2016 Annual Report2016 Group Financial Results at a Glance for the year ended 31 December, 2016 FOR...

2016

Annual Report & Accounts

Origins and Key Historical Milestones

Committed: We are passionate and committed about everything we do; committed to our values; to our mission; to customer satisfaction and to awless execution of our individual roles and responsibilities at all times.

Open: We are open and transparent with ourselves and stakeholders. We encourage open and honest communication within our organisation and with our stakeholders. We value transparency in our dealings with all stakeholders.

Respect: We believe that respect for fellow employees and stakeholders are sacrosanct and critical to actualizing the vision of the company.

Responsive: We are proud of our ability to do things in a quick and different manner to generate results. We move at break-neck speed (without violating policies and guidelines) in getting things done so as to win market share and continue to create value for our shareholders.

From its incorporation as British Petroleum (Nigeria) in 1964, Forte Oil Plc has emerged the leading diversied energy services provider, a publicly listed and widely renowned corporation with one of the fastest growing business portfolios within the energy sector.

2012-2015 2016-2020

As British Petroleum(Nigeria)

Incorporation:

Indigenization:

NNPC acquires 60% stake, with Nigeria public buying 40%

Name Change:

to African Petroleum Limited (AP)

2010-2011

Privatization:

NNPC divests 30% stake to core investorand 10% to theNigerian public

Core Investor sellsstake while NNPCincreases interestby convertingAP debt

1964 1979 2000 2005 2007

New Era:

Zenon Petroleum,led by Mr. Femi Otedolaacquires a majorityinterest from NNPCushering in a newera

Rebrand:

to Forte Oil withnew managementand 3-year turn-aroundprogram

New Frontiers:

Consolidate growth,build resilience and entrench best practices

Transformation Program Results:

Prots up by 342%Share price up >1000%Inclusion in the MSCI IndexAcquired 414 MW Thermal IPPResumed dividend paymentsCapital reorganisation

1978

Our Vision

To be the foremost integrated energy solutions provider in Nigeria.

Our Mission

To build a long-term successful Company, making Forte Oil Plc the investment of choice through positive actions that boost investor condence at all times.

Awards

Best Performing Stock in the Nigerian Stock Exchange (NSE) in 2013

Inclusion of Forte Oil shares in the Morgan Stanley Capital International Frontier Market May 2014

Listed in the 2014 Top 100 most respected Companies in Nigeria

2015 BusinessDay Top 25 CEO's Award for Companies listed on the Nigerian Stock Exchange

Best Corporate Social Responsibility marketing Company of the year award and Most 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

Best Customer Services Retail Award at the 2016 Oil Trading & Logistics (OTL) Africa Downstream Conference.

TABLE OF CONTENTS

Overview

Corporate Information

Results at a Glance

Notice of Annual General Meeting

Chairman’s Statement

Group CEO’s Statement

Subsidiaries Reviews

Corporate Governance Report

Profile of Directors

Reports of Directors

Report of the Audit Committee

Consolidated Financial Statements

Statement of Directors’ Responsibilities in Relation

to the Consolidated Financial Statements

Independent Auditor’s Report

Consolidated Statement of Financial Position

Consolidated Statement of Profit or Loss and

Other Comprehensive Income

Consolidated Statement of Cash Flows

Consolidated Statement of Changes in Equity

Notes to the Consolidated Financial Statements

Consolidated Statement of Value Added

Financial Summary

Proxy Form

Admission Card

Postage

E-Dividend Mandate

Authority to Electronically Receive Corporate Information

1

5

4

6

8

11

14

17

23

31

37

45

46

47

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51

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53

57

115

116

117

118

119

120

121

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

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 6F 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 04

+19%

Revenue

+12%

Gross profit

Revenue

Cost of sales

Gross profit

Profit before income tax

Income tax expense

Profit for the year

Basic/Diluted in (N)

148,605,261

(128,021,347)

20,583,914

5,340,244

(2,449,814)

2,890,430

1.99

124,617,238

(106,255,812)

18,361,426

7,012,442

(1,218,387)

5,794,055

4.13

2016N'000

2015N'000

-24%

Profit Before Tax

Corporate Information

orte Oil Plc (the Company) is a leading

Findigenous, integrated energy company in Nigeria involved in petroleum marketing, power

generation and upstream oileld services.

The Company operates a network of 500 retail outlets spread across the Country with major petroleum storage installations at both Apapa (Lagos State) and Onne (Rivers State). Forte Oil Plc also provides aircraft refueling operations operating under the brand name 'Air FO' and its Aviation Joint User's hydrants in Ikeja and Joint Aviation depots in Abuja, Port Harcourt and Kano making the Company one of Nigeria's leading providers of aviation fuel for local and international airlines.

The Company also manufactures and distributes a wide range of quality lubricants, which include Synth 10000, Super V, Visco 2000, Diesel Motor Oil from its 30,000 metric tonnes lubricating oil blending plant at its Apapa terminal in Lagos.

In addition to its strategic retail and commercial network in Nigeria, Forte Oil Plc is also has a foot print in Ghana under the trade name – AP Oil and Gas Limited (APOG) consisting of a network of retail outlets, liqueed petroleum gas plants and a lubricant blending arrangement with Tema Oil blending plant.

The Company has established a reputation of efciency; servicing the upstream sector under the trade name Forte Upstream Services Limited (FUS). The Company through it’s subsidiary, Amperion Power Distribution Company Limited owns 51% stake in Geregu Power Plc; a 435MW Power Plant leveraging on the recent privatisation of the power sector to deliver a long term returns for its shareholders.

Forte Oil Plc's business philosophy is premised on building a high-performance organization with world-class bus iness processes, s t rong corporate governance and compliance at all levels, culture of strong ethics and discipline and an enhanced safety, health and sustainability policies embedded across the energy value chain.

Board of Directors

Femi Otedola (CON) - Chairman

Akin Akinfemiwa - Group Chief Executive Officer

Julius B. Omodayo-Owotuga, FCA, CFA - Group Executive

Director, Finance & Risk Management

Christopher Adeyemi - Non Executive Director

Anil Dua - Independent Non Executive Director

Mairo Mandara - Independent Non Executive Director

Nicolaas A. Vervelde - Independent Non Executive Director

Salamatu Suleiman - Independent Non Executive Director

Grace C. Ekpeyong - Non Executive Director

Philip M. Akinola - Non Executive Director

Akinleye Olagbende - Company Secretary

Ukpai Okwara - Managing Director

AP Oil and Gas Ghana Limited

Seye Alabi - Managing Director

Forte Upstream Services Limited

Adeyemi Adenuga FNSE - Managing Director

Geregu Power Plc

Registered Office

13, Walter Carrington Crescent, Victoria Island, Lagos

Registrars and Transfer Office

Veritas Registrars Limited

Plot 89A, Ajose Adeogun Street, Victoria Island, Lagos

Auditors

PKF Professional Services Limited

PKF House, 205A Ikorodu Road, Obanikoro, Lagos

Bankers

First Bank of Nigeria Limited

Guaranty Trust Bank Plc

Union Bank Plc

Zenith International Bank Plc


NOTICE IS HEREBY GIVEN that the Thirty Eighth Annual General Meeting of the Members of FORTE OIL PLC will hold on July 05, 2017 at 9:00 a.m. at the Shell Hall, Muson Center, Lagos to transact the following business:

ORDINARY BUSINESS1. To present the Report of the Directors, the

Consolidated Statement of Financial Position with the Statement of Comprehensive Income at 31st December, 2016 and the Report of the Auditors and Audit Committee thereon.

2. To re-elect Mr. Christopher Adeyemi to the Board of Directors as a Director whose term expires in accordance with Article 89 of the Company's Articles of Association.

3. To ratify the appointment of Mrs. Salamatu Suleiman as an Independent Non-Executive Director

4. To ratify the appointment of Dr. (Mrs) Mairo Mandara as an Independent Non-Executive Director

5. To ratify the appointment of Mr. Nicolaas Vervelde as an Independent Non-Executive Director

6. To authorize the Directors to x the remuneration of the Auditors.

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

SPECIAL BUSINESS8. To x the remuneration of the Directors

9. To consider and if thought t, pass the following resolutions as special resolutions of the Company:

i. That following from the special resolution approval given at the 2016 General meeting for additional capital, the Directors be and are hereby authorized to raise, whether by way of a public offering, rights issue or any other method(s) they deem t, additional capital of up to N20,000,000,000.00 Twenty Billion Naira whether local ly or internat ional ly or a combination of both, through the issuance of shares, convertible securities or non-convertible securities and/or any other instrument(s), at such

Dated June 09, 2017. BY ORDER OF THE BOARD

AKINLEYE OLAGBENDECompany SecretaryFRC/2013/NBA00000003160FO House, 13 Walter Carrington CrescentVictoria IslandLagos. .

NOTICE OF THE 38THANNUAL GENERAL MEETING


dates and times and on such terms and conditions, including through a book building process or other process(es) all of which shall be determined by the Directors; subject to the approval of relevant regulatory authorities.

ii. That the Directors be and are hereby authorized to enter into any agreements and/or execute any other documents, make any lings and take any other steps as may be necessary for, or incidental to, the bringing into effect the objectives of resolution 9(i) above.

iii. That the Directors be and are hereby authorized to appoint such professional parties and perform all such other acts and do such other things as may be necessary for and/or incidental to effect the resolutions above.

PROXYA member entitled to attend and vote at the Annual General Meeting is entitled to appoint a proxy to attend and vote in his stead. A proxy need not be a member of the Company. For the appointment to be valid, a completed and duly stamped proxy form by the Commissioner of Stamp Duties must be deposited at the ofce of the Registrar, Veritas Registrars Limited, Plot 89A Ajose Adeogun Street, Victoria Island, Lagos not less than 48 hours before the time xed for the meeting.

AUDIT COMMITTEEThe Audit Committee consists of 3 shareholders and 3 Directors in accordance with Section 359(5) of the Companies and Allied Matters Act of 2004. Any member may nominate a shareholder as a member of the Audit Committee by giving written notice of such nomination to the Secretary of the Company at least 21 days before the Annual General Meeting.

RIGHTS OF SECURITIES' HOLDERS TO ASK QUESTIONSSecurities' Holders have a right to ask questions not only at the meeting but also in writing prior to the meeting and such questions must be submitted to the Company Secretary on or before June 30, 2017.

CHAIRMAN’S STATEMENT

CON

ChairmanFemi Otedola

Distinguished Fellow Shareholders, ladies

and gentlemen, it is with great pleasure

that I welcome you to the Annual

General Meeting to present to you the financial

statements and reports for the financial year

ended 31 December 2016 together with a

review of the performance of our Company

during the outgone financial year.

I will like to start by highlighting some of the key

events in our operating environment that

impacted our performance in the 2016 financial

year.

BUSINESS ENVIRONMENT AND PERFORMANCE

The Nigerian economy and the business

environment remained challenging with both

monetary and fiscal pressures significantly

impacting business activities and economic

growth during the financial year.

The price of crude oil in the international market

continued its downward trend with a rebound

towards the end of the year giving some respite.

Despite this rebound, crude oil production

volumes were hampered by the activities of

militants in the Niger Delta area with its direct

downward effect on government revenues

and spending throughout the year with the

trickledown effect being felt at the State

and Local Government levels.

During the 2016 financial year, inflation

soared to a six-year high of 15.6% in

May 2016, the highest level since

February 2010 and maintained its

upward trend closing the year at

18.55% with the nation officially

in recession in Q3 2016 with a

third consecutive quarter

of contraction in the

economy.

The extremely high

i n f l a t i o n r a t e ,

g r o w i n g

u n e m p l o y m e n t ,

reduced consumer

spending and other

d e b i l i t a t i n g

concomitant economic factors took its toll on

the overall performance of the Company.

The impact of the very challenging operating

environment was mitigated by the very prudent

management of the various issues that arose in

the course of the year so as not to only ensure

continued profitability but also the long-term

sustainability of our Company. We remain

cautiously optimistic about the measures being

undertaken to turn the economy around and

our strategies are taking cognizance of these

policy measures to ensure we are positioned to

hasten the return of our business to profitability.

THE 2016 FINANCIAL PERFORMANCE

The economic issues that characterized 2015

continued, worsening the uncertainties in the

marketplace due to dire scarcity of foreign

currency, weakened purchasing power, high

inflation and pricing uncertainties depressing

demand for goods and services.

The combination of the foregoing made 2016 a

particularly challenging year, tasking the

ingenuity of the Board, Management and Staff

despite the nonpayment of outstanding

receivables under the Petroleum Support Fund.

It is noteworthy that despite the tough

environment, our Company received a boost

from the Corporate Bond Market by having a

fully subscribed NGN9 Billion Unsecured Bond

due in 2021 under the NGN50 Billion Capital

Raise approved by this General Meeting in 2016,

which was raised to restructure our existing short

term loans and fund our expansion drive. The

Bond was listed on the Trading Boards of the

FMDQ and Nigeria Stock Exchange in

November 2016 and it is a tacit endorsement of

the mid to long term viability of our Company.

We are confident that the implementation of

our strategic initiatives would ensure that we

continue to weather the challenges that

confront us and this is reflected in the 19.2%

revenue growth from NGN124.6BN in 2015 to

NGN148.6BN and an increase in gross profit from

NGN18.4BN to NGN20.6BN an increase of 12.1%

for the 2016 Financial Year. The revenues missed

the expected levels due to the prudent decision on

reduced importation of petroleum products

The improved topline performance was depressed by a

19.9% increase in Finance Cost due to in part to increase in

lending rates and interest accrued on our long overdue

subsidy payments. The Company's tax increased by

101.1% on the back of tax attributable to the dividend

payout for the Financial Year 2015.

The Board took the decision to plough the profit from 2016

back into the business and would therefore not be

recommending any dividend payout. We trust our

shareholders would see this as delayed gratification to

enjoy even greater bounties in the coming years.

CHAIRMAN’S STATEMENT (Cont’d)


The Board

The Board of Directors has remained the fulcrum for

strategy, performance, risk management and

financial efficiency and on safety. I must thank the

members of the Board for their high sense of

responsibility during the year for their attendance and

robust contributions to the discourse aimed at moving

the business forward.

During the 2016 Financial Year, our longest serving

Non-Executive Director, Dr. (Mrs.) Grace Ekpenyong

retired from the Board. We appreciate her meritorious

service to our Company and wish her well in all her

future endeavours.

Our commitment to the highest Corporate

Governance standards and the strengthening of the

discourse at the Board and Committee levels remain

unwavering.

This commitment has given rise to the appointment of

three new Independent Non-Executive Directors who

are people of great business pedigree, professional

attainment and personal integrity. Permit me to

formally welcome Dr. Mairo Mandara, Mrs. Salamatu

Hussaini Suleiman and Mr. Nicolaas Vervelde to the

Board of Directors and various Board Committees.

Their appointment brings the number of Independent

Non-Executive Directors on the Board to four meaning

that they now constitute 50% of the Board of Directors.

There is no stronger signal of the Board's resolve to

uphold the highest Corporate Governance standards

and strengthening of our fiduciary duties.

I would also like to thank my Board colleagues, the

management and all our employees for all that they

have done in the past year.

Finally, my thanks go to you, our shareholders, for the

support you have shown us during the year.

I thank you for continually investing in Forte Oil Plc.

Femi Otedola, CONChairmanFRC/2013/IODN/00000002426April 2016

Dear Esteemed Shareholders,

Thank you for the opportunity you have given me

once again to welcome you to the 38th Annual

General Meeting and to present the state of affairs

for the Financial Year ended 31st December, 2016

of our company to you.

The 2016 Financial Year: Overall Summary

2016 was a very tough year for the Nigerian

economy in general and the Oil and Gas industry.

Our Industry forms the most important part of the

Nigerian Economy with the earnings therefrom

forming the basis of Government expenditure and

source of foreign exchange to the economy. It

goes without saying that the wellbeing of the Oil

and Gas Industry is directly proportional to the

wellbeing of the Nigerian Economy.

The key factors that exacerbated this decline in the

economy include an extended run of low crude oil

prices coupled with reduced production levels

caused by the increased activities of militants in

Niger Delta led to material reduction in

government revenues and by extension spending.

As a fallout of the foregoing, the economy

contracted by 1.51% in 2016 following four

consecutive quarters of negative growth and slid

into recession in October 2016, the first recession in

25 years.

The resultant effect was the decline in the country’s

Foreign Exchange reserves (USD 25.8 billion as at

December 2016, down by 11% from the prior year)

and the soaring inflation rate of 18.5% triggered

multiple monetary policy actions aimed at

reducing the impact of the contraction and

inflation including the increase in Monetary Policy

Rate from 11% in January to 14% by December

2016, exclusion of 41 items from accessing foreign

exchange at the official markets amongst other

policy tightening measures did not ameliorate the

scarcity of foreign exchange which reached very

disturbing levels in 2016.

The inevitable devaluation of the Nigerian Naira

occurred with the release of the Pricing Modulation

Mechanism effectively changing the exchange

rate from NGN197/$1 to NGN285/$1 in May 2016.

Despite several policy moves, the foreign

exchange scarcity did not abate and this resulted

in difficulty liquidating foreign currency loan

obligations and letters of credit, reduced bank

portfolio limits in the Oil & Gas sector causing a

significant decrease in overall economic activity

levels and huge losses suffered by Corporate

Nigeria.

The Downstream Business.

Our downstream business was the most impacted

by the prevailing paucity of foreign exchange

during the period under review as Nigeria continues

to depend on imported fuel to fulfill her refined

petroleum products demand. The scarcity severely

hampered our ability to import petroleum products

to attain optimum volumes required. We took the

prudent decision of reducing the importation of

refined petroleum products to limit our exposure to

an uncertain and fluctuating foreign exchange

regime which could have resulted in a depletion of

shareholder value. Even in instances where the

foreign exchange was made available under the

NNPC/CBN Forex Intervention programme, a

rebound in crude oil prices would not allow us

import and sell profitably at the fixed pump price of

145 naira per litre under the price modulation

mechanism which was fixed at NGN 285/USD1. The

downstream sector thus had to turn to the NNPC as

Akin Akinfemiwa Group Chief Executive Officer

THE GCEO’S REPORT

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 6

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 11

the importer of last resort and jostle for local fuel

supplies through coastal and inland depot deliveries.

The outstanding subsidy, foreign exchange

differentials and interests on late payments

receivables from the Federal Government of Nigeria

had a very significant impact on our business

operations in 2016.

The situation above called for an urgent need to re-

invent our downstream business and focus on high-

margin and deregulated products such as

Lubricants, LPG and the use of our assets to maximize

opportunities in the Non-Fuel Revenue segment to

make up for the shortfalls from Premium Motor Spirit,

Automotive Gas Oil and Dual Purpose Kerosene

volumes. It is worthy to note that we grew the

lubricants business by 8.6 million litres from 12.9 million

litres to 21.5 million representing a 67% growth while

the LPG business grew 265% from 2.1 million litres to

7.7 million litres. Our Non-Fuel revenues grew by 16%

when compared to the 2015 Financial Year.

The situation with our downstream subsidiary in

Ghana, APOG was not too different. The market and

supply structure in the Ghanaian Downstream

petroleum sector in 2016 empowered the state oil

companies and gave it more dominance over and

above the pr ivately owned downstream

companies. The uncertainty around the elections of

2016, the depreciation of the cedi and hike in

government taxes just to mention a few created a

harsh operating environment for APOG. That said,

we forged more partnerships to increase our retail

footprint. We are closely monitoring the Ghanaian

business environment vis a vis the business activities

of APOG in the short term.

The Power Generation Business:

Our unflinching belief in the growth and

development of the Nigerian Power Sector led to the

completion of the Major Overhaul of the three

turbines at the Geregu Power Plant by the end of

October, 2016 increasing installed capacity from the

inherited capacity of 414MW to 435MW at a cost of

US$93 Million. Upon completion, the need to secure

gas supplies to Power the three turbines became

imminent and to this end, we have successfully

improved power generation at the Geregu I Power

Plant. Our continuous improvement efforts in this

regard is a testament of our belief that Power

Generation shall be the fulcrum of our growth in

years to come.

The Upstream Services Business:

The upstream services and oilfield support business

was also not insulated from the falling international

crude oil prices of 2016 and militants’ disruption to oil

activities in the Niger Delta. The upstream petroleum

sector suffered a cut-back in production and

exploration activities and consequently affected the

fortunes of the upstream services and support sector

thus reducing Forte Upstream Services’ revenue

streams by 32%. Despite these challenges, FUS,

secured the Akpo production chemical services

contracts and renewed its Chevron drilling fluids

services contracts and the Addax Laboratory

services contracts thereby boosting profitability by

5% at the PBT level.

Overview of our Financial Performance in 2016.

Our Group revenues of N148.6 billion for the year

ended 31st December 2016 representing an

increase of 19% compared to N124.6 billion reported

in December 2015 primarily driven by increase in fuel

prices during the year, strategic acquisition of retail

outlets, increase in market share of lubricants and

increased utilization of the power plant upon

completion of the major overhaul project in

October, 2016.

Our focus on our high margin businesses yielded

positive results tempering the effect of the reduced

fuels volumes. Gross margin increased by 12% from

N18.3 billion in FY 2015 to N20.5 billion in FY 2016

largely due to increase in energy tariffs (energy &

capacity charge) and increase sales volumes and

price of lubricants.

Furthermore, the company earned N667million, N200

million and N180million from freight income, crude oil

liftings and dividend from the upstream service

subsidiary respectively.

There was a 23% decline in profit before tax to N5.37

billion in FY 2016 compared to N7.0 Billion in FY 2015

while our Net Profit declined 100.4% from N5.7 billion

in FY2015 to N2.9 billon in FY 2016.

Revenues from Premium Motor Spirit, Lubricants and

LPG grew by 30%, 85% and 350% respectively

tempering the declines in revenues from Automotive

Gas Oil, Dual Purpose Kerosene and Aviation Turbine

Kerosene that fell 8%, 53% and 13% respectively

hampered largely by lack of foreign exchange to

import cargoes and a strategic allocation of the

available resources to our high margin product lines.

