
three Non–Executive Directors who oversee the nomination and Board appointment process and the
Board remuneration process. The Committee is also responsible for the review of the Company`s
Governance structure and ensures compliance with the Code of Corporate Governance. It also oversees
the succession planning process of the Board.

The Committee held five (5) meetings in Year 2016

S/N Name January July October October December
1. Mr. Christoper Adeyemi 27, 2016 28, 2016 11, 2016 27, 2016 07,2016
2. Rev. (Mrs.) Grace Ekpenyong*
3. Deacon. Phillip Akinola LTB LTB LTB

* Retired with effect from July 28 2016

Risk Management Committee

The Risk Management Committee assists the Board in fulfilling its oversight responsibilities regarding the
Enterprise Risk Management of the Company. This includes but not limited to the identification,
assessment, management of risk and adherence to internal risk management policies and procedures.
The Committee is further responsible for development of effective risk governance framework and
disclosure process, review of changes in the economic and business environment and review of
company’s compliance level with regulations that impact on the Company.

04 FINANCIAL REPORT FOR FORTE OIL PLC
FOR THE YEAR ENDED DECEMBER 31, 2016

The Committee held four (4) meetings in the year 2016

S/N Name Position January July October December
1. Mr. Anil Dua Chairman 27, 2016 28, 2016 11, 2016 21, 2016
2. Mr. Christopher Adeyemi Member
3. Rev. Dr. (Mrs) Grace Ekpeyong* Member LTB LTB LTB
4. Mr. Julius Omodayo-Owotuga Member
5. Mr. Akin Akinfemiwa Member

*Retired with effect from July 28, 2016

Statutory Audit Committee

The Audit Committee is composed of six (6) members, three (3) shareholder representatives and three (3)
Non-Executive Directors. One of the shareholder’s representative seats with is chosen as Chairman by
members of the committee.

The functions of the Committee are set out in section 359 (6) of the Company and Allied Matters Act Cap
C20 Laws of the Federation of Nigeria, 2014. The function of the committee includes the review of the
Company’s control policies, management accounting and reporting systems, internal control and overall
standard of business conduct. The Committee in addition, approve the audit plan for the year and
internal audit review plan for the year.

The Committee held four (4) meetings in the year 2016.

S/N Name Position January July October December
1. Mr. Tokunbo Shofolawe-Bakare Chairman 27, 2016 28, 2016 11, 2016 21, 2016
2. Mr. Emmanuel Okoro Member
3. Mr. Suleman Ahmed Member
4. Deacon Philip Akinola Member
5. Mr. Christopher Adeyemi Member
6. Mr. Anil Dua Member

The Board Finance & Strategy Committee

The Board Finance and Strategy Committee is composed of four (4) members constituted to assist the
Board of Directors in fulfilling its oversight responsibilities of the financial management of the Company. In
addition, the Committee is charged with the oversight of the Company’s strategic activities, financing
and capital structure objectives. The Committee ensures the integrity of all financial statements published.

The Committee held four (4) meetings in the year 2016

S/N Name Position January July October December
1. Mr. Christoper Adeyemi Chairman 28, 2016 28, 2016 11, 2016 20, 2016
2. Deacon. Phillip Akinola Member
3. Mr. Julius Omodayo-Owotuga Member
4. Mr. Akin Akinfemiwa Member

