2015 AR

Notes to the Consolidated Financial Statements

for the year ended 31 December 2015

22.1 This represents the overdrawn current account balances with four Nigerian banks. These facilities have an average
interest rate of 17.5% and are secured by an 'all asset debenture' .

23. Capital and reserves
Ordinary shares

d) Retained earnings
Retained earnings represent the carried forward recognised income net of expenses plus current year income
attributable to shareholders.

e) Treasury shares
This represents 5,599,087 units (at the market value of N248 as at the date of the seizure) of the company's existing
shares seized to recover the dividend and interest received on unpaid shares in 2009 by a shareholder. These shares
were seized by the company on the ruling of the Security and Exchange Commission (SEC). The shares are to be
reissued to existing shareholders of the company in the proportion of their shareholdings.

f) Other reserves
Other reserves represent the carried forward recognised other comprehensive income and expenses plus current year
other comprehensive income attributable to shareholders.

g) The irredeemable convertible cummulative preference shares in the books of AP Oil and Gas Ghana Limited has been
eliminated on consolidation thereby eliminating the dilutive instrument in the Group as at the reporting date.

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Notes to the Consolidated Financial Statements

for the year ended 31 December 2015

Bureau of Public Enterprises (BPE) has 49% equity stake in Geregu Power Plc; BSG Resources Limited and Shanghai
Municipal Electricity Power Company own 38% and 5% respectively of Amperion Power Distribution Limited as at 31
December, 2015
j) Bonus share of 1 for every 5 units of shares held was recommended by the Board of the directors and approved by the
shareholders in 2015. This is however yet to be issued to the shareholders as at the reporting date.
24. Long term employee benefits
The Group operates a funded long term employees plan (gratuity) for qualifying employees of the Group. Under the
plan, the employees are entitled to a lump sum benefits on attainment of a retirement age or on disengagement after
contributing a specific number of years in service. No other post-retirement benefits are provided to these employees.
The most recent actuarial valuations of the present value of the defined benefit obligation were carried out at 31st
December 2015 by KMC Acturial Service. The present value of the defined benefit obligation, and the related current
service cost and past service cost, were measured using the Projected Unit Credit Method with acturial valuation being
carried out at the end of each reporting period.

a) Long term employee benefit expense is recognised in administrative expenses in the statement of comprehensive
income.

b) The actuary valuation report was signed in January 2015 by Miller Kingsley (FRC/2013/NAS/00000002392) of KMC
Actuarial Services a Fellow of the Society of Actuaries, USA.

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Notes to the Consolidated Financial Statements

for the year ended 31 December 2015

c) The planned asset is held by four fund managers : Pensions Alliance Limited (PAL); FSDH Asset Management Limited,
Cardinal Stone Securities Limited, and Afriinvest Securities Limited. The fair value of these assets are disaggregated as
follows:

The treasury bills and bonds are Federal Government of Nigeria securities with quoted market price in the active
Nigerian bond market while the fixed deposits are placements with financial institutions and do not have quoted prices.
The plan typically exposes the Group to actuarial risks such as; assets volitility, interest rate risk, life expectancy, salary
risk, changes in corporate yeilds and inflation risk.

Asset volatility

The present value of the defined benefit plan liability is calculated using a discount rate determined by reference to high
quality corporate bond yields; if the return on plan assets is below this rate, it will create a plan deficit. Currently the plan
has a relatively balanced investment in Government Securities and money market instruments. Due to the long- term
nature of the plan liabilities, the board of the pension fund considers it appropriate that a reasonable portion of the plan
assets should be invested in equity securities and in real estate to leverage the return generated by the fund.

Interest Rate Risk
A decrease in the bond interest rate will increase the plan liability; however, this will be partially offset by an increase in
the return on the plan's debt investments.

Life Expectancy
The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of
plan participants during their employment. An increase in the life expectancy of the plan participants will increase the
plan's liability.

Salary Risk
The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants.
As such, an increase in the salary of the plan participants will increase the plan's liability.

Changes in bond yields
A decrease in corporate bonds yield will increase plans liabilities.

Inflation Risk
The majority of the plan's assets are either unaffected by fixed interest bonds or loosely correlated with equities inflation,
meaning that an increase in inflation will also increase defict.

In estimating the present value of the defined benefit obligation, certain assumptions on financial environment, attrition
rates of withdrawal from service and death of staff likely to be experienced were made. The significant actuarial
assumptions used are summarized as follows:

a) Discount rate/average rate of return on assets 11% per annum
b) Average rate of salary increase 10% per annum
c) Inflation rate 9% per annum
d) Mortality rate A49/52 English Life Tables

The weighted average future service of the plan is about 22 years. The average weighted duration of the closest
Nigerian bond as at the valuation date, 31st December 2015 has about 18.6 years term to maturity with a gross
redemption yield of about 11%.