We remain dedicated to high standards of Health,

Safety, Environment Quality with 43,800 hours of

continuous operations at all our terminals and major

facilities without major incident or Lost Time

Incident/Injuries (LTI).

THE GCEO’S REPORT (Cont’d)


2016 in Retrospect:

Despite the harsh operating business environment,

our commitment to excellence remains unwavering

and we are consistently striving to exceed the

expectation of our esteemed shareholders and

customers. To this end, I am pleased to report as

follows:

• I was elected as the Chairman of the Major Oil

Marketers Association of Nigeria in 2016. My

appointment as the Chairman of MOMAN is a

clear demonstration of the industry’s belief in the

leadership position of Forte Oil Plc.

• We commenced the sale of retail LPG and FO

Branded environmentally friendly composite

cylinders at our service stations.

• We received an A- Investment Grade Rating from

the Global Credit Ratings (GCR) which helped in

no small way in ensuring the successful

completion and listing of the Forte Oil Plc Series 1

– NGN 9 Billion Bond Programme on NSE and

FMDQ.

• Our customer focus was further enhanced by the

successful completion and launching of the new

Forte Oil Plc website (www.forteoilplc.com) and

the E – Procurement Portal to further espouse best

practice and deliver value to the business.

• We retained our ISO QMS 9001:2008 Certification

which is a mark of quality management systems

due to the consistent demonstration of our

commitment to provide products that meets

customer and applicable statutory and

regulatory requirements with the overall aim to

enhance customer satisfaction and processes for

continual improvement.

• In addition, the company was inducted into the

membership of ASTM International Standards in

Manufacturing and Materials, Products and

Processes, Systems and Services.

• The CGRS assessment is at an advanced stage

and should culminate in Forte Oil’s inclusion on

the Nigeria Stock Exchange’s prestigious

Premium Board.

• The drive to distinguish Forte Oil Plc through high

quality products and superior customer service

was given due recognition with the Best

Customer Services Retail Award at the 2016 Oil

Trading & Logistics (OTL) Africa Downstream

Conference.

• Full and timely disclosure remains a priority and in

celebration of our People, Processes and

Systems, we remain consistent early fliers

submitting our approved the 2016 Annual reports

on the floor of the Nigeria Stock Exchange on Jan

30, 2016.

2017: Powering into the Future.

Our young, innovative and energetic workforce is

positioned to continuously seek opportunities in our

very challenging business environment. Our drive to

attaining our vision of being the foremost integrated

energy solutions provider remains unwavering. Our

commitment to our mission of making Forte Oil Plc

the investment of choice through positive actions

remains unflinching. We believe that most of the

efforts we have made in 2016 shall result in gains for

the overall benefit of our shareholders in 2017. Our

strengthened corporate governance framework

particularly with respect to the dominance of

independent non-executive directors on the board

is a testament of our continual adoption of and

commitment to best practices.

Our drive to grow our deregulated products line

through affiliation with an internationally recognized

OEM brand for our lubricants business is at the

implementation stages. Our strategic objective to

acquire additional strategic outlets to increase our

footprint and maximize our NFR opportunities

through partnerships with strong local and

international brands is in top gear.

Suffice to mention that the Power Generation

business attained an unprecedented generation of

8,719.30 MWH representing 83.52% of nameplate

capacity on 6th June 2017 since its acquisition in

November 2013. Evidently and surely, the power

generation business is contributing its own quota to

our vision of being the foremost integrated energy

solutions provider.

I believe that our upstream services business will

weather the storms of the lower crude prices with

continuous improvements in service delivery to our

clientele base as we expand our basket of service

offerings in 2017.

Thank you for your commitment to Forte Oil Plc.

Akin Akinfemiwa

Group Chief Executive Officer

FRC/2013/IODN/0000001994

THE GCEO’S REPORT (Cont’d)



SUBSIDIARIES

Forte Upstream Services Limited

Strategic plans to increase FUSL capacity and market share are as follows:

1. Expand the scope of FUSL laboratory service offerings.

2. D e p l o y a d d i t i o n a l o i l f i e l d s e r v i c e s t h r o u g h J o i n t Venture/Partnership with Local/Offshore Companies to seek opportunities in ancillary services like drilling solids control and drilling waste management

3. In-country blending of production chemicals in place of imported chemicals

The Company's audited IFRS financial results as at December 31, 2016 reported a turnover of N2,596,576,000 with Profit Before Tax (PBT) of 597,943,000 as against N3,846,757,000 with PBT of 567,744,000 in the year 2015.

Forte Upstream Services Limited (FUSL) is a wholly owned subsidiary of Forte Oil Plc. The Company is engaged in the sale of Production Chemicals, Drilling & Completion Fluids, Laboratory Support and other engineering services to both International Oil Companies (IOCs) and Local Oil Companies (LOCs) operating in Nigeria.

FUSL 2016 BUSINESS OUTLOOK AND PERFORMANCE REVIEW

The Company in 2016 supplied production chemicals, drilling and completion fluids services, third party marine logistics services and laboratory services to both international and local Exploration &Production companies.

During the period under review, the Company navigated through the negative impact of low activity level in the upstream sector occasioned by the oil prices drop in and restiveness in Niger Delta region. The low and unpredictable price of oil remained a challenge as it customers constantly requested for discounts in the prices of services being rendered by FUSL. In spite of these challenges, the Company was able to achieve a profit before tax of N597,943,000 as against NGN 567,744,000 in the year 2015 (an increase of 5%).

N NKPIS 2016 2015Turnover 2,596,576,000 3,846,757,000 Cost of sales (1,621,906,000) (2,903,952,000)Gross prot 974,670,000 942,805,000Prot before income tax 597,943,000 567,744,000Taxation (200,927,000) (193,654,000)Prot for the year 397,016,000 374,090,000 Total Equity and Liabilities 3,871,349,000 3,063,741,000

SUBSIDIARIES (Cont’d)

Geregu Power Plc

Geregu Power Plc (the Plant) is a major wholesale producer and supplier of electric power to the Transmission Company of Nigeria (TCN) through the Market Operator (MO) and the Nigerian Bulk Electricity Trading Plc (NBET), Bulk purchaser.

Operating Results: The following is a summary of the company's operating results 2016:

The decrease in PBT was due to the amortization of major overhaul costs effective April 1 2016, while the decrease in PAT was due to provision of income tax in 2016 after expiration of the first 3-Year Pioneer Status of the Company in addition to the amortization of the major overhaul costs.

The Company recorded earnings per share of N230.13 for the year ended 31 December 2016 (31 December 2015: N356.95).

Gas Supply

The gas costs increased by 88.57% to $3.30/Mscft (December 2015: $1.75/Mscft) payable at Central Bank of Nigeria rate to the Nigerian Gas Company Limited effective January 2016 with total gas consumption of 7,904,436 mmscft. The total energy generated for the year 2015 was 699,713 mwh while 690,311 mwh was transmitted to the national grid. These figures represent 1.34% energy consumed within the power plant and its auxiliaries in the year 2016.

Energy Charge

The energy charge increased to N15,466.59/mwh (December 2015: N5,555/mwh) and capacity charge increased to N7,826.70/mwh (December 2015: N4,303/mwh) representing 136% increase in the wholesale price of power as at 31 December 2016 due to increase in gas costs and foreign exchange differentials.

The sum of N14.637 (31 December 2015: N9.344) was outstanding from the Market Operator/CBN-NEMSF and NBET as at the year ended 2016, hence, the necessity for continuous intervention (Approval of N213BN CBN-NEMSF and N701.9BN by the Federal Government of Nigeria to cushion the effect of the revenue collection losses from the Distribution Companies in Nigeria (Discos).

N’000 N’000

Prot before taxation

Taxation

Prot after taxation

Retained earnings for the year

Retained earnings, beginning of year

Dividend to equity holders

Retained earnings, end of year

Earnings per share – basic/diluted (N)

2,331,042

(29,718)

2,301,323

2,301,323

53,159,715

(3,000,000)

52,461,039

230.13

3,569,528

NIL

3,569,528

3,569,528

49,590,188

NIL

53,159,715

356.94

KPIS 2016 2015

Overview of Geregu Financial Performance as at December 31, 2016 The Company revenue for the year 2016 was N12.944BN representing 26% increase over the corresponding year 2015 revenue of N10.268BN. The increase in the revenue was due to increase in the generation wholesale tariff.

Geregu Power Plc posted a Profit Before Tax (PBT) of N2.331BN and Profit After Tax (PAT) of N2.301 for the year ended 31 December 2016 representing decrease of 34.72% and 35.52% respectively compared to 31 December 2015 PBT of N3.569BN and PAT of N3.569BN.

SUBSIDIARIES (Cont’d)

AP Oil and Gas Ghana Limited

AP Oil & Gas Ghana Ltd (APOG) is a licensed Oil Marketing Company (OMC)/ Liquefied Gas Marketing Company (LPGMC) which has been operating in Ghana downstream market since 2008.

The general business environment in 2016 being an election year was enveloped with much uncertainty. The depreciation of the cedi, hike in government taxes, and increased credit transactions due to buyer market scenario with accompanying TAR challenges, price war and difficulty in securing finance from the Banks affected businesses in the region.

However, despite all these challenges, the Company remained focused on its retail expansion

drive which saw an increase from 8 to 13 (10 white product and 3 LPG stations) retail stations.

APOG at date has a mixed portfolio of customer base comprising of commercial customers and a network of retail outlets in different parts of Ghana. The Company currently operates from all depots across the country and has a good working relationship with some of the leading Bulk Distributor Companies (BDCs) in the industry.

The following are the composition of the retail outlets:

3 Company Owned, Company Operated (COCO)3 Company Owned, Dealer Operated (CODO) 7 Dealer Owned, Dealer Operated (DODO)

PERFORMANCE REVIEW

STATEMENT OF COMPREHENSIVE INCOME FOR THE PERIOD ENDED 31 DECEMBER 2016

31-Dec-16 31-Dec-15

GHc GHc

Revenue 23,170,358 31,611,993

Cost of sales (20,873 ,523) (28, 345, 322 )

Gross prot 2,296,835 3,266,671

Other income 173,057 77,114

Distribution expenses ( 703 , 067 ) (1 ,031 , 361 )

Adminstrative expenses (1 , 611 , 411 ) (2 ,218 ,320 )

Result from operating activities 155 ,414 94, 103

Finance expenses (618 , 317 ) (834 , 173 )

Net nance cost (618 , 317 ) (834 , 173 )

Forex translation (loss) (494, 717) (1, 091 ,794)

Prot/ (loss) before income tax (957, 621) (1, 831, 864)

Corporate income tax expense (252 , 055 ) (238 , 210 )

Prot/ (loss) for the year (1 , 209, 679 ) (1 ,593, 654)

CORPORATE GOVERNANCE



he Board of Forte Oil Plc believes that the

Tproper application of best corporate governance practice is a key pillar toward

achieving long term value for all our shareholders and stakeholders. The Board is committed towards ensuring that all business conducted by the Company is in compliance with all applicable laws, regulations of the Nigerian Stock Exchange and the Securities and Exchange Code of Corporate Governance. The Board continues to ensure its compliance with corporate governance best practices evidenced by its participation in

the Corporate Governance Rating System evaluation conducted by the Convention on Business Integrity and the Nigerian Stock Exchange. At Forte Oil Plc, we believe that sound Corporate Governance goes beyond adhering to rules and policies of the regulators, it is about accountability and stakeholder engagement at all times.

The Board of Directors during the year under review complied with the Corporate Governance requirements as set out in the report below.

The Board of Directors

his is the highest decision making body of the Company. It is responsible for the overall long-term

Tsuccess 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

he Board is made up of Eight (8) members consisting of the Chairman, One (1) Non-Executive Director,

TTwo (2) Executive Directors and Four (4) Independent Non-Executive Directors in line with the Code of Corporate Governance.

Present

Absent

Not Applicable

Meaning

N/A

Key

1.

2.

3.

4.

5.

6.

7.

8.

9.

S/N

Board Meeting Attendance

Name PositionJanuary28,2016

April25,2016

July28,2016

October12,2016

October31,2016

December21,2016

Mr. Femi Otedola (CON)

Mr. Akin Akinfemiwa

Mr. Julius Omodayo-Owotuga

Rev. (Mrs.) Grace Ekpenyong*

Deacon. Phillip Akinola**

Dr. (Mrs.) Mairo Mandara***

Mrs. Salamatu Suleiman***

Mr. Christoper Adeyemi

Mr. Anil Dua

Chairman

Director

Director

Director

Director

Director

Director

Director

Director

N/A N/A N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

*Retired with effect from July 28 2016.

**Resigned with effect from December 21, 2016.

*** Appointed with effect from October 31, 2016.


The Board Committees

he Board implements it oversight function through Board Committees with each Committee

Taddressing specific topics based on its charter. The Charter for each Committee sets out its composition, agenda and frequency of meetings. The Committees are supervised by Independent

Non Executive Directors except for the Statutory Audit Committee which is supervised by a shareholder representative.

The Committee of the Board include:

Statutory Audit Committee

Finance & Strategy Committee

Remuneration and Governance Committee

Risk Management 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 Management Committee, Management Committee, Risk Committee, Credit Risk Committee, Crystalized Assets Committee.

1.

2.

3.

S/N NameJanuary27, 2016

October11, 2016

July28, 2016

October27, 2016

December07,2016


Rev. (Mrs.) Grace Ekpenyong*

Deacon. Phillip Akinola

* Retired with effect from July 28 2016

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

N/A N/A


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 with regulations that impact on the Company’s activities.

N/A



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

1.

2.

3.

4.

5.

S/N Name PositionJuly28, 2016

October11, 2016

December21, 2016

Mr. Anil Dua

Mr. Christopher Adeyemi

Rev. Dr. (Mrs) Grace Ekpeyong*

Mr. Akin Akinfemiwa


*Retired with effect from July 28, 2016

January27, 2016

Chairman

Member

Member

Member

Member


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.

1.

2.

3.

4.

5.

6.


October11, 2016

December21, 2016

Mr. Tokunbo Shofolawe-Bakare

Mr. Emmanuel Okoro

Mr. Suleman Ahmed

Deacon Philip Akinola


Mr. Anil Dua

January27, 2016

Chairman

Member

Member

Member

Member

Member

The Board Finance & Strategy Committee

The Board Finance and Strategy Committee is composed of four (4) members. Its charter consist of the oversight responsibilities of the financial management of the Company and the Company’s long-term strategy and short-term financing and capital structure objectives. The Committee ensures the integrity of all financial statements published.

1.

2.

3.

4.


October11, 2016

December20, 2016


Deacon. Phillip Akinola

Mr. Akin Akinfemiwa


January28, 2016

Chairman

Member

Member

Member

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

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

N/A N/A N/A


During the period under review, there were changes to the Board structure with the retirement of two (2) Non- Executive Directors namely Rev. Dr. (Mrs.) Grace Ekpenyong and Deacon Phillip Akinola. There were also two (2) appointments to the Board, namely Mrs. Salamatu Suleiman and Dr. (Mrs.) Mairo Mandara as Independent Non- Executive Directors of the Company. The appointment of Mrs. Suleiman and Dr. Mandara took effect from October 31, 2016.

The Governance and Remuneration Committee recommends to the Board of Directors on the requirements for the appointment of Directors. The Committee makes recommendations to the Board on qualified candidates who possess the knowledge, skills, experience, qualifications and competence to be on the Board based on its assessment of the needs of the Board. In addition to having one or more of these core competencies, candidates for appointment as a Director are identified and considered on the basis of integrity,

diversity, leadership, skills, competence and reputation.

All newly appointed Directors attended an induction program where they were given materials on the history of the Company, the business operations of the Company, norms and culture of the Company as well as an introduction to the management of the Company. In addition, corporate documents and a copy of the relevant regulations guiding the business were presented to the new Directors.

Annually, the Board of Directors attend Board training/sessions, ensuring that they continually update their skills, knowledge of industry practice, relevant regulations, operating environment and on international best governance practices, industry and global trends. Throughout the year, regular updates on developments in legal matters, governance and accounting are provided to Directors.

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 Appointment, Induction and Training

Seperation of the Positions of Chairman and Chief Executive Officer

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.

Board Evaluation Report

Communication with Stakeholders

The Board is committed to sustaining interactions with the Company’s shareholders and other s takeho lder s th rough a we l l -es tab l i shed communications and complaints management process. The Board is committed to the equitable treatment of shareholders, protection of their rights and complete disclosure and transparency at all times by the Management of the Company.

To this end, the Company has in place, a well-managed Investor Relations Unit to attend to all e n q u i r i e s o n t h e C o m p a n y ’ s f i n a n c i a l performance, financial statements, corporate actions, strategy and all other corporate information.

All other related information on the Company’s business operations and allied matters can be obtained by all stakeholders and the public from the Company’s website www.forteoilplc.com



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

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.

Directors Remuneration

*Retired with effect from July 28 2016

**Resigned 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 principles of excellent Corporate Governance practices. The Company strives to carry out its business operations on the principles of integrity and professionalism through transparent conduct at all times.

The Company during the period under review in relation to its Code of Conduct developed a Complaints Management Policy to guide its

Directors, Executive Management and Officers on the fair, impartial and objective manner to effectively resolve all stakeholder issues and enquiries. As a public quoted company, the Company was compliant in its Corporate Governance practices and operations regarding the Listing Rules of the Nigerian Stock Exchange, the directions of the Securities and Exchange Commission and other international best practice.

Insider Trading

The Board of Directors have an approved a Securities Trading Policy which prescribes a code of behavior for Directors, management of the Company, external advisers and other related persons in possess ion of market sens i t ive information. The Code prohibits these persons from dealing in the Company’s securities during closed periods in accordance with the provisions of the Investments and Securities Act Cap 124 Laws of the Federation of Nigeria, 2014 and the Post Listing Rules of the Nigerian Stock Exchange.

Under the Policy, no Director or Principal Officer of

the Company, or a close family of the Director and/or the Principal Officer of the Company who is aware of material non-public information relating to the Company may directly or through family members or other person buy or sell shares of the Company or engage in any other action to take advantage of that information during closed periods. All Insiders are notified of closed periods through written or electronic communication from the Company Secretary.

The Securities Trading Policy is available on the website of the Company.

Sustainability Report

Forte Oil Plc firmly believes in the importance of contributing to the creation of a thriving society in Nigeria. To this end, the Company is committed to the support of the health and safety initiatives and investments that will impact the lives of our immediate community and the society as a whole.

In addition, we implement measures that help us reduce the impact of our operations on the environment. During the period under review, the Company supported and implemented a variety of initiatives in the advancement of these objectives.


PROFILES OF DIRECTORS



1. 2. 3.

4. 5.

Femi Otedola, CONChairman

Akin AkinfemiwaGroup Chief Executive Ofcer

Julius Omodayo Owotuga FCA, CFA Group Executive Director, Finance & Risk Management.

Anil DuaIndependent Non-Executive Director

Mairo MandaraIndependent Non-Executive Director

Christopher AdeyemiNon-Executive Director

Salamatu SuleimanIndependent Non-Executive Director

Nicolaas VerveldeIndependent Non Executive Director

Grace Ekpenyong Non Executive Director

PhilipAkinola Non Executive Director

1.

4.

2.

5.

6.

3.

7. 8.6.

8.


9. 10.

7.

9.

10.

Mr . F e m i Otedola j o i n e d

the board of Forte Oil Plc (formerly known as African Petroleum Plc) as Chairman of the Board of Directors in May 2007.

H i s v i s i o n t r a n s f o r m e d African Petroleum Plc into Forte Oil Plc. The Company has grown in leaps and bounds to become a model of the possibilities inherent in Nigeria,

winning numerous accolades in recognition of the successful business turnaround, prompt Financial Reporting, strong Corporate Governance and investment of choice within the Oil Industry and the Nigerian Stock Exchange.

In 2007, with a firm belief in the power reforms of the Federal Government and overall vision “to be the foremost integrated energy solutions provider in Nigeria” he made a very strategic decision to participate in the Privatization Programme of the Niger ian Government and his doggedness culminated in the acquisition of a majority stake in the 414MW Geregu Power Plant by a subsidiary of Forte Oil Plc, Amperion Power Distribution Company Limited in August 2013.

He has held several board memberships including President of the Nigerian Chamber of Shipping and as past Chairman of Transcorp Hilton Hotel, Abuja. He was appointed Member of the Governing Council of the Nigerian Investment Promotion Council in January 2004 and in December of the same year, he was appointed a Member of the Committee saddled with the task of fostering business relationship between the Nigerian and the South African Private sectors.

He was a member of the National Economic Management Team under the Chairmanship of Former Pres ident Goodluck Jonathan f rom September, 2011 to May, 2015 and the Honorary International Investors Council under the leadership of Baroness Lydna Chalker.

Mr. Otedola was further recognized for his immense contributions to the growth of the Nigerian economy with the conferment of the prestigious National Honour of “Commander of the Order of the Niger - CON” by Former President Goodluck Jonathan in May, 2010.

Femi Otedola, CON Chairman

Mr . A k i n Akinfemiwa is the Group

C h i e f E x e c u t i v e Officer of Forte Oil Plc and responsible for the overall strategic leadership, direction and guidance for the b u s i n e s s a n d i t s s u b s i d i a r i e s . H e c o o r d i n a t e s t h e formulation, review and implementation of the organisation's strategy, goals and objectives.

He is the Chairman of t h e B o a r d o f Directors of Forte

Upstream Services Limited and serves as a director on Amperion Power Distribution Limited, Geregu Power Plc and AP Oil and Gas Ghana Limited. He is the Chairman of the Major Oil Marketers Association of Nigeria (MOMAN).

He was a former Director & Head Trading and Business development of Fineshade Energy Limited. He is a seasoned and experienced International Petroleum Products Trader with focus on oil and oil products futures, swaps and derivatives trading responsibilities. He was influential in developing strategic trading and supply relationships for Oando Plc in the West African Sub Region.

Mr. Akinfemiwa is an alumnus of the Said Business School. He attended various leadership programs at The Wharton Business School and Harvard Business School.