FINANCIAL REPORT FOR FORTE OIL PLC 04
FOR THE YEAR ENDED DECEMBER 31, 2016

Board Appointment, Induction and Training

With regards to the appointments on the Board, the Annually, the Board of Directors attend Board
Governance and Remuneration Committee training/sessions, ensuring that they continually
recommends to the Board of Directors on the update their skills, knowledge of industry practice,
requirements for the appointment of Directors. The relevant regulations, operating environment and
Committee makes recommendations to the Board on international best governance practices,
on qualified candidates who possess the industry and global trends. Throughout the year,
knowledge, skills, experience, qualifications and regular updates on developments in legal matters,
competence to be on the Board based on its governance and accounting are provided to
assessment of the needs of the Board. In addition to Directors.
having one or more of these core competencies,
candidates for appointment as a Director are During the period under review, there were
identified and considered on the basis of integrity, changes to the Board structure with the retirement
diversity, leadership, skills, competence and of two (2) Non- Executive Directors namely Rev. Dr.
reputation. (Mrs.) Grace Ekpenyong and Deacon Phillip
Akinola. There were also three (3) appointments to
All newly appointed Directors attended an the Board, namely Mrs. Salamatu Suleiman, Dr.
induction program where newly appointed (Mrs.) Mairo Mandara and Mr. Nicolaas Vervelde
Directors are given materials on the history of the as Independent Non- Executive Directors of the
Company, the business operations of the Company. The appointment of Mrs. Suleiman and
Company, norms and culture of the Company as Dr. Mandara took effect from October 31, 2016
well as an introduction to the management of the whilst that of Mr. Vervelde will take effect from
Company. In addition, corporate documents and a January 01, 2017.
copy of the relevant regulations guiding the
business are presented to the new Directors.

Seperation of the Positions of Chairman and Chief Executive Officer

The positions of the Chairman and the Chief Executive Officer of the Board are occupied by different
persons and the Chief Executive Officer is fully responsible for the implementation of the Company’s
business strategy and the day-to-day management of the business.

The Chairman is responsible for ensuring that Directors receive accurate, timely and clear information to
enable the Board take informed decisions. The Chairman also facilitates the contribution of Directors and
promotes effective relationships and open communications between Executive and Non-Executive
Directors.

Board Evaluation Report

The Annual Board assessment is conducted to ensure the Board, Committees and individual Directors are
effective, productive and to promote opportunities for improvement. The governance structure of the
Company is designed to ensure that the Board discharges its functions and responsibilities as provided for in
the Board Charters and in accordance with all legislative and regulatory developments and trends.

The Board evaluation report for the period ended December 31, 2016 recorded a satisfactory performance
for the Board and each individual Director.

Communication with Stakeholders

The Board is committed to sustaining interactions To this end, the Company has in place, a well-
with the company’s shareholders and other managed Investor Relations Unit to attend to all
stakeholders through a well-established enquiries on the Company’s financial
communications and complaints management performance, financial statements, corporate
process. actions, strategy and all other corporate
information.
The Board is committed to the equitable treatment
of shareholders, protection of their rights and All other related information on the Company’s
complete disclosure and transparency at all times business operations and allied matters can be
by the Management of the Company. obtained by all stakeholders and the public from
the Company’s website www.forteoilplc.com

04 FINANCIAL REPORT FOR FORTE OIL PLC
FOR THE YEAR ENDED DECEMBER 31, 2016

Directors Remuneration

The appointment and remuneration of Directors is governed by the Company’s Policy on Directors. During
the period under review, the Non- Executive Directors and Chairman received an annual Directors fee as
stated below.

Director Amount (N)

Mr. Femi Otedola (CON) Chairman 800,000.00

Dr. Mrs. Grace Ekpenyong* 600,000.00

Deacon. Philip Akinola** 600,000.00

Mr. Christopher Adeyemi 600,000.00

Mr. Anil Dua 600,000.00

Mrs. Salamatu Suleiman*** NIL

Dr. (Mrs.) Mairo Mandara*** NIL

Mr. Akin Akinfemiwa NIL

Mr. Julius Omodayo-Owotuga NIL

*Retired with effect from July 28 2016
**Retired with effect from December 21, 2016
*** Appointed with effect from October 31, 2016

Statement of Compliance with the Corporate Governance Code

Forte Oil Plc affirms its commitment to adhere to the Directors, Executive Management and Officers on
principles of excellent Corporate Governance the fair, impartial and objective manner to
practices. The Company strives to carry out its effectively resolve all stakeholder issues and
business operations on the principles of integrity and enquiries. As a public quoted company, the
professionalism through transparent conduct at all Company was compliant in its Corporate
times. Governance practices and operations regarding
the Listing Rules of the Nigerian Stock Exchange,
The Company during the period under review in the directions of the Securities and Exchange
relation to its Code of Conduct developed a Commission and other international best practice.
Complaints Management Policy to guide its