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Notes to the Consolidated Financial Statements

for the year ended 31 December 2015

Methodology
The approach for conducting the sensitivity was a recalculation of the accrued benefit obligation on the scheme for each
revised assumption. The percentage difference between the new result and the base result provides a measure of the
sensitivity to the change.
Changes in sensitivity test basis
The sensitivity for investment reviewed from 100 basis points to 300 basis points to reflect the volatility within the period
and the sensitivities on salary was reviewed from 5% to 10%.

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Notes to the Consolidated Financial Statements

for the year ended 31 December 2015

25.1 Eleven billion, two hundred million naira N11.2bn (Company N3.3bn) of this relates to long term financing for the
acquisition of Geregu Power Plant by Forte Oil Plc through its subsidiary Amperion Power Distribution Company
Limited.
There is an all asset debenture security as collateral to the banks for these long term borrowings.

26. Deferred fair value gain on loan
This note provides information about the contractual terms of the Group's interest-bearing loans and borrowings, which
are measured at amortised cost.

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Notes to the Consolidated Financial Statements

for the year ended 31 December 2015

The bank loans are secured by an "All Asset Debenture" on the Company's assets executed in favour of the financial institutions. The tem loan to the subsidiaries are secured with a
mortgage pledge on specific assets
*A 7 year loan of $45 million was obtained from First Bank of Nigeria Limited in August 2013 for the acquisition of 51% stake in Geregu Power Plc. This loan was converted to Naira
in August 2015
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Notes to the Consolidated Financial Statements

for the year ended 31 December 2015

27.1 This balance relates to bridging allowance net of bridging claims due to Petroleum Equalisation Fund (PEF). Bridging
claims, raised against the Federal Government of Nigeria, are costs incurred in transporting white products (excluding
deregulated products) from specific PPMC depots to approved areas. Bridging allowances are compulsory
contributions on each litre of white product lifted, to assist the Federal Government defray costs arising from bridging
claims. Bridging claims are usually set off against bridging allowances to establish the net amount due to, or from the
PEF, an organ of the Federal Government of Nigeria responsible for managing the process.

27.2 Inventory accrual accounts includes liability accrued for product and associated costs. This account holds accruals for
value of goods received pending receipt of supplier's invoices.

27.3 This consists of tranporters freight account, withholding tax liabilities, VAT, rents received in advance, PAYE, NSITF, and
unclaimed dividends. Unclaimed dividends of NGN83,592,000 representing dividend payable on shares not paid for
previously included in non-trade payables and other creditors was transferred to retained earnings (see statement of
changes in equity).

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Notes to the Consolidated Financial Statements

for the year ended 31 December 2015

28. Financial instruments
Credit risk
Exposure to credit risk
The carrying amount of financial assets
represents the maximum credit
exposure. The maximum exposure to
credit risk at the reporting date was:
Trade and receivables (Note 21)
Cash and cash equivalents (Note 22)

104 F I N A N C I A L R E P O R T F O R F O R T E O I L P L C F O R T H E Y E A R E N D E D D E C E M B E R 3 1 , 2 0 1 5

Notes to the Consolidated Financial Statements

for the year ended 31 December 2015

The average credit period on sales of goods is 60 days. Specific impairment is made for trade receivables that are past due
and doubtful of recovery based on the probability of default. Receivables not specifically impaired are impaired collectively
using the historical probability of default over the last three reporting periods. Trade receivables are considered to be
past due when they exceed the credit period granted.

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Notes to the Consolidated Financial Statements

for the year ended 31 December 2015

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Notes to the Consolidated Financial Statements

for the year ended 31 December 2015

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Notes to the Consolidated Financial Statements

for the year ended 31 December 2015

29. Contingencies

a) Guarantees
The Company guaranteed the sum of $45M loan by First Bank of Nigeria Plc to a subsidiary Amperion Power
Distribution Company Limited in respect of the acquisition of Geregu Power Plc.

b) Pending litigation and claims
The Company is engaged in lawsuits that have arisen in the normal course of business. The contingent liabilities in
respect of pending litigation and claims amounted to N6.8 billion as at 31 December 2015 (31 December 2014 : N46
billion). In the opinion of the directors, and based on independent legal advice, the Company is not expected to suffer
any material loss arising from these claims. Thus, no provision has been made in these consolidated financial
statements.

c) Financial commitments
The Directors are of the opinion that all known liabilities and commitments, which are relevant in assessing the state
of affairs of the Group, have been taken into consideration in the preparation of these consolidated financial statements.

30. Transactions with key management personnel

Loan to directors
No loan to directors was issued during the year ended 31 December 2015.