He also holds a B.sc Honours degree in Mechanical Engineering from the University of Ibadan and a Master of Business Administration (information Technology) from the University of Lincolnshire and Humberside, United Kingdom.

Akin Akinfemiwa Group Chief Executive Officer

A philanthropist with deep involvement in educational causes at all levels via the Sir Michael Otedola Scholarship Awards Foundation, he has continued to demonstrate his passion for his community, Epe, Lagos State and Nigeria in general, committing huge financial resources to the sponsorship of promising but financially disadvantaged students.



Mr. Julius B. Omodayo-Owotuga

i s t h e G r o u p Executive Director, F i n a n c e & R i s k Management at Forte Oil Plc. He is C F A C h a r t e r Holder, a KPMG trained Chartered Accountant and an exper ienced f i n a n c e professional. Before he joined Forte Oil Plc, he was at Af r ica F inance Corporation (AFC) where he had responsibilities for the Corporation’s

Assets and Liabilities Management function and also doubled as the Assistant Treasurer. Prior to this, he was the Finance Manager in the same Corporation. In this role, Mr. Omodayo-Owotuga set up the Financial Control function of the institution. He was also responsible for Human Resources and Administration at the Corporation's start up stage in 2007.

Mr. Omodayo-Owotuga joined the AFC from Standard Chartered Bank Nigeria Limited where he was a Finance Manager. Before this, he was at KPMG Professional Services where he led assurance engagements within the Nigerian financial services industry. He also consulted for a number of Institutions on IFRS and Risk Management while at KPMG Professional Services. Prior to KPMG, Mr. Omodayo-Owotuga worked in the Foreign Operations Group of MBC International Bank (now First Bank of Nigeria Limited) .

He is a fellow of the Institute of Chartered Accountants of Nigeria, a Chartered Management Accountant and a fellow of the Institute of Credit Administration, Certified Treasury and Financial Manager. He has attended senior management and leadership programs at the Harvard Business School and other top global business schools.

He holds a B.Sc in Accounting from the University of Lagos.

Mr. Anil Dua i s a n Independ

ent Non-Executive Director and prior t o h i s c u r r e n t appointment, he w a s t h e C h i e f Executive Officer f o r S t a n d a r d Chartered Bank West Africa.

He i s an as tu te c o r p o r a t e technocrat, who has held Executive p o s i t i o n s i n S e y c h e l l e s I n t e r n a t i o n a l Mercantile Corp,

Afrexim bank, Standard Chartered Bank of Nigeria, Cameroon, Cote d'Ivoire and Ghana

Anil Dua holds a BA Honors Economics from St. Stephen's College, Delhi University and a Masters in Economics from Delhi School of Economics.

Dr . M a i r o Mandara is a c o n s u l t a n t

obstet r ic ian and gynaecologist with e x t e n s i v e knowledge of public health systems and m a n a g e m e n t o f maternal and child health programs. After her medical t r a i n i n g a t t h e University of Jos, Dr. Mandara practiced at the Ahmadu Bello University Teaching Hospital in Zar ia, northern Nigeria.

Between 2005 and 2010, Dr. Mandara was a Senior Country

Adviser in Nigeria to the David and Lucile Packard Foundation. She then worked as the Nigerian-based Health Systems Adviser for the Earth Institute at New York’s Columbia University. Dr. Mandara is a well-known advocate for girl’s human and reproductive health and rights and for the improvement of the status of women and girls in Nigeria.

Julius Omodayo- Owotuga FCA, CFA Group Executive Director, Finance & Risk Management

Anil Dua Independent Non-ExecutiveDirector

Mairo MandaraIndependent Non-ExecutiveDirector


Mr . Christopher A d e y e m i

attended Obafemi Awolowo University I le I fe where he obtained his LL.B (Hons) degree in 1989. He became a Barrister and Solicitor o f t h e S u p r e m e Court of Nigeria in 1991.

Mr. Adeyemi began his legal career as Head of Green Form A d v i c e a n d Assistance Team in the Legal Aid Board o f E n g l a n d a n d

Wales. During his stint at the Legal Aid Board, he was responsible for setting up the Green Form Advice and Assistance phone extensions team and also the Immigration Project Team. After leaving the public sector, Mr. Adeyemi, in partnership with others, set up Agape Consulting, a Legal Practice and Management Consultancy which assists in setting up and advising over 100 Law firms in the United Kingdom.

Christopher Adeyemi is currently the Head of the Corporate and Media Law Department of the International Law and Management Firm. He has advised multinational companies on setting up businesses in the African and European markets. Mr. Adeyemi has most recently advised the Nollywood Industry on how to make international profits.

He is a member of the Nigerian Bar Association, member of the Black Solicitors Network (UK), and member of Immigration Law Practitioners Association (UK).

Mrs. Salamatu H u s s a i n i Suleiman is a

qualified lawyer and advocate. She has served as Honorable Minister of State II F o r e i g n A f f a i r s b e t w e e n A u g u s t 2010 to May 2011 and t h e M i n i s t e r o f Women Affairs and Social Development between December 2 0 0 8 a n d M a r c h 2010. She recently s e r v e d a s t h e C o m m i s s i o n e r , Political Affairs Peace and Security at the E c o n o m i c Community of West A f r i c a n S t a t e s

(ECOWAS) between February 2012 to March 2016.

Mrs. Suleiman had previously served as the Secretary to the

Commission and Director, Legal Services at the Securities

and Exchange Commission (SEC) between 2001 to 2008.

She was Company Secretary at Continental Merchant

Bank between 1992 to 1996 and Principal State Counsel at

the Ministry of Justices, Sokoto State between 1983 to 1989.

Mr. Nicolaas Vervelde is t h e

M a n a g i n g D i r e c t o r / C h i e f E x e c u t i v e o f Nigerian Breweries Plc. He is a Board M e m b e r o f t h e Nigerian Economic Summit Group and a l s o s i t s o n t h e Advisory Board of the Lagos Business S c h o o l . M r . Vervelde is also the Chairman of the Beer Sectoral Group o f t h e M a n u f a c t u r e r s A s s o c i a t i o n o f N iger ia and the

Nigeria Breweries Felix Ohiwerei Education Trust Fund.

He started his career with Heineken in 1984 and held increasingly senior management posit ions in commercial, general management and regional management in Europe, Africa & Middle East, Bahamas, Caribbean and Central America. He is an experienced Manager of Merger & Acquisitions and a seasoned International Change Manager.

Christopher AdeyemiNon-Executive Director

Salamatu SuleimanIndependent Non-Executive Director

Nicolaas VerveldeIndependent Non-Executive Director



Rev. (Dr.) Mrs. G r a c e Christopher

Ekpenyong holds a f i r s t D e g r e e i n Zoology from the University of Ibadan in 1979 and a Post Graduate Diploma in Education from the University of Lagos. She is vastly e x p e r i e n c e d i n different fields such as manufacturing, s o c i a l w e l f a r e , education, farming and humanitarian activities - having worked in various capacities within the sectors.

From 1980 to 1985, she was a Senior Lecturer/Vice Principal, Cross River State Schools Board; Lecturer at Vivian Fowler Tutorial College from 1986-1989. From 1989 to date, she has been the Deputy Managing Director, Gestric Group of Companies, Managing Director, Amazing Quality Limited and President, Widows Mite Integrated Development Association. Currently, she also functions as Executive Director, Eemjm Investment.

Mrs. Ekpenyong is a member of many associations such as the Manufacturers Association of Nigeria, National Association of Women Entrepreneurs (NAWE), Nigerian Institute of Management (NIM) and holds a Doctor of humane letters degree from the Lagos Graduate School and a Doctor of Philosophy/Divinity degree from the Lagos State University.

She holds various awards such as Certificate of Honour, Federal UNESCO Club of Nigeria (FUCN); Leadership Award, African Education and Culture Organisation, Miami, Florida, USA, and Honorary Degree of Doctor of Divinity from the Lagos Graduate School.

Mrs. Ekpenyong retired from the Board on July 28, 2016.

Mr. Akinola h o l d s a B . S c .

( H o n o u r s ) i n S o c i o l o g y a n d A n t h r o p o l o g y ( 1 9 8 7 ) , M . S c . Industrial Sociology (1989), and has Ph.D (Sociology) in view at University of Lagos.

Mr . Ak ino la has garnered over 22 years' experience i n H u m a n R e s o u r c e s O p e r a t i o n s , C o n s u l t i n g a n d Management. His

working experiences included stints as Management Consultant, Agrovog (1992 - 1994), Principal Consultant, Management Plus (1994 - 1997), and Manager, Personnel /Admin., Golden Gate Ventures and Trusts Limited.

Mr. Akinola also worked as Manager, Human Resources Development at SCG Consulting from 1997 - 1999 and Human Resources Manager, Parker Drilling Nig. Limited (1999 - 2001). He is currently the Head, Human Capital and Administration of Zenon Petroleum and Gas Limited.

Mr. Akinola is a member of the Nigeria Institute of Management (MNIM, Nigerian Institute for Training and Development (MNITAD) and an Associate of the Chartered Institute of Personnel Management (ACIPM).

Mr. Akinola retired from the Board on December 21, 2016.

Philip Akinola Non-Executive Director


Grace Ekpenyong Non-Executive Director

THE GENERAL MANDATE LETTER

ISSUED IN COMPLIANCE WITH CLAUSE 6 OF THE RULES OF THE NIGERIAN STOCK EXCHANGE GOVERNING RELATED PARTIES OR INTERESTED PERSONS

n order to ensure that its operations are carried out in the most efficient

Imanner possible, the Company seeks for the grant of a general mandate in

respect of all recurrent transactions entered into with a related party or

interested person which are of a revenue or trading nature or are necessary for

the Company’s day to day operations. These transactions have been assessed

to cumulatively exceed 5% of the value of the net tangible assets or issued share

capital of the Company.

The class of related parties and interested persons with which the Company will

be transacting includes shareholders, employees and their family members,

companies or entities within the Forte Oil Plc Group and its subsidiaries.

The rationale for the transactions are that they are necessary for the operations

of the Company, the discharge of legal and contractual obligations currently

binding on the Company, are of strategic importance to the continued

operations of the Company, they guarantee the uninterrupted supply of goods

and services necessary for the operation of the Company as a going concern,

are carried out on a transparent basis and are cost effective and performed

efficiently.



STATEMENT OF DIRECTORS’ RESPONSIBILITIES FOR THE YEAR ENDED DECEMBER 31, 2016

he Companies and Allied Matters Act, 2004 requires the Directors to

Tprepare financial statements for each financial year that give a true and

fair view of the state of financial affairs of the Company at the end of the

year and of its profit or loss.

The responsibilities include ensuring that the Company:

l keep proper accounting records that disclose, with reasonable

accuracy, the financial position of the Company and comply with the

requirements of the Companies and Allied Matters Act;

l approves the Company's strategy to meet its financial objectives and

monitor the implementation of those strategies and objectives

l oversee the establishment, implementation and monitoring of an

adequate enterprise-wide risk management framework to identify,

assess and manage risks facing the Company

The Directors are of the opinion that the financial statements give a true and fair

view of the state of the financial affairs of the Company and of its profit or loss.

The Directors further accept responsibility for the maintenance of accounting

records that may be relied upon in the preparation of financial statements, as

well as adequate systems of internal financial control.

The Directors confirm that from all indication, the Company will remain a going

concern for at least twelve months from the date of this statement.

Signed on behalf of the Board of Directors by:

Femi Otedola, CON Christopher Adeyemi Chairman Non-Executive Director


DIRECTOR’SREPORT



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 (AGO), Dual Purpose Kero (DPK), Fuel Oils and Aviation Turbine Kerosene (ATK) 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 57% equity in Amperion Power Distribution Company which owns 51% equity stake in Geregu Power Plc; the Company operates a 435 megawatt Power Plant in Ajaokuta, Kogi State.

Operating results:

The following is a summary of the Group's and Company's operating results for the year ended 31st December 2016:

Prot before taxation

Taxation

Prot after taxation

Total Comprehensive income for the year

Retained earnings, beginning of the year

Retained earnings, end of the year

Earnings per share basic

5,340,244

(2,449,814)

2,890,430

2,926,467

6,001,847

4,200,191

1.99

5,442,482

(2,206,653)

3,235,829

3,235,829

5,691,196

4,543,801

2.48


DividendThere is no dividend for the reported period

Property, Plant and Equipment

Information relating to changes in property, plant and equipment during the year is given in Note 14 to the financial statements.

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

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

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:

Mr. Femi Otedola CON (Chairman)

Mr. Akin Akinfemiwa



Deacon Phillip Akinola

Mr. Anil Dua

Mrs. Salamatu Sulieman

Dr. Mairo Mandara

Name

154,006,575

20,000

NIL

80,485

NIL

NIL

NIL

NIL

DIRECT HOLDING31/12/15

INDIRECT HOLDING31/12/15

DIRECT HOLDING31/12/16

INDIRECT HOLDING31/12/16

706,047,784

NIL

NIL

NIL

NIL

NIL

NIL

NIL

186,260,357

24,000

NIL

96,582

NIL

NIL

NIL

NIL

838,472,441

NIL

NIL

NIL

NIL

NIL

NIL

NIL



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

Share Options SchemeThe 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

Thames Investment Incorporated

Femi Otedola, CON

% HoldingNo. of Shares

640,476,400

197,996,041

186,260,357

48.87

15.00

14.21

Share Capital History

Date

Issued and Fully Paid Capital

28/02/79

17/07/80

24/08/82

10/08/84

16/09/86

03/08/88

24/09/90

10/01/94

28/11/99

13/09/04

25/11/04

30/09/05

28/10/06

20/04/09

20/04/09

6/12/13

11/07/14

N

Authorised Capital

From To

N

Date From To Consideration

N N N

6,000,000

7,500,000

11,250,000

22,500,000

30,000,000

36,000,000

43,200,000

72,000,000

86,400,000

108,000,000

216,000,000

234,263,450.50

281,116,141

394,393,919

443,271,555

543,535,383

543,535,383

7,500,000

11,250,000

22,500,000

30,000,000

36,000,000

43,200,000

86,400,000

86,400,000

108,000,000

216,000,000

234,263,450.50

281,116,141

394,393,919

443,271,555

543,535,383

543,535,383

546,095,528

-

Bonus (1:2)

Bonus (1:1)

Bonus (1:3)

Bonus (1:5)

Bonus (2:3)

Rights Issue

Bonus (1:4)

Rights Issue

Rights Issue

-

Bonus (1:5)

Placement

Rights Issue

Public Offer

-

Underwriting of 2008/2009 Hybrid Offer

7,500,000

11,250,000

22,500,000

30,000,000

36,000,000

43,200,000

72,000,000

86,400,000

108,000,000

144,000,000

5,000,000,000

2,000,000,000

6,000,000

7,500,000

11,250,000

22,500,000

30,000,000

36,000,000

43,200,000

72,000,000

86,400,000

108,000,000

144,000,000

5,000,000,000

22/06/78

17/07/80

28/08/82

04/08/84

06/08/86

12/07/88

29/06/90

29/07/93

28/11/97

19/02/99

15/11/02

26/11/13

15/04/15 546,095,528 1,310,629,267 Bonus (1:5)


Analysis of ShareholdingThe analysis of the distribution of the shares of the Company at the end of the 2016 financial year is as follows:

No. of HoldersRange

1

1,001

5,001

10,001

100,001

500,001

1,000,001

10,000,001

100,000,001

1,000

5,000

10,000

100,000

500,000

1,000,000

10,000,000

100,000,000

1,000,000,000

132,740

23,559

3,209

2,541

210

25

18

1

3

162,306

81.78%

14.52%

1.98%

1.57%

0.12%

0.02%

0.01%

0.00%

100.00%

44,358,268

48,162,671

22,305,181

61,634,867

42,260,866

18,433,970

77,966,862

29,400,929

966,105,654

1,310,629,267

3.38%

3.67%

1.70%

4.70%

3.24%

1.41%

5.95%

2.24%

73.71%

100.00%

Holders % Units Units %

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 N2,001,050.00 during the year under review as follows:

Organization/Body

1

2

3

4

Diesel supply to Lagos State Motherless Babies Home Lekki

National Association of Energy Correspondents (NAEC) Conference

Corporate support to University of Lagos Post Graduate School

Support to NAEC for the Offshore Technology Conference

N951,050.00

N250,000.00

N500,000.00

N300,000.00

AmountS/N

Disclosures

l Borrowing and Maturity Dates The details of the borrowings and maturity dates

are stated in Note 28 to the financial statements.

l Risk Management and Compliance SystemForte Oil Plc has a structured enterprise risk management framework that puts in place and undertakes a through risk assessment on all aspects of the business. The risk assessment is based on two criteria's, 'Business Impact' and 'Likelihood of Occurrence' and for every identified business risk, mitigating measures are implemented by the Company.

The Directors are responsible for the total process of the risk management as well as expressing their opinion on the effectiveness of the process. The risk management framework of the Company is integrated into the day-to-day operations of the

Company and provides guidel ines and standards for administering the acceptance and on-going management of key risks such as operational, reputational, financial, market and compliance risk.

The Directors are of the view that effective internal audit function exists in the Company and that risk management control and compliance system are operating efficiently and effectively in all respects.

l Related Party TransactionsThe Company has contractual relationship with related companies in the ordinary course of business. The details of the outstanding amounts arising from the related party transactions are stated in Notes 31 to the financial statements.



Total N2,001,050.00

Employment of Physically Challenged Persons

The Company is an equal opportunities employer and will not discriminate on any grounds. The Company operates a non-discriminatory policy in the consideration of applications for employment, including those received from physically challenged persons. In the event of any employee becoming disabled in the course of employment, the Company is in a position to arrange appropriate training to ensure the continuous employment of such a person without subjecting him/her to any disadvantage in his/her career development. As at 31 December 2016, the Company had no disabled persons in its employment.

Health, Safety and Welfare of Employees

It is the policy of Forte Oil Plc to carry out its activities in a manner that safeguards the health and safety of its workers and other stakeholders, the protection of the Company’s facilities and the environment and compliance with all regulatory and industry requirements.

The Company considers health, safety and environmental issues as important as our core businesses and assume the responsibility of providing a healthy, safe and secure work environment for our

employees as required by law. Our objective is to minimize the number of cases of occupational accidents, illnesses, damage to property and environmental degradation.

Our vision is to achieve leadership role in sustainable health, safety and environment practices through the establishment and implementation of effective business management principles that are consistent with local and international regulations and standards.

Employee Involvement and Training

The Company encourages participation of employees in the decision making process relating to matters affecting their well being. Towards this end, the Company provides opportunities for employees to deliberate on issues affecting the Company and employees’ interests, with a view to making inputs to decisions thereon. The Company places a high premium on the development of its manpower. Consequently, the Company sponsored its employees for various training courses during the year under review.

Post Balance Sheet Events There was no material event after year end that could impact on the financial statements.

Auditors Messrs PKF Professional Services have indicated their willingness to continue in office in accordance with Section 357(2) of the Companies and Allied Matters Act, Cap C20, Laws of the Federation of Nigeria, 2010. By order of the Board

Akin Olagbende Esq.Company Secretary

FRC/2013/NBA00000003160


Report of the Audit CommitteeTo the Members of Forte Oil Plc

In accordance with the provision of Section 359(6) of the Companies and

Allied Matters Act of 2004, we confirm that the accounting and reporting

policies of the Company are in accordance with Legal requirements and

agreed ethical practices.

In our opinion, the scope and planning of the audit for the year ended 31st

December, 2016 were adequate and we have reviewed the external

auditor's findings on management matters and are satisfied with the

departmental response thereto.

Dated this 30th day of January 2017.

Tokunbo Shofolawe-BakareChairman, Audit CommitteeFRC/2013/ICAN/00000004461

MEMBERS OF THE AUDIT COMMITTEE

Name

1

2

3

4

5

6

MR. TOKUNBO SHOFOLAWE- BAKARE

MR. EMMANUEL OKORO

MR. SULEMAN AHMED

DEACON PHILIP AKINOLA*

MR. CHRISTOPHER ADEYEMI

MR. ANIL DUA

CHAIRMAN

MEMBER

MEMBER

MEMBER

MEMBER

MEMBER

PositionS/N



*Resigned with effect from December 21, 2016

Photo Stories




Customer Service Week 2016

GCEO’S CUP

Forte Oil hosts GCEO’S Cup Tournament in commemoration of the 2016 Customer Service Week.

on Friday October 7, 2016 at Children's International School (CIS) Lekki, Lagos.

MULTIMOND

Team Forte Oil before kick-off

Team GT Bank before kick-offTeam BAT leaving the pitch Team Multimond before kick-off

Team Multimond Vs team GTBank

Introduction of BAT playersIntroduction of Multimond players

Kick-off by special guest, Wale Oyedeji, ED,

Corporate Banking GTBank

Team Mulitmond - Champions of the 2016 FO GECO’s Cup celebrating their victory

Trophy and Medals

Presentation of trophy to the winner by Akin Akinfemiwa

Special guests from the motherless babies homeL: Tunji Rabiu, GM Operations Forte Oil discussing with

R: Ayanru Osa, Head, Energy Group (Downstream) GTBank

Cross section of FO staff & customers at the event

Team FO Vs team BAT


Stakeholders Event - Facts Behind the Figures 2016



Stakeholders Event - 37th Annual General Meeting 2016



N9bn Bond Signing Series 1


N9bn Bond Listing on FMDQ and NSE

Consolidated Financial

Statements3 1 D E C E M B E R 2 0 1 6

Contents Page

Statement of directors’ responsibilities in relation to the consolidated nancial statements

46

Independent Auditor’s Report 47

Consolidated statement of nancial position 50

Consolidated statement of prot or loss and other comprehensive income 51

Consolidated statement of cash ows 52

Consolidated statement of changes in equity 53

Notes to the consolidated nancial statement 57

Other information:

Consolidated statement of value added 115

Financial summary 116



Signed on behalf of the Board of Directors by:

___________________________ ___________________________ ___________________________

Femi Otedola,CON Akin Akinfemiwa Julius B. Omodayo-Owotuga, CFAChairman Group Chief Executive Ofcer Group Chief Financial Ofcer FRC/2013/IODN/00000002426 FRC/2013/IODN/00000001994 FRC/2013/ICAN/00000001995

Date: 30 January 2017 Date: 30 January 2017 Date: 30 January 2017

The Directors accept responsibility for the preparation of the accompanying nancial statements, which have beenprepared using appropriate accounting policies supported by reasonable and prudent judgments and estimates inaccordance with the International Financial Reporting Standards; in compliance with the Financial Reporting Council ActNo. 6, 2011 and in the manner required by the Companies and Allied Matters Act, CAP C20 LFN 2004.