Insider Trading

The Board of Directors have an approved a the Company, or a close family of the Director
Securities Trading Policy which prescribes a code of and/or the Principal Officer of the Company who is
behavior for Directors, management of the aware of material non-public information relating
Company, external advisers and other related to the Company may directly or through family
persons in possession of market sensitive members or other person buy or sell shares of the
information. The Code prohibits these persons from Company or engage in any other action to take
dealing in the Company’s securities during closed advantage of that information during closed
periods in accordance with the provisions of the periods. All Insiders are notified of closed periods
Investments and Securities Act Cap 124 Laws of the through written or electronic communication from
Federation of Nigeria, 2014 and the Post Listing Rules the Company Secretary.
of the Nigerian Stock Exchange.
The Securities Trading Policy is available on the
Under the Policy, no Director or Principal Officer of website of the Company.

Sustainability Report

Forte Oil Plc firmly believes in the importance of In addition, we implement measures that help us
contributing to the creation of a thriving society in reduce the impact of our operations on the
Nigeria. To this end, the Company is committed to environment. During the period under review, the
the support of the health and safety initiatives and Company supported and implemented a variety
investments that will impact the lives of our of initiatives in the advancement of these
immediate community and the society as a whole. objectives.

FINANCIAL REPORT FOR FORTE OIL PLC 04
FOR THE YEAR ENDED DECEMBER 31, 2016



















Directors' Report
For the year ended 31 December 2016

In accordance with the provisions of the Companies and Allied Matters Act Cap C20, Laws of the Federation of
Nigeria, 2004, the Board of Directors of Forte Oil Plc (“the Company”) are pleased to present their report on the
affairs of the Company and subsidiary companies (“the Group”), together with the Group audited financial
statements and the auditor's report for the year ended 31 December 2016.

Legal Form

The Company was incorporated in 1964 as British Petroleum (BP) Nigeria Limited marketing of BP Petroleum
Products as the main focus. The Company changed from a private to public company in 1978, when 40% of the
shares were sold to Nigerian citizens in compliance with the provisions of the Nigerian Enterprises Promotion
Decree of 1977. On July 31, 1979, the Federal Government of Nigeria (FGN) acquired 60% share capital held
originally by BP, for the Nigerian National Petroleum Corporation (NNPC). This step transformed the Company into
an entirely Nigerian concern necessitating the subsequent change of name to African Petroleum (AP) in 1979.

In March 1989, FGN sold 20% of its share holding to the Nigerian public, thus making AP the first public company
privatized under the Privatization and Commercialization Policy. The FGN, under another round of privatization in
year 2000 divested its remaining 40% shareholding in AP, thus making AP a privately owned Company, with over
153,000 shareholders.

In 2010, the Company was acquired by a majority stakeholder, Zenon Petroleum Ltd which led to the change of
name from African Petroleum to Forte Oil Plc. The Company began a three (3) year restructuring programme of its
operations, policies and vision with the incorporation of sustainable growth strategies and policies to continuously
improve and deliver prompt quality, effective service its customers and all stakeholders.

Principal Activity

The Company is a major marketer of refined petroleum products with a strong presence in the 36 States of Nigeria
and the Federal Capital Territory - Abuja. It procures and markets Premium Motor Spirit (PMS), Automotive Motor
Oil (Diesel), Dual Purpose Kero (DPK), Fuel Oils and JetA-1 fuel amongst others. Forte Oil Plc also manufactures and
distributes a wide range of lubricants foremost amongst them are SYNTH 10000 and newly repackaged SUPER V
and VISCO 2000.

The company sources high quality chemical products, classed under industrial, organic and petro-chemicals,
which it markets to local industries. The chemical Products include: DOP, Polyol, Acetone, Calcium
Hydrochloride, Isopropyl Alcohol etc.

Structure

The Company has two wholly owned subsidiaries: Forte Upstream Services Limited and AP Oil & Gas, Ghana
(APOG). In addition, the Company owns 51% equity in Amperion Power Distribution Company which manages
and operates a 435 megawatt Geregu Power Plant in Ajaokuta, Kogi State.