Executive Directors are not entiled to and do not get paid directors fees.

Key management personnel and compensation

The Group has 232 employees in 2015 and 231 in 2014. The total number of employees for the company were 182 in 2015
and 150 in 2014.

Group 2015 2014
1. Group Chief Executive Officer
2. Group Executive Director - Finance and Risk Management Akin Akinfemiwa Akin Akinfemiwa
3. Group Head Corporate Services
4. Manager Director- AP Oil and Gas Ghana Ltd Julius Omodayo-Owotuga Julius Omodayo-Owotuga
5. Managing Director - Forte Upstream Services Ltd
6. Chief Executive Officer - Geregu Power Plc Oludare Arinde Oludare Arinde

Ukpai Okwara Ukpai Okwara

Vacant Kennet Olisa

Adeyemi Adenuga Adeyemi Adenuga

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Notes to the Consolidated Financial Statements

for the year ended 31 December 2015

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Notes to the Consolidated Financial Statements

for the year ended 31 December 2015

876,469
9,562

2,674,041
a) Included as collateral for the NGN3.2bn loan from Zenith Bank is a personal guarantee of the Chairman Mr. Femi Otedola. All outstanding balances with these related parties are

priced at arm's length.
b) Transaction during the year on Zenon Petroleum & Gas limited represents amount owed by Zenon that was converted to rent covering two years effective 1 February 2018 to 31

December 2020.
32. Events after the end of reporting date

The sum of N281,959,600.82 and N264,164,041.16 were received on January 13, 2016 from the Nigerian Bulk Electricity Trading Plc (NBET) and Transmission on 19th of January
Company of Nigeria respectively, being part of the reported trade receivables.
In addition, the sum of N1.57 billion was recovered from Dangote Company on 26 January, 2016. All payments relates tp part payments of outstanding balance.
No other event or transaction has occurred since the reporting date, which could have had a material effect on the consolidated financial statements at that date or which needs to be
mentioned in the consolidated financial statements in the interest of fair presentation of the Consolidated`s financial position at the reporting dates or its results for the year then
ended.

33. Prior period corresponding balances
Certain prior period balances have been reclassified to ensure proper disclosure and uniformity with current year's presentation. These reclassifications have no net impact on these financial statements.

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Other National Disclosures

Consolidated Statement of Value Added for the year ended 31 December 2015

(73,392,950) (62,409,672)
(41,660,652) (41,040,450)

12,277,113

16

8

25

11
39
100

Included in depreciation and amortisation for the Group is the depreciation for the turbines used for power generation which
in included in cost of sales of the statement of comprehensive income for the Group in line with the provisions of IFRS.
Value added represents the additional wealth which the Group has been able to create/erode by its own and its employees'
efforts. This statement shows the allocation of that wealth among the employees, government, providers of capital and that
retained for the future creation of more wealth.

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Other National Disclosures (Cont’d)

Financial Summary for the year ended 31 December 2015

Treasury Stock 14,471,119 (1,388,574)
47,669,317 65,740,960
(1,388,574)

121,757,956

5,338,657
4,207,442
2,638,912

112 F I N A N C I A L R E P O R T F O R F O R T E O I L P L C F O R T H E Y E A R E N D E D D E C E M B E R 3 1 , 2 0 1 5

Proxy Form

37TH ANNUAL GENERAL MEETING to be held at the Lekki Coliseum, Providence street, Lekki Phase 1,
Lekki - Lagos on April 26, 2016 at 10:00a.m

I/We……………………………………………….. being a member/members of Forte Oil Plc hereby
appoint*……………………………………….....……or failing him/ her, the Chairman of the meeting, Mr.
Femi Otedola, or failing him, Mr. Akin Akinfemiwa, as my/our proxy to attend and vote for me/us and
on my/our behalf at the Annual General Meeting of the Company to be held on April 26, 2016 and at
any adjournment thereof.

Signature of Shareholder……………………...............................................................…………...
Name of Shareholder………........................................................................………………………

NUMBER OF SHARES HELD:

RESOLUTIONS FOR AGAINST

Report of the Directors, the Balance Sheet
together with the Profit and Loss Account s at
31st December 2015

To re-elect Dr. Mrs. Grace Ekpenyong as a
Non-Executive Director

To ratify the appointment of Mr. Anil Dua
as a Non- Executive Director

To declare a dividend

To authorize the Directors to fix
the Auditors' remuneration.

To elect/re-elect members of
the Audit Committee.