The Directors are of the opinion that the accompanying nancial statements give a true and fair view of the state of thenancial affairs of the Company, in accordance with the International Financial Reporting Standards; in compliance withthe Financial Reporting Council of Nigeria Act, No 6, 2011 and in the manner required by Companies and Allied MattersAct, CAP C20, LFN 2004.

The Directors further accept responsibility for the maintenance of adequate accounting records as required by theCompanies and Allied Matters Act, CAP C20 Laws of the Federation of Nigeria 2004 and for such internal controls as theDirectors determine is necessary to enable the preparation of consolidated nancial statements that are free from material misstatements whether due to fraud or error.

The Directors have made assessment of the company's ability to continue as a going concern and have no reason tobelieve that the company will not remain a going concern in the years ahead.

STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN RELATION TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2016


Independent Auditor’s Reportto the members of Forte Oil Plc

Opinion

We have audited the consolidated financial statements of Forte Oil Plc (''the Company'') and its subsidiaries (“the Group”), which comprise the consolidated statement of financial position at 31 December 2016, and the consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group at 31 December 2016, and i ts consol idated f inancial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs) in compliance with the Financial Reporting Council of Nigeria Act, No 6, 2011 and with the requirements of the Companies and Allied Matters Act, CAP C20, LFN 2004.

Basis for Opinion

We conducted our audit in accordance with International

Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor 's Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the International Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of the consolidated financial statements in Nigeria, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. The key audit matters below relate to the audit of the consolidated financial statements.

Accountants &business advisers

To the Shareholders of Forte Oil Plc

1. Information Technology (IT) systems and control over financial reporting

A significant part of the Group's financial reporting process is reliant on IT systems with automated processes and controls over the capture, storage and extraction of information. A fundamental component of these processes of controls is ensuring appropriate user process and change management protocols exist, and are being adhered to.

These protocols are important because they ensure that access and changes to IT systems and related data are made and authorised in an appropriate manner.

The Group uses a vendor customized Enterprise Resource Planning application (SAP).

The Group has an IT division to manage the IT function, and/or to assist with operational requirements (includes service providers for major functions).

In the event that the IT system failed, Business operations will be disrupted / hampered until systems is restored.

As our audit sought to place a high level of reliance on IT systems and application controls related to financial reporting, a high proportion of the overall audit effort was in this area.

Key Audit Matters

We focused our audit on those IT systems and controls that are significant for the Group financial reporting process.

As audit procedures over IT systems and controls require specific expertise, we involved IT specialist in our audit.

We assessed and tested the design and operating effectiveness of the Group's IT controls, including those over users access and changed management as well as data reliability.

In a limited number of cases, we adjusted our planned audit approach as follows:

Ÿ We extended our testing to identify whether there had been unauthorised or inappropriate access or changes made to critical IT systems and related data;

Ÿ Where automated procedures were supported by systems with identified deficiencies, we extended our procedures to identify and test alternative controls; and

Ÿ Where required, we performed a greater level of testing to validate the integrity and reliability of associated data reporting.

How the matters were addressed in the audit



2. Trade and other Receivables - Impairment Trade receivables are stated at their original invoiced

value less appropriate allowance for estimated irrecoverable amounts. As disclosed in note 4.11.1 and note 21.1 to the consolidated financial statements, the Group assesses at each reporting date whether there is objective evidence that financial asset is impaired. In carrying out this assessment, management relies on entity-developed internal models. For instance, in assessing collective impairment, the Group uses historical trend of the probability of default, timing of recoveries and the amount of loss incurred, adjusted for management determined risk rating.

There is significant measurement uncertainty involved in this assessment, which makes it a key audit matter.


3. Valuation of Long term Employee Benefits Liability The Group operates both defined contribution plans

and defined benefit plans. As at 31 December 2016, the estimated gratuity liability stood at N486.6 million (Company : N414.5 million). The actuarial techniques used to assess the value of defined benefit plans involved financial assumptions (discount rate, rate of return on assets, medical costs trend rate) and demographic assumptions (salary increase rate, employee turnover rate, etc.). The Group uses the assistance of an external independent actuary in the assessment of these assumptions. Further disclosure on this is in note 24 to the consolidated financial statements.

We identified the valuation of long term employee benefits liability as representing a key audit matter due to uncertainties that are inherent in the underlying assumptions.

We assessed the competence, capabilities and objectivity of the external independent actuary, and verified the qualifications. In addition, we discussed the scope of their work with the management and reviewed their terms of engagement to determine that there were no matters that affected their independence and objectivity or imposed scope limitations upon them. We confirmed that approaches used are consistent with IFRS and industry norms. We made use of our internal expert to evaluate the management and their valuers' judgements, mostly on the financial and demographic assumptions.

We compared the data provided to the valuers by management against the one given to auditors during the audit to ensure alignment of the result.

Furthermore, we tested a selection of data inputs underpinning the long term employees' benefits liability valuation, against appropriate supporting documentation, to assess the accuracy, reliability and completeness thereof.

In addition, we assessed the adequacy of the disclosures that pertain to the long term employee benefits liability in the consolidated and separate financial statements.

We focused our testing of the impairment of trade and other receivables on the key assumptions made by the management.

Our audit procedures included:

Ÿ Understand, evaluate and validate contracts over sales and trade receivables cycle.

Ÿ Review, evaluate and validate contracts over credit process including age analysis of debtors.

Ÿ Critically evaluate the determination of the expected cash flow used.

Ÿ Evaluate whether the model used to calculate the recoverable amount complies with the requirement of IAS 39.

Other Information

The directors are responsible for the other information. The other information comprises the Chairman's statement, Directors' Report, Audit Committee's Report, Corporate Governance Report and Company Secretary's report which is expected to be made available to us after that date. The other information does not include the consolidated financial statements and our auditor's report thereon.

Our opinion on the consolidated financial statements does not cover the other information and we do not and will not 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.

Responsibilities of the Directors and Those Charged with Governance for the Consolidated Financial Statements

The directors are responsible for the preparation and fair presentation of the consolidated financial statements in accordance with International Financial Reporting Standards in compliance with the Financial Reporting Council of Nigeria Act, No 6, 2011 and the requirements of the Companies and Allied Matters Act, CAP C20, LFN 2004, and for such internal control as the directors determine is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, the directors are responsible for assessing the Group's ability to continue as a going concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Group's financial reporting process.

Auditor's Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

Ÿ Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The r isk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Ÿ Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's internal control.

Ÿ Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.

Ÿ Conclude on the appropriateness of the director's use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Group to cease to continue as a going concern.

Ÿ Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

Ÿ Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with the Audit Committee regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the Audit Committee with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with the Audit Committee, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current year and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Najeeb A. Abdussalaam, FCA FRC/2013/ICAN 00000000753For: PKF Professional Services Chartered AccountantsLagos, Nigeria

Dated: 30 January 2017



CONSOLIDATED STATEMENT OF FINANCIAL POSITIONAT 31 DECEMBER 2016

Note 31-Dec-16 31-Dec-15 31-Dec-16 31-Dec-15N’000 N’000 N’000 N’000

AssetsNon-current assetsProperty, plant and equipment 14. 69,297,575 62,420,249 9,452,411 9,663,556 Investment property 15. 1,799,462 1,831,743 1,799,462 1,831,743 Intangible assets 16. 229,307 286,110 211,476 278,710 Investment in subsidiaries 17. - - 10,707,406 11,032,291 Deferred tax assets 18. 165,152 131,141 - - Long term employee benets 24. 1,674 41,819 525 40,695 Total non-current assets 71,493,170

64,711,062

22,171,280

22,846,995

Current assetInventories 19. 4,655,295

10,059,871

3,816,328

8,971,340

Other assets 20. 744,636

389,579

112,305

125,625

Trade and other receivables 21. 46,819,458

34,896,618

31,215,527

23,672,578

Cash and cash equivalents 22. 17,043,933

11,700,826

16,143,555

10,124,422

Total current assets 69,263,322

57,046,894

51,287,715

42,893,965

Total assets 140,756,492

121,757,956

73,458,995

65,740,960

EquityShare capital 23. 655,314

546,095

655,314

546,095

Share premium 23. 8,071,943

8,181,162

8,071,943

8,181,162 Other reserves 23. (222,357)

(257,985)

(7,752)

(7,752)

Retained earnings 23. 4,200,191

6,001,847

4,543,801

5,691,196 Total equity attributable to equity

holders of the Company 12,705,091

14,471,119

13,263,306

14,410,701

Treasury stock 23. (1,388,574)

(1,388,574)

(1,388,574)

(1,388,574)

Non controlling interests 23. 32,017,060

33,198,198

-

-

Total equity 43,333,577 46,280,743 11,874,732

13,022,127

LiabilitiesNon-current liabilities

Deferred tax liabilities 18. 495,372

73,914

417,594

-

Loans and borrowings 25. 17,394,641

13,951,682

2,172,169

2,976,673

Medium term bond 25 8,704,594

-

8,704,594

-

Deferred fair value gain on loan 26. 1,021,572

1,432,781

-

-

Non-current trade and other payables 27. 397,615

400,487

397,615

400,487

Total non-current liabilities 28,013,794

15,858,864

11,691,972

3,377,160

Current liabilitiesLoans and borrowings 25. 21,395,842

13,757,807

20,689,764

12,026,413

Bank overdraft 22. 1,928,321

10,268,358

1,812,448

10,226,394

Current income tax liabilities 12. 1,230,362

967,834

982,389

751,179

Deferred fair value gain on loan 26. 454,032

440,855

-

-

Trade and other payables 27. 44,400,564

34,183,495

26,407,690

26,337,687

Total current liabilities 69,409,121

59,618,349

49,892,291

49,341,673

Total liabilities 97,422,915

75,477,213

61,584,263

52,718,833

Total equity and liabilities 140,756,492

121,757,956

73,458,995

65,740,960

The consolidated nancial statements were approved by the Board of Directors on 30 January, 2017 and signed on its behalf by:

___________________________ ___________________________ _______________________________Femi Otedola, CON Akin Akinfemiwa Julius B. Omodayo-Owotuga, CFAChairman Group Chief Executive Ofcer Group Executive Director, Finance FRC/2013/IODN/00000002426 FRC/2013/IODN/00000001994 FRC/2013/ICAN/00000001995

Group Company

The accompanying notes and signicant accounting policies form an integral part of these consolidated nancial statements.


CONSOLIDATED STATEMENT OF PROFIT OR LOSSAND OTHER COMPREHENSIVE INCOMEFOR THE YEAR ENDED 31 DECEMBER 2016

Revenue

Cost of sales

Gross protOther incomeDistribution expensesAdministrative expenses

Operating prot

Finance IncomeFinance cost

Net nance (cost)/income

Prot before income taxIncome tax expense

Prot for the year

Other Comprehensive Income:Items that will not be reclassied

subsequently to prot or lossForeign exchange translation gain/(loss)

Items that may be reclassied

subsequently to prot or lossDened benet plan actuarial gain/(loss)

Total other comprehensive loss net of taxes

Total comprehensive income for the year

Owners of the CompanyNon controlling interests

Earnings per shareBasic/diluted in (N)


31-Dec-16 31-Dec-15 31-Dec-16 31-Dec-15Notes N’000 N’000 N’000 N’000

7. 148,605,261 124,617,238 131,613,962 108,853,855

7. (128,021,347) (106,255,812) (116,429,276) (96,540,929)

20,583,914 18,361,426 15,184,686 12,312,926 8. 2,347,180 4,050,967 2,428,950 3,730,957 9. (3,015,582) (2,754,213) (2,968,431) (2,700,331)

10. (10,293,350) (10,969,932) (7,937,308) (7,562,925)

9,622,162 8,688,248 6,707,897 5,780,627

11 1,887,824 3,470,012 1,356,995 3,142,423 11 (6,169,742) (5,145,818) (2,622,410) (3,091,295)

(4,281,918) (1,675,806) (1,265,415) 51,128

5,340,244 7,012,442 5,442,482 5,831,755 12. (2,449,814) (1,218,387) (2,206,653) (1,037,177)

2,890,430 5,794,055 3,235,829 4,794,578

35,628 (2,303) - -

409 (7,583) - (5,497)

36,037 (9,886) - (5,497)

2,926,467 5,784,169 3,235,829 4,789,081

2,637,605 4,482,520 3,235,829 4,789,081

23. 288,862 1,301,649 - -

2,926,467 5,784,169 3,235,829 4,789,081

13. 1.99 4.13 2.48 4.41

CompanyGroup



31-Dec-16 31-Dec-15 31-Dec-16 31-Dec-15Notes N’000 N’000 N’000 N’000

Cash ows from operating activitiesProt for the year 2,890,430 5,784,169 3,235,829 4,789,081

Adjustment for:Foreign exchange translation loss on consolidation 19,890 2,303 - - Depreciation of property, plant and equipment 14. 2,865,583 2,361,516 1,226,872 1,119,705 Amortization of intangible asset 16. 90,563 201,329 83,427 191,490 Depreciation of investment property 15. 32,281 87,025 32,281 87,025 Prot on disposal of property, plant and equipment (13,144) (4,597) (16,347) (2,484) Prot on disposal of investment property - (523,841) - (523,841) Finance income 11. (1,887,824) (3,470,012) (1,356,995) (3,142,423) Interest expense 11. 6,169,742 5,145,818 2,622,410 3,091,295 Increase/(decrease) in impairment allowance for trade receivables 17,602 (28,536) - (23,393) Current service cost 24. 125,335 164,618 100,987 124,105 Interest costs on dened benet plan - 10,436 - 9,001 Dened benet plan actuarial loss - 7,583 - 5,497 Income tax expense 12. 2,449,814 1,158,392 2,206,653 977,182 capital gains tax expense 59,995 - 59,995 Impairment of investment - - 324,885 -

12,760,272

10,956,198

8,460,002

6,762,235

Changes in:Inventories 19. 5,404,576

2,142,079

5,155,012

2,278,882

Other assets 20. (355,057)

182,986

13,320

1,790

Trade and other receivables 21. (12,042,960)

18,732,071

(7,542,949)

21,593,193

Trade and other payables 27. 9,328,586

(16,601,830)

231,772

(19,797,670)

Non trade payables and other creditors 27. 1,004,058

(1,469,944)

(26,194)

(1,062,616)

Cash generated from operating activities 16,099,475

13,941,560

6,290,963

9,775,814

Employee benet paid (13,819)

(48,390)

(10,147)

(38,877) Income taxes paid 12. (1,753,476)

(1,117,068)

(1,557,849)

(925,845)

Net cash from operating activities 14,332,180 12,776,102 4,722,967 8,811,092

Cash ows from investing activitiesProceeds from sale of property, plant and equipment 14,8 67,919

32,614

58,785

28,314

Proceeds from sale of investment property -

600,000

-

600,000 Acquisition of property, plant and equipment 14. (9,759,940)

(10,558,149)

(1,058,165)

(957,935)

Acquisition of intangible assets 16. (24,205)

(11,563)

(16,193)

(7,476) Acquisition of investment property 15 -

(60,000)

-

(60,000)

Long term employee benet funded 24 (19,357)

(123,446)

(4,000)

(88,451) Return on employee benets planned assets reinvested 24 (53,132)

(36,256)

(46,670)

(33,389)

Interest received 11. 1,887,824

3,470,012

1,356,995

3,142,423 Net cash (used in)/generated from investing activities (7,900,891)

(6,686,788)

290,752

2,623,486

Cash ows from nancing activitiesDividend paid to non controlling interests (1,470,000)

-

-

-

Treasury stock -

(1,388,574)

-

(1,388,574) Dividend paid (4,521,671)

(2,730,478)

(4,521,671)

(2,730,478)

Short term loans and borrowings 25 7,638,035

1,468,880

8,663,351

(262,514) Long term loans and borrowings 25 12,147,553

1,697,853

7,900,090

(1,326,095)

Deferred fair value gain on loan 26. (398,032)

1,873,636

-

- Interest paid 11. (6,169,742)

(5,145,818)

(2,622,410)

(3,091,295)

Net cash( used in)/generated in nancing activities 7,226,143

(4,224,501)

9,419,360

(8,798,956)

Net increase/(decrease) in cash and cash equivalents 13,657,432

1,864,814

14,433,079

2,635,622

Cash and cash equivalents at 1 January 22. 1,432,469

(434,136)

(101,972)

(2,737,594)

Effect of exchange rate uctuations 25,711

1,790

-

-

Cash and cash equivalents at 31 December 22. 15,115,612

1,432,468

14,331,107

(101,972)

Group Company


CONSOLIDATED STATEMENT OF CASH FLOWSFOR THE YEAR ENDED 31 DECEMBER 2016


STATEMENT OF CHANGES IN EQUITYFOR THE YEAR ENDED 31 DECEMBER 2016

Att

rib

uta

ble

to

eq

uit

y h

old

ers

- t

he G

rou

p

Sh

are

cap

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are

pre

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earn

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To

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to

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the

co

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asu

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No

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g

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rest

To

tal eq

uit

yN

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N’0

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N’0

00

N’0

00

N’0

00

N’0

00

N’0

00

N’0

00

Bala

nce a

t 31 D

ecem

ber

2015

546,0

95

8,1

81,1

62

(257,9

85)

6,0

01,8

47

14,4

71,1

19

(1,3

88,5

74)

33,1

98,1

98

46,2

80,7

43

Ch

an

ges in

eq

uit

y f

or

2016:

Pro

t o

r lo

ss

for

the y

ear

-

-

-

2,6

01,5

68

2,6

01,5

68

-

288,8

62

2,8

90,4

30

Fore

ign e

xch

ange tra

nsl

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ain

-

-

35,6

28

-

35,6

28

-

-

35,6

28

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nt

att

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uta

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to

eq

uit

y h

old

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546,0

95

8,1

81,1

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(222,3

57)

8,6

03,4

15

17,1

08,3

15

(1,3

88,5

74)

33,4

87,0

60

49,2

06,8

01

Tra

nsacti

on

s w

ith

ow

ners

, re

co

rded

dir

ectl

y in

eq

uit

y

Div

idend

-

-

-

(4,5

21,6

71)

(4

,521,6

71)

-

(1,4

70,0

00)

(5,9

91,6

71)

Reve

rsal o

f div

idends*

138,4

47

138,4

47

138,4

47

With

hold

ing tax o

n d

ivid

end f

rom

a s

ubsi

dia

ry-

-

-

(20,0

00)

(20,0

00)

-

- (2

0,0

00)

Bonus

issue to e

quity

hold

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109,2

19

(

109,2

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-

-

-

-

-

-

Bala

nce a

t 31 D

ecem

ber

2016

655,3

14

8,0

71,9

43

(222,3

57)

4,2

00,1

91

12,7

05,0

91

(1,3

88,5

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32,0

17,0

60

43,3

33,5

77

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form

an in

tegra

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conso

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d

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.

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repre

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on s

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ith the A

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f N

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AM

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nanci

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tate

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.

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eq

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Bala

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2015

546,0

95

8,1

81,1

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(7

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5,6

91,1

96

14,4

10,7

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(1

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13,0

22,1

27

Ch

an

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eq

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y f

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2016:

Pro

t o

r lo

ss

for

the y

ear

-

-

-

3,2

35,8

29

3,2

35,8

29

-

3,2

35,8

29

Den

ed b

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-

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-

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Am

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546,0

95

8,1

81,1

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(7

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8,9

27,0

25

17,6

46,5

30

(1

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16,2

57,9

56

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nsacti

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s w

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, re

co

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dir

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eq

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Div

idend to e

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-

-

-

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(4,5

21,6

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-

(4,5

21,6

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f div

idends*

-

-

-

138,4

47

138,4

47

-

1

38,4

47

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issue to e

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hold

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109,2

19

(

109,2

19)

-

-

-

-

-

Bala

nce a

t 31 D

ecem

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2016

6

55,3

14

8,0

71,9

43

(7

,752)

4

,543,8

01

13,2

63,3

06

(

1,3

88,5

74)

11

,874,7

32

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repre

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on s

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s under

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2014

546,0

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8,1

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(248,0

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3,9

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31,8

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-

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4,4

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546,0

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546,0

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Notes to the Consolidated

Financial Statements F o r t h e y e a r e n d e d 3 1 D e c e m b e r 2 0 1 6



Notes to the Consolidated Financial Statements For the year ended 31 December 2016

1. The Group

1.1 Reporting entity

1.2 Principal activities

2. Basis of preparation

2.1 Statement of compliance

2.2 Functional/presentation currency

2.3 New standards and interpretations not yet adoptedStandards and interpretations issued but not yet effective.

IFRS 9, 'Financial instruments'

a)

b)

c)

IFRS 9 introduces a new approach to the classication of nancial assets, which is driven by the businessmodel in which the asset is held and their cash ow characteristics. A new business model was introducedwhich does allow certain nancial assets to be categorsed as "fair value through other comprehensiveincome" in certain circumstances. The requirementss for nancial liabilities are mostly carried forwardunchanged from IAS 39. However, some changes were made to the fair value option for nancial liabilities toaddress the issue of own credit risk.

The new model introduces a single impairment model being applied to all nancial instruments, as well as an"expected credit loss" model for the measurement of nancial assets.

IFRS 9 contains a new model for hedge accounting that aligns the accounting treament with the riskmanagement activities of an entity, in addition enchanced disclosures will provide better information aboutrisk management and the effect of hedge accounting on the nancial statements.