Operating results:

The following is a summary of the Group's and Company's operating results:

Prot before taxation 5,340,244 5,442,482
Taxation (2,449,814) (2,206,653)
Prot after taxation 2,890,430 3,235,829
Total Comprehensive income for the year 2,926,467 3,235,829
Retained earnings, beginning of the year 6,001,847 5,691,196
Retained earnings, end of the year 4,200,191 4,543,801
Earnings per share basic 1.99 2.48

FINANCIAL REPORT FOR FORTE OIL PLC 04
FOR THE YEAR ENDED DECEMBER 31, 2016

Dividend

There is no dividend for the reported period

Fixed Assets

Information relating to changes in fixed assets during the year is given in Note xxx to the financial statements.

Directors

The names of the Directors as at the date of this report and those who held office during the year are as follows:

MR. FEMI OTEDOLA, C.O.N. (Chairman) Appointed on May 25, 2007
MRS. GRACE C. EKPENYONG Retired on July 28, 2016
DEACON PHILLIP AKINOLA Retired on December 21, 2016
MR. CHRISTOPHER ADEYEMI Re-elected on March 28, 2014
MR. AKIN AKINFEMIWA Appointed December 28, 2011
MR. JULIUS OMODAYO-OWOTUGA Appointed December 28, 2011
MR. ANIL DUA Appointed October 30, 2015
MRS. SALAMATU SULIEMAN Appointed October 31, 2016
DR. MAIRO MANDARA Appointed October 31, 2016
MR. NICOLAAS VERVELDE Appointed December 8, 2016

*Mrs. Salamatu Suleiman and Dr. Mairo Mandara were appointed to the Board on October 31, 2016 while Mr.
Nicolaas Vervelde was appointed on December 8, 2016. Their appointment will be put up for ratification at this
Annual General Meeting.

In accordance with Article 89 of the Company's Articles of Association, Mr. Christopher Adeyemi will retire by
rotation from the Board of Directors at this Annual General Meeting and being eligible has offered himself for re-
election at this meeting.

Changes on the Board

Since the conclusion of the last Annual General Meeting, there have been changes to the Board with the
retirement of Dr. Mrs. Grace Ekpenyong on July 28, 2016 and Deacon. Phillip Akinola on December 21, 2016 and
the appointment of Mrs. Salamatu Suleiman, Dr. Mairo Mandara on October 31, 2016 and Mr. Nicolaas Vervelde
on December 8, 2016.

Diversity on the Board

Forte Oil Plc is committed to diversity in all aspects of its business and activities and at all levels, including its Board
of Directors. The Board of Directors do not discriminate the appointment of diverse candidates to the Board
which includes gender, race, and ethnicity, along with varied skills and experiences which contributes to a
balanced and effective Board.

We believe the benefit of having a diverse Board is an essential element in maintaining a competitive
advantage.

Directors Interests

The Directors of the Company who held office during the year together with their direct and indirect interest in the
share capital of the Company were as follows:

Name DIRECT HOLDING INDIRECT HOLDING DIRECT HOLDING INDIRECT HOLDING
Mr. Femi Otedola CON (Chairman) 31/12/15 31/12/15 31/12/16 31/12/16
Mr. Akin Akinfemiwa 154,006,575 706,047,784 186,260,357 816,122,297
Mr. Julius Omodayo-Owotuga 20,000 NIL 24,000 NIL
Mr. Christopher Adeyemi NIL NIL NIL NIL
Deacon Phillip Akinola 80,485 NIL 96,582 NIL
Mr. Anil Dua NIL NIL NIL NIL
Mrs. Salamatu Sulieman NIL NIL NIL NIL
Dr. Mairo Mandara NIL NIL NIL NIL
NIL NIL NIL NIL

04 FINANCIAL REPORT FOR FORTE OIL PLC
FOR THE YEAR ENDED DECEMBER 31, 2016

Contracts

None of the Directors has notified the company for the purpose of Section 277 of the Companies and Allied
Matters Act Cap C20, Laws of the Federation of Nigeria, 2010 of any declarable interest in contracts which the
Director is involved.

Acquisition of Shares

The Company did not purchase any of its own shares during the year.

Share Options Scheme

The Directors did not partake in any share option schemes during the period under review.