To fix the remuneration of the Directors

To sell the 5,599,908 units of shares allotted but
not paid for by Mr. Osa Osunde and Fidelity
Finance Limited to existing shareholders

To authorize and grant a general mandate in
respect of all recurrent transactions entered into
with a related party or interested person

To authorize the Directors’ to raise additional
equity and/or dept capital up to the sum of
N100 billion by all means subject to relevant
regulatory approval

Please indicate with an “X” in the appropriate box how you wish your votes to be cast on the resolutions
set above. Unless otherwise instructed, the proxy will vote or abstain from voting at his discretion.

To be valid, this proxy form should be duly stamped by the Commissioner of Stamp Duties and signed
before posting it to reach the address overleaf not later than 48 hours before the time for holding this
meeting.

Please note that no action should be taken on the proxy form if the member is attending the
meeting.

F I N A N C I A L R E P O R T F O R F O R T E O I L P L C F O R T H E Y E A R E N D E D D E C E M B E R 3 1 , 2 0 1 5 113

Admission Card

Please admit *-------------------------------------------------------------------------* to the 37th
Annual General Meeting of the members of Forte Oil Plc holding at the Lekki
Coliseum, Providence street, Lekki Phase 1, Lekki - Lagos on April 26, 2016 by
10.00am.

IF YOU ARE UNABLE ATTEND THE MEETING
A member (Shareholder) who is unable to attend an Annual General Meeting
is allowed by law to vote by proxy and the above proxy form has been
prepared to vote in case you cannot personally attend the meeting.
Following the normal practice, the names of two Directors of the Company
have been entered on the form to ensure that someone will at the meeting
act as your proxy; but if you wish, you may insert in the blank space marked (**)
the name of any person, whether a member (Shareholder) of this Company or
not, who will attend the meeting and vote on your behalf instead of one of the
Directors.

NUMBER OF SHARES HELD

IMPORTANT

a) The name of the shareholder must be written in BLOCK LETTERS on the
form marked (*). Please stamp and sign the proxy form if you are not
attending the meeting and post it so as to reach the address shown
overleaf not later than April 22,2016. If executed by a corporation, the
proxy form should be sealed with a common seal.

b) The shareholder or his proxy must produce the admission card in order
to gain entrance to the Annual General Meeting

c) Shareholders or their proxies are requested to sign the admission card
before attending the meeting.

______________________________
Signature of person attending

Akinleye Olagbende Esq.
Company Secretary

FO House, 13 Walter Carrington Crescent
Victoria Island, Lagos.
FRC/2013/NBA00000003160

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VERITAS REGISTRARS

F I N A N C I A L R E P O R T F O R F O R T E O I L P L C F O R T H E Y E A R E N D E D D E C E M B E R 3 1 , 2 0 1 5 115

E-Dividend Mandate

Veritas Registrars

I/we hereby request that all dividend(s) due to me/us from my/our holding in Forte Oil Plc be paid directly
to my/our Bank named below

116 FINANCIAL REPORT FOR FORTE OIL PLC FOR THE YEAR ENDED DECEMBER 31, 2015

Authority to Electronically
Receive Corporate Information

In line with the developments in electronic communications to
circumvent the usual issue of late receipt of corporate information,
we would like to introduce to our shareholders the electronic
delivery of corporate information such as annual reports and
financial statements, proxy form etc.

With this service, as an alternative to receiving paper copies of
corporate information and materials, you can elect to receive an
electronic copy thereof via an email that will provide an electronic
link to the corporate information and/or receive a compact disk of
the corporate information by post.

If you so elect, kindly complete the authority to electronically
receive information attached below and return to The Company
Secretary at the Head office at No 13, Walter Carrington Crescent,
Victoria Island, Lagos.
Regards,

Akin Olagbende Esq.
Company Secretary

FO House, 13 Walter Carrington Crescent
Victoria Island, Lagos.
FRC/2013/NBA00000003160

I/We……………………………………….....................................………
… being a member / members of Forte Oil Plc hereby authorise(s)
the Company and agree to receive all future corporate
information of the Company electronically.

Signature

Email(s)

CSCS Clearing House Number (CHN)

Postal Address

Telephone Number

Date

CSCS Account Number

F I N A N C I A L R E P O R T F O R F O R T E O I L P L C F O R T H E Y E A R E N D E D D E C E M B E R 3 1 , 2 0 1 5 117

Available at all Forte Oil retail outlets. For enquires call our Customer Care Line : 01-2776122

cus:[email protected]

ForteOilNg @ForteOilNg ForteOilNg
www.forteoilplc.com



Notes

FINANCIAL REPORT FOR FORTE OIL PLC FOR THE YEAR ENDED DECEMBER 31, 2015

Notes

FINANCIAL REPORT FOR FORTE OIL PLC FOR THE YEAR ENDED DECEMBER 31, 2015

Notes

FINANCIAL REPORT FOR FORTE OIL PLC FOR THE YEAR ENDED DECEMBER 31, 2015