Forte Oil Plc (the Company) was incorporated on 11 December 1964 as British Petroleum. It became AfricanPetroleum through the nationalisation policy of the Federal Government of Nigeria in 1979. The Companychanged its name to Forte Oil Plc in December 2010 upon restructuring and rebranding. The majorshareholders are Zenon Petroleum and Gas Company Limited and Thames Investment Incorporated. TheCompany and its subsidiaries, Forte Upstream Services Limited, AP Oil and Gas Ghana Limited andAmperion Power Distribution Limited and its subsidiary, Geregu Power Plc are collectively the Group.

The Company and its subsidiaries are primarily engaged in the marketing of petroleum products which isdivided into fuels, production chemicals, lubricants, greases and power generation.

These consolidated nancial statements have been prepared in accordance with International FinancialReporting Standards (IFRSs) as issued by the International Accounting Standards Board (IASB) and incompliance with the Financial Reporting Council of Nigeria Act, No 6, 2011. These are the Group's nancialstatement for the year ended 31 December 2016, prepared in accordance with IFRS 3- BusinessCombination has been applied.

These consolidated nancial statements are presented in Naira, which is the Group's functional currency(except for AP Oil Ghana Ltd which operates in the Ghanian Cedis). Except as indicated in theseconsolidated nancial statements, nancial information presented in Naira has been rounded to the nearestthousand.

At the date of authorisation of these consolidated nancial statements, the following IFRSs and amendmentsto IFRS that are relevant to the group and the company were issued but not effective.

A nalized version of IFRS 9 has been issued which replaces IAS 39 Financial Instruments: Recognition andMeasurement. The completed standard comprises guidance on Classication and Measurement,Impairment, Hedge Accounting and Derecognition:

2.3.1

IFRS 9 carries forward the derecognition requirements of nancial assets and liabilities from IAS 39.The group is yet to assess IFRS 9's full impact and intends to adopt IFRS 9 not later than the accountingperiod beginning on or after I January 2018.



2.3.2 IFRS 15, 'Revenue from contracts with customers'

Step 1: Identify the contract(s) with a customer.Step 2: Identify the performance obligations in the contract.Step 3: Determine the transaction price.Step 4: Allocate the transaction price to the performance obligations in the contract.Step 5: Recognise revenue when (or as) the entity satises a performance obligation.

IFRS 15 was issued which establishes a single comprehensive model for entities to use in accounting forrevenue arising from contracts with customers. IFRS 15 supersedes the current revenue recognitionguidance including IAS 18 Revenue, IAS 11 Construction Contracts and the related Interpretations when itbecomes effective.

The core principle of IFRS 15 is that an entity should recognise revenue to depict the transfer of promisedgoods or services to customers in an amount that reects the consideration to which the entity expects to beentitled in exchange for those goods or services. Specically, the Standards introduce a 5-step approach torevenue recognition:

Under IFRS 15, an entity recognises revenue when (or as) a performance obligation is satised, i.e. when“control” of the goods or services underlying the particular performance obligation is transferred to thecustomer. Far more prescriptive guidance has been added in IFRS 15 to deal with specic scenarios.Furthermore, the new standard will also result in enhanced disclosures about revenue, provide guidance fortransactions that were not previously addressed comprehensively and improve guidance for multiple-elementarrangements. IFRS 15 is effective for annual reporting periods beginning on or after 1 January 2018. Thegroup is yet to assess IFRS 15's full impact and intends to adopt IFRS 15 not later than the accounting periodbegining on or after 1 January 2018.

Impact on Initial ApplicationThe rst time application of IFRS 9 will have a wide and potentially very signicant impact on the accounting for nancial instruments. The new impairment requirements are likely to bring signicant changes for impairment provisions for trade receivables. Due to recent release of this standard, the Group has not yet made a detailed assessment of the impact of this standard.

Impact on Initial ApplicationThe amended to the standard might have impact on the Group nancial statements when it becomes effective in 2018

2.3.3 1FRS 16, 'Leases'

IFRS 16 is effective for annual reporting periods beginning on or after January 1, 2019. However, an entitycannot adopt this standard earlier than it adopts IFRS 15, Revenue from Contracts with Customers. Thisstandard was issued on 13 January, 2016. The group is yet to assess IFRS 16's full impact and intends toadopt IFRS 16 not later than the accounting period beginning on or after 1 January 2019.

IFRS 16 species how an IFRS reporter will recognise, measure, present and disclose leases. The standardprovides a single lessee accounting model, requiring lessees to recognise assets and liabilities for all leasesunless the lease term is 12 months or less or the underlying asset has a low value. Lessors continue toclassify leases as operating or nance, with IFRS 16’s approach to lessor accounting substantiallyunchanged from its predecessor, IAS 17.

IFRS 16 was issued which introduces a number of signicant changes to the lease accounting model underIFRSs, including a requirement for leases to recognize nearly all leases on their balance sheets. IFRS 16 willsupersede the current leases guidance including IAS 17 Leases, IFRIC 4 Determing whether anArrangement contains a lease, SIC 15- Operating leases incentives, SIC 27-Evaluating the substance ofTransactions involving the legal form of lease.

Impact on Initial ApplicationThe Group is still reviewing the impact the standard may have on the preparation and presentation of the nancial statements when the standard is adopted in 2019.




2.3.5 Clarications to IFRS 15 'Revenue from contracts with customers' Amends IFRS 15 in three areas:a.

b.

c.

The amendments also provide some transition relief for modied contracts and completed contracts.Effective date: The Amendments are effective for annual periods beginning on or after 1 January 2018.

2.3.6 Recognition of deferred tax assets for unrealised losses (Amendments to IAS 12)The Amendments are:a.

b. The carrying amount of an asset does not limit the estimation of probable future taxable prots.c.

d.

Effective date: The Amendments are effective for annual periods beginning on or after 1 January 2017.

Unrealised losses on debt instruments measured at fair value and measured at cost for tax purposes giverise to a deductible temporary difference regardless of whether the debt instrument's holder expects torecover the carrying amount of the debt instrument by sale or by use.

Estimates for future taxable prots exclude tax deductions resulting from the reversal of deductibletemporary differences.An entity assesses a deferred tax asset in combination with other deferred tax assets. Where tax lawrestricts the utilisation of tax losses, an entity would assess a deferred tax asset in combination with otherdeferred tax assets of the same type.

Identication of performance obligations – changes clarify the application of the concept of 'distinct‘ in thiscontext.Whether an entity is acting as principal or agent – changes clarify the application of the principal of‘control’ in making this determination.Licensing – changes assist in determining whether an entity’s activities ‘signicantly affect’ intellectualproperty during the period for which it has been licensed to a customer.

2.3.4 Disclosure initiative (Amendments to IAS 7)The Amendments:•

•


require an entity to provide disclosures that enable users to evaluate changes in liabilities arising fromnancing activities. An entity applies its judgement when determining the exact form and content of thedisclosures needed to satisfy this requirementsuggest a number of specic disclosures that may be necessary in order to satisfy the above requirement,including:- changes in liabilities arising from nancing activities caused by changes in nancing cash ows, foreignexchange rates or fair values, or obtaining or losing control of subsidiaries or other businesses- a reconciliation of the opening and closing balances of liabilities arising from nancing activities in thestatement of nancial position, including those changes identied immediately above.




2.3.7 Amendment to IAS 40 Investment Property The amendment claried that to transfer to, or from, investment properties there must be a change in use. To conclude if a property has changed use there should be an assessment of whether the property meets the denition. This change must be supported by evidence. The Board conrmed that a change in intention, in isolation, is not enough to support a transfer.



The issue arose from confusion over whether an entity transfer's property under development from inventory to investment property when there is evidence of a change in use that was not explicitly included in the standard. The list of evidence was therefore re-characterised as a non-exhaustive list of examples to help illustrate the principle. The examples were expanded to include assets under construction and development and not only transfers of completed properties.

The Board provided two options for transition.

1. Prospective application. Any impact from properties that are reclassied would be treated as an adjustment to opening retained earnings as at the date of initial application. There are also special disclosure requirement if this option is selected.

2. Retrospective application. This option can only be selected without the use of hindsight.


Impact on Initial ApplicationThe amended to the standard might not have any impact on the Group nancial statements when it becomes effective in 2018.

2.3.8 Amendment to IFRS 2 Share Based Payment.

IFRS 2 Share-based Payment, clarifying how to account for certain types of share-based payment transactions.

The amendments, which were developed through the IFRS Interpretations Committee, provide requirements on the accounting for:a. the effects of vesting and non-vesting conditions on the measurement of cash-settled share-based

payments;b. share-based payment transactions with a net settlement feature for withholding tax obligations; and c. a modication to the terms and conditions of a share-based payment that changes the classication of the

transaction from cash-settled to equity-settled.


Impact on Initial ApplicationThe amended to the standard might not have any impact on the Group nancial statements when it becomes effective in 2018.

2.4 Basis of measurement

2.5 Use of estimates and judgements

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accountingestimates are recognised in the period in which the estimates are revised, if the revision affects only thatperiod, or in the period of the revision and future periods, if the revision affects both current and futureperiods.

These consolidated nancial statements are prepared on the historical cost basis except as modied byactuarial valuation of staff gratuity and fair valuation of nancial assets and liabilities where applicable. Thereare other assets and liabilities measured at amortised cost.

The preparation of the consolidated nancial statements in conformity with IFRSs requires management tomake judgements, estimates and assumptions that affect the application of accounting policies and thereported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.



N'0002016

18,936

110,438 28,176

Motor vehicles decrease by:

Computer software decrease by:Information technology equipment increased by:

The nancial effect of this reassessment, assuming the assets held until the end of their estimated usefullives, are to decrease / increase the amortisation/depreciation expense in the current nancial periodrespectively by the following:-


a) Recovery of deferred tax assets

In particular, the Group has identied the following areas where signicant judgements, estimates andassumptions are required. Changes in these assumptions may materially affect the nancial position ornancial results reported in future periods. Further information on each of these areas and how they impactthe various accounting policies are described below and also in the relevant notes to the consolidatednancial statements.

Judgement is required to determine which types of arrangements are considered to be tax on income incontrast to an operating cost. Jugement is also required in determining whether deferred tax assets arerecognised in the consolidated statement of nancial position. Deferred tax assets, including those arisingfrom un-utilised tax losses require management assessment of the likelihood that the Group will generatesufcient taxable earnings in future periods in order to utilise recognised deferred tax assets. Assumptionsabout the generation of future taxable prots depend on management's estimates of future cash ows.These estimates of future taxable income are based on forecast cash ows from operations (which areimpacted by sales volume and production, global oil prices, operating costs and capital expenditure) andjudgement about the application of existing tax laws.

Future changes in tax laws could also limit the ability of the Group to obtain tax deductions in future periods.

b) Decommissioning costs

c) Contingencies

d) Estimated useful lives and residual values of intangible assets and property, plant and equipment

To the extent that future cash ows and taxable income differ signicantly from estimates, the ability of theGroup to realise the net deferred tax assets recorded at the reportting date could be impacted.

The Group may incur decommissioning cost at the end of the operating life of some of the Group's facilitiesand properties. The Group assesses its decommissioning provision at each reporting date. The ultimatedecommissioning costs are uncertain and cost estimates can vary for various factors including changes torelevant legal requirements, emergence of new restoration techniques or experience on similardecommissioning exercise. The expected timing, extent and amount of expenditure can also change, forexample in response to changes in laws and regulations or their interpretations. Therefore, signicantestimates and assumptions are made in determining the provision for decommissioning. As a result, therecould be signicant adjustments to the provisions established which could affect future nancial results.

By their nature, contingencies will only be resolved when one or more uncertain future events occur or fail tooccur. The assessment of the existence, and potential quantum, of contingencies inherently involves theexercise of signicant judgement and the use of estimates regarding the outcome of future events.

As described at 4.4.4 below, the Group reviews the estimated useful lives of property, plant and equipment;intangible assets at the end of each reporting period. During the current period, the management determinedthat the useful lives of certain items of motor vehicles, computer software and information technologyequipment should be extended and shortened as appropriate. The useful life of motor vehicles and computersoftwares were reviewed upward because the management did not foresee discontinuing their use in theearlier time frame while the useful lives of the information technology equipments was reviewed downwarddue to obsolescence trend of this class of assets.



e) Impairment review

a) growth in EBITDA, calculated as adjusted operating prot before depreciation and amortisation;b) timing and quantum of future capital expenditure;c) long-term growth rates; and

IFRS requires management to undertake an impairment test of indenite lived assets and, for nite livedassets, to test for impairment if events or changes in circumstances indicate that the carrying amount of anasset may not be recoverable.

Impairment testing is an area which involves management judgement, requiring assessment as to whetherthe carrying value of assets can be supported by the net present value of future cash ows derived from suchassets using cash ow projections which have been discounted at an appropriate rate. In calculating the netpresent value of the future cash ows, certain assumptions are required to be made in respect of highlyuncertain matters including management's expectations of:

d) the selection of discount rates to reect the risks involved.

Changing the assumptions selected by management, in particular the discount rate and growth rateassumptions used in the cash ow projections, could signicantly affect the Group's impairment evaluationand hence results. The Group's review includes the key assumptions related to sensitivity in the cash owprojections.

The Group prepares and approves a formal ve year management plan for its operations, which is used inthe calculation of its value in use, a long-term growth rate into perpetuity has been determined as thecompound annual growth rate in EBITDA in years four to ve of the management plan.

During the period, additional impairment loss to the tune of N324,885,000 was recognised in the statement ofprot or loss for its investment in AP Oil and Gas Ghana Limited. The carrying amount of this investment inthe separate nancial statements was greater than the recoverable value to the tune of the impairmentcharge.

f)

g) Control over subsidiariesThe Group's management has asessed whether or not the Group has control over the subsidiaries based onwhether the Group has the practical ability to direct the relevant activities of each subsidiary laterally. Inmaking their judgement, the directors considered the Group’s absolute size of holding in the subsidiaries andthe relative size of and dispersion of the shareholdings owned by the other shareholders. After assessment,the Directors concluded that the Group has a sufciently dominant voting interest to direct the relevantactivities of the subsidiaries and therefore the Group has control over them.

Provisions for employee benetsThe actuarial techniques used to assess the value of the dened benet plans involve nancial assumptions(discount rate, rate of return on assets, medical costs trend rate) and demographic assumptions (salaryincrease rate, employee turnover rate, etc.). The Group uses the assistance of an external independentactuary in the assessment of these assumptions. For more details refer to note 24.




3. Basis of consolidation3.1

i has power over the investee entity, ii is exposed, or has rights, to variable returns from the investee entity as a result of its involvement, iii can exercise some power over the investee to affect its returns.

3.2

3.3

The Group's nancial statements incorporate the nancial statements of the parent and entities controlled bythe parent and its subsidiaries made up to 31 December 2016. Control is achieved where the investor:

The nancial statements of subsidiaries are included in the consolidated nancial statements from the datethat control commences until the date that control ceases. The accounting policies of subsidiaries have beenchanged when necessary to align them with the policies adopted by the Group.Prot or loss and each component of other comprehensive income of subsidiaries are attributed to theowners’ of the Company and to the non-controlling interests even if this results in the non-controlling interesthaving a decit balance.In the Company’s separate nancial statements, investments in subsidiaries are carried at cost less anyimpairment that has been recognised in prot or loss.

Group structure

Forte Upsteam Services (FUS) Limited and AP Oil and Ghana Limited (APOG) are wholly owned by Forte OilPlc while Forte Oil Plc owns 57% in Amperion Power Distribution Limited. Amperion Power DistributionLimited owns 51% of Geregu Power Plc.

Transactions eliminated on consolidation

All intra-group balances and any gain and losses arising from intra-group transactions are eliminated inpreparing the consolidated nancial statements. Unrealized losses are eliminated in the same way asunrealized gains, but only to the extent that there is no evidence of impairment.

3.4

4. Signicant accounting policies

4.1.1 Foreign currency transactions

Exchange differences are recognised in prot or loss in the period in which they arise except for:-

- exchange differences on transactions entered into to hedge foreign currency risks; and-

Foreign currency gains and losses on nancial assets and nancial liabilities are reported on a net basis.

The accounting policies set out below have been applied consistently to all periods presented in theseconsolidated nancial statements, unless otherwise indicated.

Transactions in foreign currencies are translated to the respective functional currencies of the entities withinthe group.Monetary items denominated in foreign currencies are re-translated at the exchange rates applying at thereporting date. Non-monetary items carried at fair value that are denominated in foreign currencies areretranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items thatare measured in terms of historical cost in a foreign currency are not re-translated.

exchange differences on foreign currency borrowings which are regarded as adjustments to interest costs, where those interest costs qualify for capitalisation to assets under construction;

exchange differences on loans to or from a foreign operation for which settlement is neither planned norlikely to occur and therefore forms part of the net investment in the foreign operation, which arerecognised initially in other comprehensive income and reclassied from equity to prot or loss on disposalor partial disposal of the net investment.

Non-controlling interest

Non-controlling interest is the equity in a subsidiary or entity controlled by the Company, not attributable,directly or indirectly, to the parent company and is presented separately in the consolidated statement ofprot or loss and other comprehensive income and within equity in the consolidated statement of nancialposition. Total comprehensive income attributable to non- controlling interests is presented on the line “Non-controlling interests” in the statement of nancial position, even where it becomes negative.



4.1.2 Foreign operations

4.2 Financial instruments

The functional currency of the parent company and the presentation currency of the consolidated nancialstatements is Naira. The assets and liabilities of the Group's foreign operations are translated to Naira usingexchange rates at period end. Income and expense items are translated at the average exchange rates forthe period, unless exchange rates uctuated signicantly during that period, in which case the exchange rateon transaction date is used. Goodwill acquired in business combinations of a foreign operation are treated asassets and liabilities of that operation and translated at the closing rate.

Exchange differences are recognised in other comprehensive income and accumulated in a separatecategory of equity.

On the disposal of a foreign operation, the accumulated exchange differences of that operation, which isattributable to the Group are recognised in prot or loss.

The Group classies nancial instruments, or their component parts, on initial recognition as a nancialasset, a nancial liability or an equity instrument in accordance with the substance of the contractualarrangement. Financial instruments are recognised when the Group becomes a party to the contractualprovisions of the instrument.Financial instruments are recognised initially at fair value plus transactions costs that are directly attributableto the acquisition or issue of the nancial instrument, except for nancial assets at fair value through prot orloss, which are initially measured at fair value, excluding transaction costs.

Financial instruments are derecognised on trade date when the Group is no longer a party to the contractualprovisions of the instrument.

4.2.1 Available-for-sale nancial assets

4.2.2 Trade and other receivables

4.2.3 Cash and cash equivalents

When an investment is disposed, any cumulative gains and losses previously recognised in equity arerecognised in prot or loss. Dividends are recognised in prot or loss when the right to receive payments isestablished.

Trade receivables are stated at their original invoiced value, as the interest that would be recognised fromdiscounting future cash receipts over the short credit period is not considered to be material. Tradereceivables are reduced by appropriate allowances for estimated irrecoverable amounts. Interest on overduetrade receivables is recognised as it accrues.

Cash equivalents comprise short-term, highly liquid investments that are readily convertible into knownamounts of cash and which are subject to an insignicant risk of changes in value. An investment with amaturity of three months or less is normally classied as being short-term.

Available-for-sale nancial assets comprise equity investments. Subsequent to initial recognition, available-for-sale nancial assets are stated at fair value. Movements in fair values are taken directly to equity, with theexception of impairment losses which are recognised in prot or loss. Fair values are based on prices quotedin an active market if such a market is available. If an active market is not available, the Group establishesthe fair value of nancial instruments by using a valuation technique, usually discounted cash ow analysis.

4.2.4

4.2.5 Trade and other payables

Non-derivative nancial liabilitiesBank overdrafts that are repayable on demand and form an integral part of the Group's cash managementare included as a component of cash and cash equivalents for the purpose of the statement of cash ows.

Trade payables are stated at their original invoiced value, as the interest that would be recognised fromdiscounting future cash payments over the short payment period is not considered to be material.




4.2.6 Loans and borrowings

4.2.6a Interest-bearing borrowings

4.2.6b

4.2.7 Compound instruments

Interest-bearing borrowings are stated at amortised cost using the effective interest method. The effectiveinterest method is a method of calculating the amortised cost of a nancial liability and of allocating interestexpense over the relevant period. The effective interest rate is the rate that exactly discounts estimatedfuture cash payments through the expected life of the nancial liability.

Debt instruments

Financial instruments issued by the Group are qualied as debt instruments if there is a contractual obligationto deliver cash or another nancial asset to the holder of the instrument. The same applies if the Group isrequired to exchange nancial assets or nancial liabilities with another entity under conditions that arepotentially unfavourable to the Group.

Issues of bonds are recorded at their initial fair value which normally reects the proceeds received, net ofdirect issue costs less any repayments. Subsequently these are stated at amortised cost, using the effectiveinterest method. Any difference between the proceeds after direct issue costs and the redemption value isrecognised over the term of the borrowing in the income statement using the effective interest method.

At the issue date, the fair value of the liability component of a compound instrument is estimated using themarket interest rate for a similar non-convertible instrument. This amount is recorded as a liability atamortised cost using the effective interest method until extinguished upon conversion or at the instrument’sredemption date.

4.2.8 Impairment of nancial assets

4.2.9 Investments in subsidiaries

A nancial asset not carried at fair value through prot or loss is assessed at reporting date to determinewhether there is objective evidence that is impaired. A nancial asset is impaired if objective evidenceindicates that a loss event has occured after initial recognition of the asset, and that the loss event had anegative effect on the future cash ows of that asset that can be estimated reliably. See note 4.11(Impairment) and note 6 (Financial risk management).

Investments in subsidiaries are carried at cost less accumulated impairment losses in the Company'sbalance sheet. On disposal of investments in subsidiaries, the difference between disposal proceeds and thecarrying amounts of the investments are recognised in prot or loss.

The equity component is determined as the difference of the amount of the liability component from the fairvalue of the instrument. This is recognised in equity, net of income tax effects, and is not subsequentlyremeasured.