Major Shareholding

According to the Register of Members, the shareholder under-mentioned held more than 5% of the issued share
capital of the Company as at 31 December 2016:

Zenon Petroleum & Gas Limited No. of Shares % Holding
Thames Investment Incorporated 640,476,400 48.87
Femi Otedola CON 175,645,897 13.40
186,260,357 14.21

Share Capital History

Authorised Capital Issued and Fully Paid Capital

Date From To Date From To Consideration
N
N N NN
-
22/06/78 6,000,000 7,500,000 28/02/79 6,000,000 7,500,000 Bonus (1:2)
17/07/80 7,500,000 11,250,000 17/07/80 7,500,000 11,250,000 Bonus (1:1)
22,500,000 24/08/82 11,250,000 22,500,000 Bonus (1:3)
28/08/82 11,250,000 Bonus (1:5)
Bonus (2:3)
04/08/84 22,500,000 30,000,000 10/08/84 22,500,000 30,000,000 Rights Issue
06/08/86 30,000,000 36,000,000 16/09/86 30,000,000 36,000,000 Bonus (1:4)
12/07/88 36,000,000 43,200,000 03/08/88 36,000,000 43,200,000
Rights Issue
29/06/90 43,200,000 72,000,000 24/09/90 43,200,000 86,400,000 Rights Issue
-
29/07/93 72,000,000 86,400,000 10/01/94 72,000,000 86,400,000 Bonus (1:5)
Placement
28/11/97 86,400,000 108,000,000 28/11/99 86,400,000 108,000,000 Rights Issue

19/02/99 108,000,000 144,000,000 13/09/04 108,000,000 216,000,000 Public Offer
15/11/02 144,000,000 5,000,000,000 25/11/04 -
30/09/05 216,000,000 234,263,450.50 Underwriting of
28/10/06 2008/2009 Hybrid Offer
20/04/09 234,263,450.50 281,116,141

281,116,141 394,393,919

394,393,919 443,271,555

26/11/13 5,000,000,000 2,000,000,000 20/04/09 443,271,555 543,535,383
6/12/13 543,535,383 543,535,383
11/07/14 543,535,383 546,095,528

FINANCIAL REPORT FOR FORTE OIL PLC 04
FOR THE YEAR ENDED DECEMBER 31, 2016

Analysis of Shareholding

The analysis of the distribution of the shares of the Company at the end of the 2016 financial year is as follows

Range No. of Holders Holders % Units Units %

1 1,000 132,740 81.78% 44,358,268 3.38%
1,001 5,000 23,559 14.52% 48,162,671 3.67%
5,001 10,000 3,209 1.98% 22,305,181 1.70%
10,001 100,000 2,541 1.57% 61,634,867 4.70%
100,001 500,000 210 0.12% 42,260,866 3.24%
500,001 1,000,000 25 0.02% 18,433,970 1.41%
1,000,001 10,000,000 18 0.01% 77,966,862 5.95%
10,000,001 100,000,000 1 0.00% 29,400,929 2.24%
100,000,001 1,000,000,000 3 100.00% 966,105,654 73.71%
162,306 1,310,629,268 100.00%

Donations and Charitable Gifts

The Company identifies with the aspirations of the community as well as the environment within which it operates
and made charitable donations to the under-listed organizations amounting to Nxxxxxxxxx during the year under
review as follows:

S/N Organization/Body Amount

1 Diesel supply to Lagos state Motherless babies home Lekki N951,050.00

2 National Association of Energy Correspondents (NAEC) Conference N250,000.00

3 Corporate support to Unilag Post Graduate School N500,000.00

4 National Association of Energy Correspondents (NAEC) Support for OTC N300,000.00

Disclosures Company and provides guidelines and
standards for administering the acceptance and
l Borrowing and Maturity Dates on-going management of key risks such as
The details of the borrowings and maturity dates operational, reputational, financial, market and
are stated in Note xxx to the financial statements. compliance risk.

l Risk Management and Compliance System The Directors are of the view that effective
Forte Oil Plc has a structured enterprise risk internal audit function exists in the Company and
management framework that puts in place and that risk management control and compliance
undertakes a through risk assessment on all system are operating efficiently and effectively in
aspects of the business. The risk assessment is all respects.
based on two criteria's, 'Business Impact' and
'Likelihood of Occurrence' and for every l Related Party Transactions
identified business risk, mitigating measures are The Company has contractual relationship with
implemented by the Company. related companies in the ordinary course of
business. The details of the outstanding amounts
The Directors are responsible for the total process arising from the related party transactions are
of the risk management as well as expressing their stated in Notes XXXXXX to the financial
opinion on the effectiveness of the process. The statements.
risk management framework of the Company is
integrated into the day-to-day operations of the

04 FINANCIAL REPORT FOR FORTE OIL PLC
FOR THE YEAR ENDED DECEMBER 31, 2016

























2. Trade and other Receivables - Impairment We focused our testing of the impairment of trade and other
Trade receivables are stated at their original invoiced receivables on the key assumptions made by the
value less appropriate allowance for estimated management.
irrecoverable amounts. As disclosed in note 4.11.1 and
note 21.1 to the consolidated financial statements, the Our audit procedures included:
Group assesses at each reporting date whether there is
objective evidence that financial asset is impaired. In Ÿ Understand, evaluate and validate contracts over sales
carrying out this assessment, management relies on
entity-developed internal models. For instance, in and trade receivables cycle.
assessing collective impairment, the Group uses
historical trend of the probability of default, timing of Ÿ Review, evaluate and validate contracts over credit
recoveries and the amount of loss incurred, adjusted for
management determined risk rating. process including age analysis of debtors.

There is significant measurement uncertainty involved in Ÿ Critically evaluate the determination of the expected
this assessment, which makes it a key audit matter.
cash flow used.
3. Valuation of Long term Employee Benefits Liability
The Group operates both defined contribution plans Ÿ Evaluate whether the model used to calculate the
and defined benefit plans. As at 31 December 2016, the
estimated gratuity liability stood at N486.6 million recoverable amount complies with the requirement of
(Company : N414.5 million). The actuarial techniques IAS 39.
used to assess the value of defined benefit plans
involved financial assumptions (discount rate, rate of We assessed the competence, capabilities and objectivity
return on assets, medical costs trend rate) and of the external independent actuary, and verified the
demographic assumptions (salary increase rate, qualifications. In addition, we discussed the scope of their
employee turnover rate, etc.). The Group uses the work with the management and reviewed their terms of
assistance of an external independent actuary in the engagement to determine that there were no matters that
assessment of these assumptions. Further disclosure on affected their independence and objectivity or imposed
this is in note 24 to the consolidated financial scope limitations upon them. We confirmed that
statements. approaches used are consistent with IFRS and industry
norms.
We identified the valuation of long term employee
benefits liability as representing a key audit matter due We made use of our internal expert to evaluate the
to uncertainties that are inherent in the underlying management and their valuers' judgements, mostly on the
assumptions. financial and demographic assumptions.

Other Information We compared the data provided to the valuers by
management against the one given to auditors during the
The directors are responsible for the other information. The audit to ensure alignment of the result.
other information comprises the Chairman's statement,
Directors' Report; Audit Committee's Report, Corporate Furthermore, we tested a selection of data inputs
Governance Report and Company Secretary's report underpinning the long term employees' benefits liability
which is expected to be made available to us after that valuation, against appropriate supporting documentation,
date. The other information does not include the to assess the accuracy, reliability and completeness
consolidated financial statements and our auditor's report thereof.
thereon.
In addition, we assessed the adequacy of the disclosures
Our opinion on the consolidated financial statements does that pertain to the long term employee benefits liability in
not cover the other information and we do not and will not the consolidated and separate financial statements.
express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial
statements, our responsibility is to read the other information
and, in doing so, consider whether the other information is
materially inconsistent with the consolidated financial
statements or our knowledge obtained in the audit, or
otherwise appeared to be materially misstated.

If, based on the work we have performed on the other
information that we obtained prior to the date of this
auditor's report, we conclude that there is a material
misstatement of this other information, we are required to
report that fact. We have nothing to report in this regard.