4.3.1 Share capital

4.3.2 Dividend distribution

Ordinary shares are classied as equity. Incremental costs directly attributable to the issue of ordinary sharesand share options are recognised as a deduction from equity, net of any tax effects and costs directlyattributable to the issue of the instrument.

Dividend distribution to the company’s shareholders is recognised as a liability in the group’s nancialstatements in the period in which the dividends are approved by the company’s shareholders.

Dividends which remained unclaimed for a period exceeding twelve (12) years from the date of declarationand which are no longer actionable by shareholders in accordance with Section 385 of Companies and AlliedMatters Act of Nigeria, are written back to retained earnings.



4.4 Property, plant and equipment

4.4.1 Recognition and measurement

4.4.2 Reclassication of investment property

Items of property, plant and equipment are measured at cost less accumulated depreciation andaccumulated impairment losses, if any.

Cost includes expenditure that is directly attributable to the acquisition of the asset. Items of property, plantand equipment under construction are disclosed as capital work-in-progress. The cost of constructionrecognised includes the cost of materials and direct labour, any other costs directly attributable to bringingthe assets to a working condition for the intended use, the costs of dismantling and removing the items andrestoring the site on which they are located, and borrowing costs on qualifying assets.

When parts of an item of property, plant and equipment have different useful lives, they are accounted for asseparate items (major components) of property, plant and equipment.

Gains and losses on disposal of an item of property, plant and equipment are determined by comparing theproceeds from disposal with the carrying amount of property, plant and equipment, and are recognised netwithin other income in prot or loss.

When the use of a property changes from owner-occupied to investment property, the property is transferredto investment properties at its carrying amount.

4.4.3 Subsequent costs

4.4.4 Depreciation

The estimated useful lives for the current and comparative period are as follows: Land Over lease periodBuildings 25 yearsBuilding improvements 5 yearsPlants, equipment and tanks 5-20 yearsFurniture and tttings 4 yearsComputer equipment 3 yearsMotor vehicles 5-8yearsGas turbines 160,000 Equivalent Operating Hours (EOH) per plant

Depreciation methods, useful lives and residual values are reviewed at each nancial period end andadjusted, if appropriate. Capital work-in-progress is not depreciated. The attributable cost of each asset istransferred to the relevant asset category immediately the asset is available for use and depreciatedaccordingly.

The cost of replacing part of an item of property or equipment is recognised in the carrying amount of theitem if it is probable that future economic benets embodied within the part will ow to the Group and its costcan be measured reliably. The costs of the day-to-day servicing of property and equipment are recognised inprot or loss as incurred.

Depreciation is calculated over the depreciable amount, which is the cost of an asset, or other amountsubstituted for cost, less its residual value.

Depreciation is recognized in prot or loss on a straight-line basis (except for gas turbines; for which Unit ofProduction Method i.e Equivalent Operating Hours (EOH) is used) over the estimated useful lives of eachpart of an item of property, plant and equipment which reects the expected pattern of consumption of thefuture economic benets embodied in the asset. Leased assets are depreciated over the shorter of the leaseterm and their useful lives unless it is reasonably certain that the Group will obtain ownership by the end ofthe lease term in which case the assets are depreciated over the useful life.




With effect from January 1 2016, the Group reassessed the useful life of the following:

Computer from 4years to 3 yearsMotor Vehicles from 4years to 5 years

4.4.5 De-recognition of tangible assets

Non-current asset held for sale

An item of property and equipment is derecognised on disposal or when no future economic benets areexpected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as thedifference between the net disposal proceeds and the carrying amount of the asset) is included in prot orloss in the period the asset is derecognised.

Non-current assets or a disposal group comprising assets and liabilities, that are expected to be recoveredprimarily through sale rather than through continuing use, are classied as held for sale. Immediately beforeclassication as held for sale, the assets, or components of a disposal group are remeasured in accordancewith the Group's accounting policies. Thereafter generally the assets, or disposal group are measured at thelower of their carrying amount and fair value less cost to sell. Impairment losses on initial classication asheld for sale and subsequent gains or losses on remeasurement are recognised in prot and loss. Gains arenot recognised in excess of any cumulative impairment loss.

4.5 Investment property

The estimated useful lives for the current and comparative period are as follows: Land Over lease periodBuildings 25 years

-

-

- The property is held primarily for rental income generation and/or value appreciation.

4.6 Intangible assets

4.6.1 Intangible assets acquired separately

Investment properties are measured at cost less accumulated depreciation and accumulated impairmentlosses, if any. Cost includes expenditure that is directly attributable to the acquisition of the property.Investment properties under construction are disclosed as capital work-in-progress. The cost ofconstruction recognised includes the cost of materials and direct labour, any other costs directly attributableto bringing the property to a condition of commercial lease to third parties.Land held for an undened futureuse is recognised as investment property.

Property that is being constructed or developed for future use as investment property is recognised asinvestment property.

Depreciation is calculated over the depreciable amount, which is the cost of a property, or other amountsubstituted for cost, less its residual value. Depreciation is recognised on a straight - line basis over theuseful life of the investment property.

The criteria used by the Group to distinguish investment property from owner occupied property are asfollows:

The property must not be actively used for the running of the core business activity of the group that is,production and marketing of petroleum products.The property generates cashows which have no direct connection with core business activity of thegroup.

Intangible assets acquired separately are shown at historical cost less accumulated amortisation andimpairment losses.Amortisation is charged to prot or loss on a straight-line basis over the estimated useful lives of theintangible assets unless such lives are indenite. These charges are included in other expenses in prot or



Software costs - 3 to 8 yearsAmortisation periods and methods are reviewed annually and adjusted if appropriate.

4.6.2 Intangible assets generated internally

- it is technically feasible to complete the asset for use by the Group- the Group has the intention of completing the asset for either use or resale- the Group has the ability to either use or sell the asset- it is possible to estimate how the asset will generate income- the Group has adequate nancial, technical and other resources to develop and use the asset; and- the expenditure incurred to develop the asset is measurable.

Expenditures on research or on the research phase of an internal project are recognised as an expensewhen incurred. The intangible assets arising from the development phase of an internal project arerecognised if, and only if, the following conditions apply:

If no intangible asset can be recognised based on the above, then development costs are recognised in protand loss in the period in which they are incurred.

Intangible assets with an indenite useful life are tested for impairment annualy. Other intangible assets areamortised from the date they are available for use. The estimated useful live for the current and comparativeperiod is:

4.6.3 Intangible assets recognised in a business combination

4.6.4 Subsequent expenditure

4.6.5 Amortisation

Computer software: 3 to 8 years

4.7 Leases

4.7.1 Finance leases

Contingent rentals are recognised as expense in the period in which they are incurred.

Intangible assets acquired in a business combination and recognised separately from goodwill are initiallyrecognised at their fair value at the acquisition date.

Subsequent expenditure on software assets is capitalised only when it increases the future economicbenets embodied in the specic asset to which it relates. All other expenditure is expensed as incurred.

Amortisation is calculated over the cost of the asset, or other amount substituted for cost, less its residualvalue.

Amortisation is recognised in prot or loss on a straight - line basis over the estimated useful lives ofintangible assets from the date that they are available for use, since this must closely reect the expectedpattern of consumption of the future economic benets embodied in the asset. The estimated useful life forthe current and comparative period is:

Amortisation methods, useful lives and residual values are reviewed at each nancial period end andadjusted if appropriate.

Leases are classied as nance leases whenever the terms of the lease transfer substantially all the risksand rewards of ownership to the Group. All other leases are classied as operating leases.

Assets held under nance leases are recognised as assets of the Group at the fair value at the inception ofthe lease or if lower, at the present value of the minimum lease payments. The related liability to the lessor isincluded in the statement of nancial position as a nance lease obligation.

Lease payments are apportioned between interest expenses and capital redemption of the liability. Interest isrecognised immediately in prot or loss, unless attributable to qualifying assets, in which case they arecapitalised to the cost of those assets.




4.7.2 Operating leases

4.8 Borrowing costs

4.9 Taxation

Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifyingasset are capitalised as part of the cost of that asset. Other borrowing costs are expensed in the period inwhich they are incurred.

Income tax for the period is based on the taxable income for the period. Taxable income differs from prot asreported in the statement of comprehensive income for the period as there are some items which may neverbe taxable or deductible for tax and other items which may be deductible or taxable in other periods.

Operating lease payments are recognised as an expense on a straight-line basis over the lease term, exceptif another systematic basis is more representative of the time pattern in which economic benets will ow tothe Group.

Contingent rentals arising under operating leases are recognised in the period in which they are incurred.Lease incentives and similar arrangements of incentives are taken into account when calculating the straight-lined expense.

4.10 Inventories

Perpetual inventory system where cost of sales and ending inventory is updated continuously is in use.

Allowance is made for obsolete, slow moving or defective items where appropriate.

Deferred tax is the future tax consequences of temporary differences between the carrying amounts and taxbases of assets and liabilities shown on the statement of nancial position. Deferred tax assets and liabilitiesare not recognised if they arise in the following situations: the initial recognition of goodwill; or the initialrecognition of assets and liabilities that affect neither accounting nor taxable prot. The amount of deferredtax provided is based on the expected manner of recovery or settlement of the carrying amount of assets andliabilities, using tax rates enacted or substantially enacted at the statement of nancial position date.

The Group does not recognise deferred tax liabilities, or deferred tax assets, on temporary differencesassociated with investments in subsidiaries, joint ventures and associates where the parent company is ableto control the timing of the reversal of the temporary differences and it is not considered probable that thetemporary differences will reverse in the foreseeable future. It is the Group's policy to reinvest undistributedprots arising in group companies.

A deferred tax asset is recognised only to the extent that it is probable that future taxable prots will beavailable against which the asset can be utilised.

The carrying amount of deferred tax assets are reviewed at each statement of nancial position date andreduced to the extent that it is no longer probable that sufcient taxable prot will be available to allow all orpart of the asset to be recovered.

Inventories are measured at the lower of cost and net realisable value. The cost of deregulated inventories -AGO, ATK, LPFO is based on the weighted average cost principle, and includes expenditure incurred inacquiring the inventories, production or conversion costs and other costs incurred in bringing them to theirexisting location and condition. The cost of regulated inventories - PMS and DPK is based on the standardcost principle. In the case of manufactured inventories and work in progress, cost includes an appropriateshare of production overheads based on normal operating capacity.

Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costsof completion and selling expenses.

The production costs comprise direct materials, direct labour and an appropriate proportion of manufacturingxed and variable overheads.

Spare parts and consumablesSpare parts which are expected to be fully utilized in production within the next operating cycle and other consumables are valued at weighted average cost.



4.11 Impairment

4.11.1 Financial assets (including loans and receivables)

A nancial asset not carried at fair value through prot or loss is assessed at each reporting date todetermine whether there is objective evidence that it is impaired. A nancial asset is impaired if objectiveevidence indicates that a loss event has occurred after the initial recognition of the asset, and that the lossevent had a negative effect on the estimated future cash ows of that asset that can be reliably estimated.

Objective evidence that nancial assets (including equity securities) are impaired can include default ordelinquency by a debtor, restructuring of an amount due to the Group on terms that the Group would notconsider otherwise, indications that a debtor or issuer will enter bankruptcy, or the disappearance of an active market for a security. In addition, for an investment in an equity security, a signicant or prolonged decline inits fair value below its cost is objective evidence of impairment.

In assessing collective impairment, the Group uses historical trends of the probability of default, timing ofrecoveries and the amount of loss incurred, adjusted for management’s judgement as to whether currenteconomic and credit conditions are such that the actual losses are likely to be greater or less than suggestedby historical trends.

4.11.2 Non-nancial assets

An impairment loss is recognised if the carrying amount of an asset exceeds its recoverable amount.

4.12 Employee benetsThe Group operates both dened contribution plans and dened benet plans.

4.12.1 Dened benet plan

An impairment loss in respect of a nancial asset measured at amortised cost is calculated as the differencebetween its carrying amount and the present value of the estimated future cash ows discounted at theasset’s original effective interest rate. Losses are recognized in prot or loss and reected in an allowanceaccount against receivables. Interest on the impaired asset where applicable continues to be recognizedthrough the unwinding of the discount. When a subsequent event causes the amount of impairment loss todecrease, the decrease in impairment loss is reversed through prot or loss.

The carrying amounts of the Group’s non-nancial assets, other than inventories and deferred tax assets arereviewed at each reporting date to determine whether there is any indication of impairment. If any suchindication exists, then the asset’s recoverable amount is estimated. For intangible assets that have indeniteuseful lives or that are not yet available for use, the recoverable amount is estimated each period at the sametime.The recoverable amount of an asset is the greater of its value in use and its fair value less costs to sell. Inassessing value in use, the estimated future cash ows are discounted to their present value using a pre-taxdiscount rate that reects current market assessments of the time value of money and the risks specic tothe asset.

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment lossesrecognized in prior periods are assessed at each reporting date for any indications that the loss hasdecreased or no longer exists. An impairment loss is reversed if there has been a change in the estimatesused to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’scarrying amount does not exceed the carrying amount that would have been determined, net of depreciationor amortization, if no impairment loss had been recognised.

A dened benet plan is a post-employment benet plan other than a dened contribution plan. The Group’snet obligation in respect of dened benet post-retirement plans is calculated separately for each plan byestimating the amount of future benet that employees have earned in return for their service in the currentand prior years; that benet is discounted to determine its present value and any unrecognised past servicecosts and the fair value of any plan assets are deducted. The discount rate is the yield at the reporting dateon government bonds that have maturity dates approximating the terms of the Group’s obligations and thatare denominated in the same currency in which the benets are expected to be paid.




4.12.2 Dened contribution plan

The calculation is performed annually by a qualied actuary using the projected unit credit method. When thecalculation results in a benet to the Group, the recognised asset is limited to the total of any unrecognisedpast service costs and the present value of economic benets available in the form of any future refundsfrom the plan or reductions in future contributions to the plan. In order to calculate the present value ofeconomic benets, consideration is given to any minimum funding requirements that apply to any plan in theGroup. An economic benet is available to the Group if it is realisable during the life of the plan, or onsettlement of the plan liabilities. When the benets of a plan are improved, the portion of the increasedbenet related to past service by employees is recognised in prot or loss on a straight-line basis over theaverage period until the benets become vested. To the extent that the benets vest immediately, theexpense is recognised immediately in prot or loss.

A dened contribution plan is a post-employment benet plan under which an entity pays xed contributionsinto a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations forcontributions to dened contribution pension plans are recognised as an employee benet expense in protor loss in the period during which services are rendered by employees. In relation to the dened contributionplan, the Group has in place the Pension fund scheme.

4.12.3 Pension fund scheme

4.12.4 Terminal benet

4.12.5

4.13 Provision, contingencies and decommissioning costs

4.13.1 Provisions

Provisions for environmental restoration, restructuring costs and legal claims are recognised when: the grouphas a present legal or constructive obligation as a result of past events; it is probable that an outow ofresources will be required to settle the obligation; and the amount has been reliably estimated. Restructuringprovisions comprise lease termination penalties and employee termination payments. Provisions are notrecognised for future operating losses.

Where there are a number of similar obligations, the likelihood that an outow will be required in settlement is

determined by considering the class of obligations as a whole. A provision is recognised even if the likelihoodof an outow with respect to any one item included in the same class of obligations may be small.

In accordance with the revised provisions of the Pension Reform Act, 2014, the Group has instituted aContributory Pension Scheme for its employees, where both the employees and the Group contribute 8%and 10% respectively of the employee's emoluments (basic salary, housing and transport allowances). TheGroup’s contribution under the scheme is charged to the prot and loss account while employee contributionsare funded through payroll deductions.

Termination benets are recognised as an expense when the Group is committed demonstrably, withoutrealistic possibility of withdrawal, to a formal detailed plan to either terminate employment before the normalretirement date, or to provide termination benets as a result of an offer made to encourage voluntaryredundancy. Termination benets for voluntary redundancies are recognised as an expense if the Group hasmade an offer of voluntary redundancy, it is probable that the offer will be accepted, and the number ofacceptances can be estimated reliably. If benets are payable more than 12 months after the reportingperiod, then they are discounted to their present value.

Short term benets - Prot-sharing and bonus plans

Forte Oil Plc recognises a liability and an expense for bonuses and prot-sharing, based on a formula thattakes into consideration the prot attributable to Forte's shareholders after certain adjustments. Forte Oil Plcrecognises a provision where contractually obliged or where there is a past practice that has created aconstructive obligation.

A provision is recognised if, as a result of a past event, the Group has a present legal or constructiveobligation that can be estimated reliably, and it is probable that an outow of economic benets will berequired to settle the obligation.



4.13.2 Contingent liabilities

4.13.3 Contingent assets

Provisions are measured at the present value of the expenditures expected to be required to settle theobligation using a pre-tax rate that reects current market assessments of the time value of money and therisks specic to the obligation. The increase in the provision due to passage of time is recognised as interestexpense.

Contingent liabilities are possible obligations whose existence will only be conrmed by future events notwholly within the control of the Group. Contingent liabilities are not recognised in the nancial statements butare disclosed. However if the possibility of an outow of economic resources is considered remote, suchcontigent liabilities are recognised in the nancial statements.

Contingent assets are possible assets that arise from past events whose existence will be conrmed only bythe occurrence or non-occurrence of one or more uncertain future events not wholly within the control of theentity. Contigent assets are only disclosed when an inow of economic benet is probable. Asset isrecognised when the realisation of income is virtually certain, in which case the related asset is no more

4.13.4 Decommissioning costs

4.14 Models used for impairment test, valuations, actuarial results

Liabilities for decommissioning costs are recognised when the Group has an obligation to dismantle andremove a facility or an item of property, plant or equipment and to restore the site on which it is located, andwhen a reliable estimate of the liability can be made. Where an obligation exists for a new facility such as aretail outlet, this will be on construction. An obligation for decommissioning may also crystalize during theperiod of operation of a facility through a change in legislation or through a decision to terminate operations.The amount recognised is the present value of the estimated future expenditure determined in accordancewith local conditions and requirements. A corresponding item of property, plant and equipment of an amountequivalent to the provision is also recognised. This is subsequently depreciated as part of the asset.

Other than the unwinding discount on the provision, any change in the present value of the estimatedexpenditure is reected as an adjustment to the provision and the corresponding item of property, plant andequipment.

A nancial asset not carried at fair value through prot or loss is assessed at each reporting date todetermine whether there is objective evidence that it is impaired. A nancial asset is impaired if objectiveevidence indicates that a loss event has occurred after the initial recognition of the asset, and that the lossevent had a negative effect on the estimated future cash ows of that asset that can be reliably estimated.

Objective evidence that nancial assets (including equity securities) are impaired can include default ordelinquency by a debtor, restructuring of an amount due to the Group on terms that the Group would notconsider otherwise, indications that a debtor or issuer will enter bankruptcy, or the disappearance of an active market for a security. In addition, for an investment in an equity security, a signicant or prolonged decline inits fair value below its cost is objective evidence of impairment.

The Group considers evidence of impairment for receivables at both specic asset and collective level. Allindividually signicant receivables are assessed for specic impairment. All individually signicant receivablesfound not to be specically impaired are then collectively assessed for any impairment that has been incurredbut not yet identied. Receivables that are not individually signicant are collectively assessed for impairmentby grouping together receivables with similar risk characteristics.

In assessing collective impairment, the Group uses historical trends of the probability of default, timing ofrecoveries and the amount of loss incurred, adjusted for management’s judgment as to whether currenteconomic and credit conditions are such that the actual losses are likely to be greater or less than suggestedby historical trends.




Non-nancial assets

The carrying amounts of the Group’s non-nancial assets, other than inventories and deferred tax assets arereviewed at each reporting date to determine whether there is any indication of impairment. If any suchindication exists, then the asset’s recoverable amount is estimated. For intangible assets that have indeniteuseful lives or that are not yet available for use, the recoverable amount is estimated each nancial period atthe same time.

The recoverable amount of an asset is the greater of its value in use and its fair value less costs to sell. Inassessing value in use, the estimated future cash ows are discounted to their present value using a pre-taxdiscount rate that reects current market assessments of the time value of money and the risks specic tothe asset.

An impairment loss in respect of a nancial asset measured at amortised cost is calculated as the differencebetween its carrying amount and the present value of the estimated future cash ows discounted at theasset’s original effective interest rate. Losses are recognized in prot or loss and reected in an allowanceaccount against receivables. Interest on the impaired asset continues to be recognized through theunwinding of the discount. When a subsequent event causes the amount of impairment loss to decrease, thedecrease in impairment loss is reversed through prot or loss.

4.15 Income Recognition

4.16 Finance, dividend income and nance cost.

4.15.1 Sale of goods and servicesRevenue from sale of goods in the course of ordinary activities is measured at fair value of the considerationreceived or receivable, net of returns, trade discounts and volume rebates.

Revenue from energy sold and capacity charge are measured on monthly basis using the regulated rates inthe Multi Year Tariff Order 11, 2012 - 2017 (MYTO II) of the Nigerian Electricity Regulatory Commission(NERC), net of energy and capacity import and grid transmission losses of 8.05% of energy sent out.

4.15.2 Rental income

Rental income from investment property is recognised as revenue on a straight-line basis over the term ofthe lease. Lease incentives granted are recognised as an integral part of the total rental income, over theterm of the lease. Rental income from other property is recognised as other income.

Revenue is recognised when signicant risks and rewards of ownership have been transferred to thecustomer, recovery of the consideration is possible, the associated costs and possible return of goods can beestimated reliably , there is no continuing management involvement with the goods, and the amount ofrevenue can be measured reliably. If it is probable that discounts will be granted and the amount can bemeasured reliably, then the discount is recognised as a reduction of revenue as the sales are recognised.

The timing of the transfer of risks and rewards varies depending on the individual terms of the sales agreement.

4.15.3 Throughput incomeThroughput income represents fees earned from the use of the Group's storage facilities by third parties onone hand and the Nigerian National Petroleum Corporation product discharge into these storage facilities.These are recognised as other income.