04 FINANCIAL REPORT FOR FORTE OIL PLC
FOR THE YEAR ENDED DECEMBER 31, 2016

Responsibilities of the Directors and Those Charged with Ÿ Conclude on the appropriateness of the director's use of
Governance for the Consolidated Financial Statements
the going concern basis of accounting and based on
The directors are responsible for the preparation and fair the audit evidence obtained, whether a material
presentation of the consolidated financial statements in uncertainty exists related to events or conditions that
accordance with International Financial Reporting may cast significant doubt on the Group's ability to
Standards in compliance with the Financial Reporting continue as a going concern. If we conclude that a
Council of Nigeria Act, No 6, 2011 and the requirements of material uncertainty exists, we are required to draw
the Companies and Allied Matters Act, CAP C20, LFN 2004, attention in our auditor's report to the related disclosures
and for such internal control as the directors determine is in the consolidated financial statements or, if such
necessary to enable the preparation of consolidated disclosures are inadequate, to modify our opinion. Our
financial statements that are free from material conclusions are based on the audit evidence obtained
misstatement, whether due to fraud or error. up to the date of our auditor's report. However, future
events or conditions may cause the Group to cease to
In preparing the consolidated financial statements, the continue as a going concern.
directors are responsible for assessing the Group's ability to
continue as a going concern, disclosing, as applicable, Ÿ Evaluate the overall presentation, structure and content
matters related to going concern and using the going
concern basis of accounting unless the directors either of the consolidated financial statements, including the
intend to liquidate the Group or to cease operations, or disclosures, and whether the consolidated financial
have no realistic alternative but to do so. statements represent the underlying transactions and
events in a manner that achieves fair presentation.
Those charged with governance are responsible for
overseeing the Group's financial reporting process. Ÿ Obtain sufficient appropriate audit evidence regarding

Auditor's Responsibilities for the Audit of the Consolidated the financial information of the entities or business
Financial Statements activities within the Group to express an opinion on the
consolidated financial statements. We are responsible
Our objectives are to obtain reasonable assurance about for the direction, supervision and performance of the
whether the consolidated financial statements as a whole group audit. We remain solely responsible for our audit
are free from material misstatement, whether due to fraud opinion.
or error, and to issue an auditor's report that includes our
opinion. Reasonable assurance is a high level of assurance, We communicate with the Audit Committee regarding,
but is not a guarantee that an audit conducted in among other matters, the planned scope and timing of the
accordance with ISAs will always detect a material audit and significant audit findings, including any significant
misstatement when it exists. Misstatements can arise from deficiencies in internal control that we identify during our
fraud or error and are considered material if, individually or audit.
in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the We also provide the Audit Committee with a statement that
basis of these consolidated financial statements. we have complied with relevant ethical requirements
regarding independence, and to communicate with them
As part of an audit in accordance with ISAs, we exercise all relationships and other matters that may reasonably be
professional judgment and maintain professional skepticism thought to bear on our independence, and where
throughout the audit. We also: applicable, related safeguards.

Ÿ Identify and assess the risks of material misstatement of From the matters communicated with the Audit
Committee, we determine those matters that were of most
the consolidated financial statements, whether due to significance in the audit of the consolidated financial
fraud or error, design and perform audit procedures statements of the current year and are therefore the key
responsive to those risks, and obtain audit evidence that audit matters. We describe these matters in our auditor's
is sufficient and appropriate to provide a basis for our report unless law or regulation precludes public disclosure
opinion. The risk of not detecting a material about the matter or when, in extremely rare circumstances,
misstatement resulting from fraud is higher than for one we determine that a matter should not be communicated
resulting from error, as fraud may involve collusion, in our report because the adverse consequences of doing
forgery, intentional omissions, misrepresentations, or the so would reasonably be expected to outweigh the public
override of internal control. interest benefits of such communication.

Ÿ Obtain an understanding of internal control relevant to Najeeb A. Abdussalaam, FCA
FRC/2013/ICAN 00000000753
the audit in order to design audit procedures that are For: PKF Professional Services
appropriate in the circumstances, but not for the Chartered Accountants
purpose of expressing an opinion on the effectiveness of Lagos, Nigeria
the Group's internal control.
Dated: 30 January 2017
Ÿ Evaluate the appropriateness of accounting policies

used and the reasonableness of accounting estimates
and related disclosures made by the directors.

04 FINANCIAL REPORT FOR FORTE OIL PLC
FOR THE YEAR ENDED DECEMBER 31, 2016