4.16.1 Finance and dividend income

Finance income comprises interest income on funds invested. Interest income is recognised using theeffective interest method. When a loan and receivable is impaired, the group reduces the carrying amount toits recoverable amount, being the estimated future cashow discounted at the original effective interest rateof the instrument, and continues unwinding the discount as interest income. Interest income on impaired loanand receivables recognised using the original effective interest rate. Dividend income is recognised in protor loss on the date that the Group's right to receive payment is established.



4.16.2 Finance costFinance costs comprises interest expense on borrowings.

4.17 Earnings per shareThe Company presents basic earnings per share data for its ordinary shares.

Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifyingasset are recognised in prot or loss using the effective interest method.

Basic earnings per share is calculated by dividing the prot or loss attributable to ordinary shareholders of theGroup by the weighted average number of ordinary shares outstanding during the period, adjusted for ownshares held.

4.18 Segment reporting

4.19 Business combinations

4.20 Transactions with non controlling interests

4.21 Deferred fair value gain on loans

An operating segment is a component of the Group that engages in business activities from which it mayearn revenues and incur expenses. Segment results that are reported to the Group's CEO (the chiefoperating decision maker) include items directly attributable to a segment as well as those that can beallocated on a reasonable basis. Unallocated items comprise mainly of head ofce expenses, and tax assetsand liabilities.

The acquisition method of accounting is used to account for the acquisition of subsidiaries by the group.The consideration transferred is measured as the sum of the fair value of the asset given, equity instrumentsissued and liabilities incurred or assumed at the acquisition date. Transaction costs are recognised withinprot or loss as and when they are incured.The Group measures non-controlling interest on the acquisitiondate as the proportion of the subsidiary's identiable net assets.

Transactions with non controlling interests that do not result in the gain or loss of control are accounted for astransactions with equity holders of the group. For purchases of additional interest from non controllinginterests, the difference between the purchase consideration and the group's proportionate share of thesubsidiary's additional net asset value acquired is accounted for directly in equity.

Deferred fair value gain on loans are not recognised until there is reasonable assurance that the Companywill comply with the conditions attached to them and that the gainss will be received. Deferred fair value gainon loans are recognised in prot or loss on a systematic basis over the periods in which the Companyrecognises as expenses the related costs for which the gains are intended to compensate. Specically,deferred fair value gain on loans whose primary condition is that the Company should purchase, construct orotherwise acquire non-current assets are recognised as deferred revenue in the consolidated statement ofnancial position and transferred to prot or loss on a systematic and rational basis over the useful lives ofthe related assets. Deferred fair value gain on loans that are receivable as compensation for expenses orlosses already incurred or for the purpose of giving immediate nancial support to the Company with nofuture related costs are recognised in prot or loss in the period in which they become receivable. The benetof a deferred fair value gain on loans at a below-market rate of interest is treated as a deferred fair value gainon loans, measured as the difference between proceeds received and the fair value of the loan based onprevailing market interest rates. The amount recognised as deferred fair value gain on loan is recognised inprot or loss over the period the related expenditure is incurred.

4.22 Trade and other receivables

The fair value of trade and other receivables is estimated as the present value of the future cash ows, anddiscounted at market rates of interest at the reporting date. For trade and other receivables with a remaininglife of less than one year, the notional amount is deemed to reect the fair value.




4.23 Effective interest method

Fair value which is determined for disclosure purposes, is calculated based on the present value of futureprincipal and interest cash ows, discounted at market rates of interest at the reporting date. For trade andother creditors with a remaining life of less than one year, the notional amount is deemed to reect the fairvalue.

The effective interest method is a method of calculating the amortised cost of a nancial instrument and ofallocating interest income or expense over the relevant period. The effective interest rate is the rate thatexactly discounts estimated future cash receipts or payments (including all fees on points paid or receivedthat form an integral part of the effective interest rate, transaction costs and other premiums or discounts)through the expected life of the nancial instrument, or where appropriate, a shorter period. Income andexpense is recognised on an effective interest basis for debt instruments other than those nancialinstruments “at fair value through prot or loss”.

4.24

4.25

4.26 Statement of cash ows

4.27 Related parties

4.28 Event occurring after the balance sheet date

Other non-adjusting event are disclosed in the notes.

5. Determination of fair values

Offsetting nancial assets and liabilitiesFinancial assets and liabilities are offset and the net amount presented in the statement of nancial positionwhen, and only when, the Group has a legal right to offset the amounts and intends either to settle on a netbasis or to realise the asset and settle the liability simultaneously.

Repurchase and reissue of share capital (Treasury shares)

The statement of cash ows is prepared using the indirect method. Changes in items in the statement ofnancial position that have not resulted in cash ows have been eliminated for the purpose of preparing thestatement. Dividends paid to ordinary shareholders are included in nancing activities. Finance cost is alsoincluded in nancing activities while nance income received is included in investing activities.

Related parties include the holding company and other group entities. Directors, their close family membersand any employee who is able to exert a signicant inuence on the operating policies of the Company, arealso considered to be related parties. Key management personnel are also regarded as related parties. Keymanagement personnel are those persons having authority and responsibility for planning, directing andcontrolling the activities of the entity, directly or indirectly, including any director (whether executive orotherwise) of that entity.

The value of asset and liabilities at the balance sheet date are adjusted if there is evidence that subsequentadjusting event warrant a modication of these values. These adjustment are made up to the date ofapproval of the consolidated nancial statements by the Board of Directors.

When share capital recognised as equity is repurchased, the amount of the consideration paid, whichincludes directly attributable costs, net of any tax effects, is recognised as deduction from equity.Repurchased shares are classied as treasury shares and are presented in the reserve for own shares.When treasury shares are sold or reissued subsequently, the amount received is recognised as an increasein equity, and the resulting surplus or decit on the transaction is presented in share premium.

A number of Group's accounting policies and disclosures require the determination of fair value, both fornancial and non nancial assets and liabilities. Fair value is the price that would be received to sell an assetor paid to transfer a liability in an orderly transaction between market participants at the measurement date,regardless of whether that price is directly observable or estimated using another valuation technique. Inestimating the fair value of an asset or a liability, the Group takes into account the characteristics of the assetor liability that market participants would take into account when pricing the asset or liability at themeasurement date. Fair value for measurement and/or disclosure purposes in these consolidated andseparate nancial statements is determined for measurement and / or disclosures purposes based on thefollowing methods.



Trade and other receivables

When applicable, further information about the assumptions made in determining fair values is disclosed inthe notes specic to that asset or liability.

The fair value of trade and other receivables is estimated as the present value of the future cash ows,discounted at market rates of interest at the reporting date. For trade and other receivables with a remaininglife of less than one year, the notional amount is deemed to reect the fair value.

Fair value which is determined for disclosure purposes, is calculated based on the present value of futureprincipal and interest cash ows, discounted at market rates of interest at the reporting date. For trade andother creditors with a remaining life of less than one year, the notional amount is deemed to reect the fairvalue.

6. Financial risk managementOverview

Forte Oil Group (FO Group) - Risk Management framework

Specic objectives of the Group’s Risk Management framework are: *

* To establish a framework for FO risk management process and to ensure group-wide implementation.* To ensure systematic and uniform assessment of risks related with the Group’s operations.* To reduce operational surprises and losses.** To assure business growth with nancial stability.

The Board oversees risk management through the following Committees:

Board Risk Management Committee


Corporate Governance and Remuneration Committee

The Board of Directors sets our overall risk appetite, approve the risk management strategy and is ultimatelyresponsible for the effectiveness of the risk management process and system of internal control within FOGroup.

To ensure that all the current and future material risk exposures of FO Group are identied, assessed,quantied, appropriately mitigated and managed.

To enable compliance with appropriate regulations, wherever applicable, through the adoption of best

The Board Risk Management Committee is responsible for developing and monitoring the Group’s riskmanagement policies which are established to identify and analyse the risks faced by the Group, to setappropriate risk limit and controls, monitor risks and adherence to risk limits. The Committee ensures thatrisk management policies are integrated into FO Group’s culture. The Committee also reviews quarterly riskmanagement reports and direct appropriate actions to be taken by senior management. The committeereports quarterly to the Board of Directors on its various activities.

The Audit Committee oversees how management monitors compliance with the Group’s risk managementpolicies and procedures, and reviews the adequacy of the risk management framework in relation to the risksfaced by the FO Group.

The Corporate Governance and Remuneration Committee assists the Board in fullling its responsibilities inrelation to Corporate Governance & remuneration matters by ensuring the groups meets the legal andregulatory requirements, thus protecting the Group from incurring operational and reputational liabilities thatcan affect the achievement our goals and objectives

Our risk management objective is to ensure sustainable business growth with stability by promoting a pro-active approach in identifying, evaluating, mitigating and reporting risks associated with the business. In orderto achieve these objective, we have established a structured and disciplined approach to Risk Management,including the development of the Risk Matrix, in order to guide decisions of the Group on risk related issues.Forte Oil Plc Group has a risk management system embedded in our day to day business activities whichguides our business operations and is being followed in a consistent and systematic manner to increasevalue to our shareholders. Our Enterprise Risk Management framework focuses on enterprise wide risk ofForte Oil Group with the objective to protect and enhance each entity’s value and by extension the Group’svalue.




Credit Risk Management Committee

The Risk Management Committee is a Management Committee of Forte Oil Group which evaluates the risksinherent within the business and ensure that they are captured appropriately within the business risk prole.The committee monitors residual risk exposures and provides assurance as to adequacy of controlsimplemented to manage risks to the agreed level of appetite. The committee meets monthly, however riskreports are provided quarterly to the Board Risk Committee. Principal risk events are however escalatedimmediately.

The Credit Risk Management Committee is a Sub-Committee of the Risk Management Committee thatassess the credit risk of Forte Oil Group. The Committee review and approve credit request in line with theGroup’s credit policy.



The Credit Risk Management Committee is a Sub-Committee of the Risk Management Committee thatassess the credit risk of Forte Oil Group. The Committee review and approve credit request in line with theGroup’s credit policy.

The committee also meets at least monthly to review payment performance of credit customers, theadequacy of Bank Guarantees, credit limits of customers and also take appropriate actions to ensure zerotolerance for bad debts.

Risk Management Structure & Governance

Risk Management Governance Structure

External AuditCredit Risk Management

Committee

Board/Board Risk Management Committee

Management Team

FO Plc Management Committees including –Risk Management & Credit Management

1st Line: Primary Risk

Responsibility

* Operational

management manages

the Company’s risks by

implementing and

maintaining effective

internal control

procedures on a day-to-

day basis.

2nd Line: Challenge and Risk Control.

* The Risk Management department

collaborates with operational

management to develop and monitor

processes and controls to mitigate

identied risks.

* They facilitate risk assessment

sessions, develop risk management

programs and alert management to

emerging issues and changing risk

scenarios.

3rd Line: Assurance

* Independent assurance

of the effectiveness of the

risk management process

and methodology

Risk Management Committee GCEO

Risk Management Department Internal Audit

Functional/Departmental Risk Champions

Second line of Defence Third line of DefenceFirst line of Defence




Risk Prole

Operational RiskHSE Risk

Financial RiskCredit riskLiquidity riskMarket riskCapital risk management

Reputational RiskStrategic Risk

Operational Risk

*

* Requirements for the reconciliation and monitoring of transactions.

* Compliance with regulatory and other legal requirements.

* Documentation of controls and procedures.

*

* Requirements for the reporting of operational losses and proposed remedial action.

* Development of contingency plans

* Training and professional development

* Ethical and business standards

* Risk mitigation approach such as adequate insurance cover on the assets of FO Group Plc.

HSE Risk

Requirements for appropriate segregation of duties, including the independent authorization oftransactions/processes.

Requirements for the periodic assessment of operational risks faced, and the adequacy of controls andprocedures to address the risks identied.

The Operational risk of the Group is identied and monitored through risk management review of operationalprocesses and procedures across departments and subsidiaries with the use of Risk Management tool kitsuch as Risk registers, Control Self- Assessments, Top 25 Risk of the business and Key Risk IndicatorsReview.Compliance with Group's operating standards is also supported by a programme of periodic reviewsundertaken by Business Assurance and Compliance (BAC). The results of BAC reviews are discussed withthe management of the business unit while the summaries submitted to the Audit Committee and ExecutiveManagement of the group.

Forte Oil Group is committed to managing a Health, Safety & Environmental system that promotes a safeworking environment for all employees, contractors, customers and visitors to our sites. At Forte Oil Group,Health and Safety has equal importance with all other business activities.

In the course of our daily operations, we are exposed to various risks. The Group has a risk managementfunction that manages these risks with various reporting done as required. We have categorised the risksinto the following:

Operational risk is the risk of direct or indirect loss arising from a wide variety of causes associated with thegroup’s processes and controls, personnel, technology and infrastructure, and from external factors otherthan credit, market and liquidity risks such as those arising from legal and regulatory requirements andgenerally accepted standards of corporate behaviour. Operational risks arise from all of the group’soperations.

The group’s objective is to manage operational risk to be within its risk appetite thus ensuring that the overallcontrol processes and procedures does not restrict initiative and creativity. The primary responsibility for thedevelopment and implementation of controls to address operational risk is assigned to senior managementwithin each business unit. This responsibility is supported by the development of overall group standards forthe management of operational risk in the following areas:



Financial Risk

The Group has exposure to the following risks from its use of nancial instruments:Credit RiskLiquidity RiskMarket RiskForeign Exchange RiskCurrency RiskInterest Rate RiskOther Market Risk

Credit Risk

Trade and other receivables

Allowance for impairment losses

The models used for impairment is explained in note 4.14 above

It is the policy of the Group to carry out its activities in a manner that guarantees health and safety of itsworkers and other stakeholders, the protection of the company’s facilities and the environment andcompliance with all regulatory and industry requirements. We consider health, safety and environmentalissues as important as our core businesses and assume the responsibility of providing healthy, safe andsecure work environment for our workers as required by law.

Our objective is to minimize the number of cases of occupational accidents, illnesses, damage to propertyand environmental degradation. 72 incidents were reported by various staff from different departments atdifferent locations in the year 2016.

FO Group Plc’s overall risk management focuses on the unpredictability of nancial markets and the adverseeffect on the company’s nancial and operational performance. The Group has a risk management functionthat manages the nancial risks relating to the Group’s operations under the policies approved by the Boardof Directors.

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in nancialloss to the Group. The Group has a policy of only dealing with creditworthy customers as a means ofmitigating the risk of nancial loss from defaults. We also secure our credits with Bank Guarantees fromCompany selected Banks.

The Company uses other publicly available nancial information and its own trading records to evaluate itsmajor customers. All credits are administered in line with FO’s Credit policy. Warning signs for default are promptly identied based on our Credit Management & Reporting tools.Mitigating actions such as reduced credit term, aggressive cash collection and downward review of creditlimits are highlighted and implemented for high-risk customers based on approval by Executive Managementand Management Credit Committee.

There is no material concentration of our credit exposure geographically or with individual customers andthere is no signicant level of counterparty default.

The Group has established a credit policy under which each new customer is analysed individually forcreditworthiness. Credit limit are established for each customer, which represents the maximum exposure tothe customer. These limits are reviewed periodically by management credit committee based on customer’sperformance and credit worthiness. Customers that fail to meet the Group’s credit criteria may transact withthe Company on a cash-and-carry basis or provides a Bank Guarantee.

Our exposure to credit risk for trade and other receivables and related impairment losses at the reportingdate is as disclosed in note 28.

Forte Oil Group establishes an allowance for impairment that represents its estimate of incurred losses inrespect of trade and other receivables and investments. Please refer to Note 28 for the ageing of trade andother receivables and related impairment allowances for the Group at the reporting date.




Investments

Guarantees

There is a nancial guarantee on behalf of Amperion to First Bank of Nigeria Plc.

Liquidity Risk

The Group manages its liquidity process by:- Day to day funding, managed by monitoring future cash ows to ensure that requirements can be met.- Monitoring balance sheet liquidity ratios against internal requirements.- Managing the concentration and debt prole.- Usage of overdraft facility to meet liquidity needs

Market Risk

Foreign Exchange Risk

The Group actively monitors the credit rating of companies and only invest in liquid securities with companieswith high credit ratings. The Group does not expect any counterparty to fail to meet its obligations.

The Group’s policy is to provide nancial guarantees only to subsidiaries after a careful review of theunderlying transaction. Where the underlying transaction does not meet the Group’s risk appetite, suchtransactions are exited.

Liquidity risk is the risk that the Group will encounter difculty in meeting the obligations associated with itsnancial liabilities that are settled by delivering cash or another nancial asset. The Group’s approach tomanaging liquidity is to ensure, as far as possible, that it will always have sufcient liquidity to meet itsliabilities when due, under both normal and stressed conditions, without incurring unacceptable andavoidable losses or risking damage to the Group’s reputation. Cash ow projection is performed by thetreasury unit of FO Group Plc to anticipate the cash & liquidity requirements of the Group.

The Group has a clear focus on ensuring sufcient access to capital to nance growth and to renancematuring debt obligations. As part of the liquidity management process, the Company has various creditarrangements with some banks and related parties which can be utilised to meet its liquidity requirements.

Lastly, the Group ensures that it has sufcient cash on demand to meet expected operational expenses for aperiod of 60 days, including the servicing of nancial obligations; this excludes the potential impact ofextreme circumstances that cannot reasonably be predicted, such as natural disasters.

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates andequity prices will affect the Group’s income or the value of its holdings of nancial instruments. The objectiveof market risk management is to manage and control market risk exposures within acceptable parameters,while optimizing the return.

The Group transacts some of its purchases and sales in foreign currency and is exposed to foreignexchange risk on these transactions. The company has no long term assets or liabilities denominated inforeign currency. The opening of the OTC FX Market has enabled the Group use Non-DeliverableForwards/Futures (NDFs)to hedge Foreign Exchange Risk. Generally, the Group seeks to apply hedgeaccounting in order to minimize the effects of exchange rate movements on prot margins.

Foreign exchange risks are minimized by a reduction in direct import transactions while increasing localpurchases from importers. Also interest rates are benchmarked to NIBOR (for local loans and LIBOR (forforeign loans).



Currency Risk

Sensitivity Analysis

Year End N'00031-Dec-16 +-2% 369,547 31-Dec-15 +-2% 414,766

Interest Rate Risk

At the reporting date, the interest rate prole of the Group's interest -bearing nancial interest was:Secured bank loan 19.5%Overdraft 20.8%

Note 25 highlights the borrowings for the reporting period.

Interest on borrowings is denominated in the currency of the borrower. Generally, borrowings aredenominated in currencies that match the cash ows generated by the underlying operations of the Group,primarily Naira, also GHC and USD. This provides an economic hedge without derivatives being entered intoand therefore hedge accounting is not applied in these circumstances.

In respect of other monetary assets and liabilities denominated in foreign currencies, the Group ensures thatits net exposure is kept to an acceptable level by buying or selling foreign currencies at spot rates whennecessary to address short-term imbalances.

The investment in APOG subsidiary is hedged by a GHC-denominated secured bank loan, which mitigatesthe currency risk arising from the subsidiary’s net assets. The investments in other subsidiaries are nothedged as those currency positions are considered to be long-term in nature.

A change in the exchange rate either positively or negatively by 200 basis points would have increased/(decreased) equity and prot or loss by the amount stated below. This analysis is based on foreign currencyexchange rate variances that the Group considered to be reasonably possible at the end of the reportingperiod, the analysis assumes that all other variables, in particular interest rates remain.

A weakening of the Naira against the currencies at 31 December would have increased/(decreased) equityand prot or loss by the amount shown below:

Increase / Decrease in foreign

exchange rate

The currency risk is the risk that the fair value or future cash ows of a nancial instrument will uctuate dueto the changes in foreign exchange rates.

The Group is exposed to currency risk on sales, purchases and borrowings that are denominated in acurrency other than its functional currency. The Group is exposed primarily to US Dollars (USD), Euro (E),Pound Sterling (GBP) and Ghanian Cedis (GHC).

The Group monitors the movement in currency rates on an ongoing basis to mitigate the risk that themovements in the exchange rates may adversely affect the Group's income or value of their nancialinstruments.The Group is allowed to hedge currency exposure within the tolerable limit by bank and must be approved byRisk Management Committee. The Group does not hedge for speculative reasons.

The Group is exposed to interest rate risk because the Company borrows funds at xed interest rates andalso utilizes overdraft facilities from Banks. This risk is managed by the Company by maintaining anappropriate mix between short and long term borrowings. The risk is also managed by the Company byconstantly negotiating with the banks to ensure that interest rates are consistent with the monetary policyrates as dened by the Central Bank of Nigeria.




Sensitivity Analysis

Other market Risk

Capital Management

The group's debt to capital ratio at the end of the reporting year was as follows:Dec-16 Dec-15N’000 N’000

Total liabilities 97,422,915 75,477,213 Total assets 140,756,492 121,757,956

Gearing ratio as at: 69% 62%

There were no changes in the group's approach to capital management during the year.

Reputational Risk

The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and marketcondence at all times and to sustain future development and growth of the business. The Board of Directorsmonitors capital on the basis of the gearing ratio, which the group denes as total liabilities (non-currentliabilities and current liabilities) over total assets (non-current assets and current assets). Board of Directorsalso monitors the level of dividends to ordinary shareholders.

The Group manages its capital structure to achieve capital efciency, maximise exibility and give theappropriate level of access to debt markets at attractive cost levels. Also, The Board seeks to maintain abalance between the higher returns that might be possible with higher levels of borrowings and theadvantages and security afforded by a sound capital position. The group does not have a dened share buy-back plan.

Reputational risk is the risk that operations and activities of Forte Oil Group, its related parties or afliates willnegatively affect its image or public perception.

The Group understands the fact that the losses stemming from reputational exposure may not bequantiable, thus we have implemented structures and procedures which will help protect the companyagainst such losses.

The Board through the Risk Management committee monitor closely, media publications about the activitiesof Forte Oil Group through Brand and Corporate Communications Unit (BCC) who ensures controls formitigating reputational risk are active at all times.

We also regularly engage and interact with our stakeholders to know how Forte Oil Group is fullling theirexpectations. We improve our performance based on the feedback obtained. Major stakeholders includecustomers, investors, employees, suppliers, government, regulators, special interest & consumer groups,media and the general public.

Assuming that all other variables remain constant, a 200 basis points increase in interest rates at thereporting period would lead to an additional NGN159.3m charge to the income statement (2015 :NGN139.97m). A 200 basis point decrease in interest rate at the reporting date would have an equal butopposite effect.

Management of the Forte Oil Group monitors the mix of debt and equity securities in its investment portfoliobased on market indices. Material investments within the portfolio are managed on an individual basis and allbuy and sell decisions are recommended by Risk Management Committee and approved by the ExecutiveCommittee.

Management is assisted by external advisors in this regard. In accordance with this strategy, certaininvestments are designated at fair value through prot or loss because their performance is activelymonitored and they are managed on a fair value basis. The group does not enter into commodity contractsother than to meet the group’s expected usage and sale requirements; such contracts are not settled net.



Strategic Risk

7. Operating segment

Segment Description

Fuels

Upstream Services

Lubricants and Greases This segment manufactures and sells lubricants and greases.

Power Generation This segment generates power.

The accounting policies of the reportable segments are the same as described in notes 2 to 5.Information regarding the results of each reportable segment is included below:

31-Dec-16 31-Dec-15 31-Dec-16 31-Dec-15N’000 N’000 N’000 N’000

7.1 Revenue & Cost of Sales7.1.1 Revenue

Fuels 121,606,852 104,302,214 120,158,417 102,653,464 Production chemicals 2,599,434 3,870,808 2,857 26,587 Lubricants and greases 11,455,022 6,176,464 11,452,688 6,173,804 Power generation 12,943,953 10,267,752 - -

148,605,261 124,617,238 131,613,962 108,853,855

7.1.2 Cost of salesFuels (Note 7.1.3) 109,439,879 93,985,396 108,106,304 92,506,632 Production chemicals 1,596,528 2,924,946 3,505 30,473 Lubricants 8,321,710 4,005,935 8,319,467 4,003,824 Power generation (Note 7.1.4) 8,663,230 5,339,535 - -

128,021,347 106,255,812 116,429,276 96,540,929

Gross prot 20,583,914 18,361,426 15,184,686 12,312,926

Strategic risk is the risk that Forte Oil Group will make inappropriate strategic choices, or that there will bechanges in the external environment to which the Group fails to adapt its strategies.

The Group organizes a Strategy Review Session to deliberate on issues relating to changes in operatingenvironment that may impact strategy execution and implementation. These include issues on Product sourcingand logistics, availability of forex for importation, delay in subsidy payments, currency devaluation, changes ingovernment policies and macroeconomic variables and volatilities in crude prices which have implications forprotability, product availability and business growth.

Failure to manage this risk could have a wide-ranging impact. It could lower revenues, protability and returns toshareholders, and severely impair our ability to meet other nancial and non-nancial objectives.

The Board has ultimate responsibility for approving strategic plans, initiatives and changes to strategic direction.In addition, Forte Oil Group employs robust strategy development processes which consider the implications ofeconomic, industrial, market, technological and customer developments and trends. Business PerformanceReview Meeting is carried out monthly for Strategic Business Units and Quarterly for all departments to reviewbusiness performance against target.

This segment provides ancilliary services to the Exploration &Production (E&P) sub sector of the oil and gas industry.

The Group has four reportable segments, as described below, which are the Group's strategic business units.The strategic business units offer different products, and are managed separately. For each of the strategicbusiness units, the Group's CEO reviews internal management reports on at least monthly basis. The followingsummary describes the operations in each of the Group's reportable segments.

This segment is responsible for the sale and distribution of petroleumproducts (white products) and Aviation Turbine Kerosene (ATK) inretail outlets and to industrial customers.

Group Company




7.1.3

7.1.4


7.2 Segment ReportingCurrent assetsFuels and lubricants 48,940,662 42,849,958 51,286,612 42,893,965 Production chemicals 3,441,851 2,724,405 1,103 - Power generation 16,880,810 11,472,531 - -

Total current assets 69,263,322 57,046,894 51,287,715 42,893,965

7.2.2 Non current assetsFuels and lubricants 11,758,079 23,146,595 22,170,799 22,846,995 Production chemicals 338,751 338,214 481 - Power generation 59,396,339 41,226,252 - -

Total non current assets 71,493,170 64,711,061 22,171,280 22,846,995

7.2.3 Current liabilitiesFuels and lubricants 47,837,962 49,502,671 49,891,208 49,341,673 Production chemicals 2,016,465 1,499,364 1,083 - Power generation 19,554,694 8,616,314 - -

Total current liabilities 69,409,121 59,618,349 49,892,291 49,341,673

7.2.4 Non current liabilitiesFuels and lubricants 11,691,972 3,377,160 11,691,718 3,377,160 Production chemicals 77,778 73,914 254 - Power generation 16,244,044 12,407,790 - -

Total non current liabilities 28,013,794 15,858,864 11,691,972 3,377,160

Company

The fuels and lubricants segment both share the same resources of the company which are not directlyallocated to the segments

Depreciation charge of N1,524,595,000 (December 2015: N1,143,527,000) for the turbines used for powergeneration is included in cost of sales for the Power Generating Segment. This is recognised using EquivalentOperating Hours (EOH) of the turbines for the period.

The company operates Vendor Managed Inventory located at some customers' premises. The risk and rewardof the inventory at these locations still resides in the company until consumed or transferred to the customer'sfacilities. Freight cost of inventory in these locations is included as part of the value of inventory and not freightexpense and subsequently recognised as cost of sales when the risk and reward of these inventory passes tothe customer.

Group



7.3 Geographic segmentThe Group operates in two geographic regions namely Nigeria and Ghana.

Nigeria Ghana Nigeria Ghana31-Dec-16 31-Dec-16 31-Dec-15 31-Dec-15

N’000 N’000 N’000 N’000

Income statementRevenue 147,154,272 1,450,989 122,965,828 1,651,410 Cost of sales (126,714,191) (1,307,156) (104,774,936) (1,480,876)

Gross prot 20,440,081 143,833 18,190,892 170,534

Other income 2,336,341 10,839 4,046,938 4,029 Distribution expenses (2,968,431) (47,151) (2,700,331) (53,882) Administrative expenses (10,164,581) (128,769) (10,796,997) (172,934)

Operating prot/(loss) 9,643,410 (21,248) 8,740,502 (52,253)

Finance income 1,887,825 - 3,470,012 - Finance expense (6,131,021) (38,721) (5,102,237) (43,581)

Reportable segment prot before income tax 5,400,213 (59,969) 7,108,277 (95,834)

Financial positionTotal current assets 68,512,948 750,374 56,539,262 507,632 Total non current assets 71,200,113 293,057 64,477,716 233,346

Total assets 139,713,061 1,043,431 121,016,978 740,978

Total current liabilities 68,371,688 1,037,433 58,906,962 711,387 Total non current liabilities 28,013,794 - 15,858,864 -

Total liabilities 96,385,482 1,037,433 74,765,826 711,387

Statement of cash owsNet cash generated from operating activities 14,347,835 (15,655) 12,734,902 4,944

Net cash used in investing activities (7,896,405) (4,486) 6,635,440 (15,092)

Net cash generated from/(used in) nancing activities

7,218,324 7,819 (4,224,501) -





8. Other incomeInvestment property rental income 198,552 175,062 210,762 181,017 Throughput income (Note 8.1) 496,953 589,205 496,952 589,205 Foreign exchange gain (Note 8.2) 295,556 440,859 254,301 355,304 Bad debt impairment no longer required - 25,467 - 25,467 Provisions no longer required (Note 8.3) 312,802 300,162 312,802 300,162 Sundry income (Note 8.4) 139,806 314,099 70,622 75,802 Prot on sale of forfeited shares - 825,649 - 825,649 Dividend Received(Note 8.5) - - 180,000 - Income from crude lifting contract (Note 8.6) 218,054 - 218,053 - Investment income from held to maturity instruments - 313,763 - 313,763 Freight Income (Note 8.7) 667,511 538,263 667,511 538,263 Gain on disposal of investment property - 523,841 - 523,841 Gain on disposal of property, plant and equipment 17,946 4,597 17,946 2,484

2,347,180 4,050,967 2,428,950 3,730,957

8.1

8.2 This represents transactional gains of foreign exchange on sale earned from sale of dollar inows.

8.3 This represents excess accrual for freight in prior years.

8.4 This represents income from sales of scrap and empty packaging materials.

8.5

8.6

8.7 This represents income earned from 100 trucks owned by Forte Oil Plc managed by TSL.

31-Dec-16 31-Dec-15 31-Dec-16 31-Dec-15

N’000 N’000 N’000 N’000

9. Distribution expenses Freight cost 2,986,696 2,723,532 2,939,545 2,669,650 Sales commissions 28,886 30,681 28,886 30,681

3,015,582 2,754,213 2,968,431 2,700,331

The company operates Vendor Managed Inventory located at some customers' premises. The risk and reward ofthe inventory at these locations still resides in the company until consumed or transferred to the customer'sfacilities. Freight cost of inventory in these locations is included as part of the value of inventory and not freightexpense and subsequently recognised as cost of sales when the risk and reward of these inventory passes to thecustomer.

Group Company

This represents throughput income earned on storage of products for the Pipeline and Petroleum MarketingCompany (PPMC) in Apapa tank farm.

Group Company

During the year ended 31 December 2016, the company-Forte Oil Plc received N200,000,000 Dividend from ForteUpstream Services Limited, one of its subsidiaries. Amperion Power Distribution Limited also receivedN1,530,000,000 from its subsidiary Geregu Power Plc. These dividend incomes have been eliminated onconsolidation after deducting applicable taxes.

This represents net income from crude oil litng contract of 45,000bpd executed with the Nigerian NationalPetroleum Corporation (NNPC) to lift out of the total crude allocation.




10. Administration expensesPersonnel expenses (Note 10.1) 2,580,841 2,422,025 2,069,216 1,955,843 Depreciation and amortisation 1,463,832 1,506,343 1,342,580 1,398,220 Bank charge 412,039 456,042 397,883 402,955 Transport and travel costs 328,052 424,531 211,479 227,066 Repairs and maintenance 702,218 962,063 604,051 663,631 Safety security and quality control 299,389 205,016 239,052 196,613 Insurance 469,463 398,447 165,596 181,991 Internet and communication 138,961 157,729 113,455 124,043 Utilities 133,177 99,729 106,103 71,632 Professional and legal fees (Note 10.2) 817,369 606,150 346,789 242,132 Audit fees 73,486 67,162 60,900 60,900 Board and AGM expenses 130,658 57,731 122,538 57,731 Licenses, rates and fees 154,322 89,168 124,399 83,849 Imported related period cost - 94,496 - 65,459 Public relations, promotions and advertisement 111,328 245,681 70,482 244,827 Rent and leases 1,204,410 1,016,510 1,085,383 923,476 Foreign exchange loss 557,115 1,418,505 - 65,459 Impairment of receivables 17,602 1,763 - - Bad and uncollectible debt 7,502 81,916 7,406 81,593 Diminution in investment (Note 10.3) - - 324,885 - Loss on held -to- maturity investments - 69,200 - 69,200 Shrinkage and product losses 384,449 298,149 377,937 293,271 Others expenses 307,137 291,576 167,174 153,034

10,293,350 10,969,932 7,937,308 7,562,925

10.1 Personnel expensesSalaries, wages and allowances 1,505,538 1,513,091 1,194,298 1,166,109 Contributions to pension fund scheme 96,339 103,612 78,917 87,413 Gratuity and redundancy cost 298,208 322,262 259,204 283,554 Training, recruitment and canteen expenses 273,192 159,440 224,633 138,556

Medical expenses 42,564 31,297 30,866 24,281 Contract Manpower 320,021 240,354 264,124 208,765 Other personnel expenses 44,979 51,969 17,174 47,165

2,580,841 2,422,025 2,069,216 1,955,843

10.2

10.3

10.4


Analysis of expenses by nature (Note 7, 9, 10)

Changes in inventory of lubes, production chemicals,

energy and rened products 126,496,752 105,112,285 116,429,276 96,540,929

Distribution cost 3,015,582 2,754,213 2,968,431 2,700,331 Personnel expenses (Note 10.1) 2,580,841 2,422,025 2,069,216 1,955,843 Depreciation and amortisation 2,988,427 2,649,870 1,342,580 1,398,220Other expenses 6,248,677 7,041,564 4,525,512 4,208,862

Total cost of sales, distribution costs and administrative

expenses 141,330,279 119,979,957 127,335,015 106,804,185

Included in this cost in the year is the professional fees incurred in respect of merger and acquisition prospects on a downstreambusiness entity.

Group Company

This relates to diminution charge on investment in AP Oil and Gas Ghana Ltd. This was eliminated on consolidation.

Group Company

The additional disclosure below represents the analysis of the expenses by nature.




1,887,824 3,470,012 1,356,995 3,142,423 Finance costsInterest expense on bank loans and overdrafts (6,169,742) (5,145,818) (2,622,410) (3,091,295)

Net nance costs/Income (4,281,918) (1,675,806) (1,265,415) 51,128

11.1 This includes interest earned on Petroleum subsidies for 2015 and 2016 from Petroleum Product Pricing Regulatory Agency that werenot received within the stipulated 45 days of the PSF scheme.

Interest income represents income earned on bank deposits while interest expense represents charges paid on trade nance, loans and

overdraft facilities utilised during the year.


11. Finance income and nance costFinance income Interest income on bank deposits 799,967 142,549 269,203 142,549 Other interest income (Note 11.1) 732,025 3,183,464 1,087,792 2,999,874 Other income from government grant on loan 355,832 143,999 - -

Group Company




12. Taxation

a) Income tax expenseIncome tax 1,819,424 1,050,959 1,620,509 862,227 Education tax 195,469 128,337 167,604 114,955 Capital Gain 946 59,995 946 59,995

2,015,839 1,239,291 1,789,059 1,037,177 Deferred tax charge 433,975 (20,904) 417,594 -

Total income tax expense 2,449,814 1,218,387 2,206,653 1,037,177

b) Effective tax rateProt for the year 2,890,430 5,794,055 3,235,829 4,794,578 Total income tax expense 2,449,814 1,218,387 2,206,653 1,037,177

Prot before taxes 5,340,244 7,012,442 5,442,482 5,831,755

Effective tax rates 46% 17% 41% 18%

c) Effective tax rate reconciliation

Prot before taxes 5,340,244 7,012,442 5,442,482 5,831,755 Income tax expense at 30% 1,602,073 2,103,733 1,632,745 1,749,527 Effect of income exempt from taxation (63,574) (826,850) (59,651) (604,493) Effect of expenses not deductible for taxation 576,745 619,453 545,005 579,296 Effect of capital allowance (1,311,317) (1,161,693) (1,287,303) (1,149,553)Effect of balancing charge 9,440 1,605 9,440 1,451 Loss effect (243,786) 28,711

569,581 764,959 840,235 576,227 Capital gains tax 946 59,995 946 59,995 Education tax 169,009 128,337 141,207 114,955 Underprovision 1,260,574 - 806,672 - Minimum tax 15,729 - - - Dividend tax 286,000 286,000 Deferred tax 433,975 (20,904) 417,594 -

Income tax charge 2,449,814 1,218,387 2,206,654 1,037,177

Education tax was computed at the rate of 2% of assesible prot in accordance with the provisions of the Act.

The company income tax computation for the period ended 31 December 2016 was based on the provisionsof the Company Income Tax Act Cap C21 LFN 2004. Amperion Power Distribution Company Ltd reported ataxable loss for the period ended and is exempted from minimum tax in its rst four (4) years ofcommencement of business while Geregu Power Plc in line with the relevant tax laws and regulations willenjoy pioneer status considering its nature of operations. Hence, no tax estimate has been recognised forthese entities in these nancial statements. Geregu Power is not liable to income tax for the period underreview because the company's Pioneer status incentive has been approved. Hence, it will enjoy tax holidayfor the next three years with a two year extention option.

Group Company

The income tax charge for the year can bereconciled to the accounting prot as follows:

--

--





d) Movement in current tax liability balanceLiability at 1 January 967,834 845,611 751,179 639,847 Income tax for the year 2,016,004 1,239,291 1,789,059 1,037,177 Payments during the year (1,753,476) (1,117,068) (1,557,849) (925,845)

1,230,362 967,834 982,389 751,179

13. Earnings per share

Prot attributable to ordinary shareholdersProt for the year 2,601,568 4,492,406 3,235,829 4,794,578

Prot attributable to ordinary shareholders 2,601,568 4,492,406 3,235,829 4,794,578

Weighted average number of ordinary sharesIssued ordinary shares at 1 January * 1,092,191 1,092,191 1,092,191 1,092,191 Treasury shares (5,599) (5,599) (5,599) (5,599) Bonus issue 218,438 218,438 -

Weighted average number of ordinary shares 1,305,030 1,086,592 1,305,030 1,086,592

Basic/diluted earnings per share in (N) 1.99 4.13 2.48 4.41

Dilutive instruments

There were no dilutive instruments in the books of the Group as at the year ended 31 December, 2016. Theirredeemable convertible cummulative preference shares in the books of AP Oil and Gas Ghana Limited hasbeen eliminated on consolidation thereby removing the dilutive instrument in the Group as at the reporting date.

The group's basic earnings per share of N1.99 kobo (December 2015 : N4.13kobo) is based on the protattributable to ordinary shareholders of N2,609,296,000 (December 2015 : N4,492,406,000), and on the1,305,030,000 (December 2015 : 1,086,592,000) ordinary shares of 50 kobo each, being the weighted averagenumber of ordinary shares in issue during the current and preceding year.

Group Company



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Group Company31-Dec-16 31-Dec-16

N’000 N’000

15. Investment property

CostBalance at 1 January 2016 2,546,976 2,546,976

Balance at 31 December 2016 2,546,976 2,546,976

Depreciation and impairment lossesBalance at 1 January 2016 715,233 715,233 Depreciation for the year 32,281 32,281

Balance at 31 December 2016 747,514 747,514

Carrying amountAt 1 January 2016 1,831,743 1,831,743

At 31 December 2016 1,799,462 1,799,462

{a}

{b}

{c}

{d}

{e}

{f} No impairment charge on investment properties duing the year.

During the year ended 31 December 2016 the Group recognised N198,552,000 as rental income in statementof prot or loss (December 2015 : N175,062,000) after eliminating intra-group transactions while the Companyrecognised N210,762,000 (December 2015 : N181,017,000).

Investment property comprises of a number of commercial properties that are leased to third parties. The leaseperiod ranges between 1 - 2 years. Investment properties are carried at cost/deemed cost. The carrying amountof investment property is separated between lease hold land and buildings. Lease hold land is amortised overthe lease period while building is depreciated on a straight line basis over the estimated useful life at 4% perannum.

There is an All Asset Debenture Security on the Company - Forte Oil Plc's assets for all its loans and tradenance lines with First Bank Nigeria Limited, Guaranty Trust Bank Plc and Zenith Bank Plc. The All AssetDebenture is however being perfected as at the reporting date.

Depreciation charge of N32,281,000 (2015 N87,025,000) is included in administrative expenses in the statement of prot or loss and other comprehensive income.

The fair value of the investment properties as at 31 December 2016 was N7,546,549,200,.The fair valuation

was carried out by Jide Taiwo & Co (FRC/2012/NIESV/000000254); Diya, Fatimehin & Co

(FRC/2013/NIESV/00000002773) & (FRC/2013/NIESV/00000000754); Ismail & Partners Networking Services

Limited (FRC/2013/NIESV/00000005548); Dele Olaiya & Associates These valuations upward movement in the

values of these (FRC/2013/NIESV/0000002559).(FRC/2012/NIESV/00000000245); Bullnet & Enquiries

properties, hence no indication of impairment for all investment properties.




Group Company31-Dec-16 31-Dec-16

N’000 N’000

16. Intangible asset

CostBalance at 1 January 966,314 930,804

Acquisitions 24,205 16,193 Reclassication 9,450 - Translation difference 1,129 -

Balance at 31 December 2016 1,001,098 946,997

AmortisationBalance at 1 January 680,204 652,094

Amortisation for the year 90,563 83,427 Translation difference 1,024 -

Balance at 31 December 2016 771,791 735,521

Carrying amountsAt 1 January 2016 286,110 278,710

At 31 December 2016 229,307 211,476

a) These relate to purchased softwares.

b)

c)

d)

{e} No impairment charge on intangible assets during the year.

The amortisation charge of Group N90,563,000 (2015:N201,329,000); Company N83,427,000 (2015:N191,490,000) on intangible asset is included in administrative expenses in the statement of comprehensive Income.

There is an All Asset Debenture Security on the Company - Forte Oil Plc's assets for all its loans and tradenance lines with First Bank Nigeria Limited, Guaranty Trust Bank Plc and Zenith Bank Plc. The All AssetDebenture is however being perfected as at the reporting date.

With effect from 01 January, 2016, the Company reassessed the useful life of its SAP ERP software andchanged to 8 years from 5 years previously in use. The effect of this has been applied prospectively in linewith the provisions of the IFRS. Monthly depreciation expense for this affected software decreased byN9,203,195.



% ofownership Amount

N’00017. Investment in subsidiaries

Investment in subsidiaries comprise:

31 December 2016

Equity:Forte Upstream Services 100 10,000 AP Oil and Gas Ghana Limited 100 670,011 Amperion Power Distribution Limited 57 10,149,926

Irredeemable Preference Shares:Cummulative Convertible Preference Shares in AP Oil and Gas Ghana Ltd 424,950

11,254,887 Impairment allowance (Note 17.1) (547,481)

Total investment in subsidiaries 10,707,406

31 December 2015Equity:AP Oileld Services Limited 100 10,000 AP Oil and Gas Ghana Limited 100 670,011 Amperion Power Distribution Limited 57 10,149,926

Irredeemable Preference Shares:Cummulative Convertible Preference Shares in AP Oil and Gas Ghana Ltd 424,950

11,254,887

Impairment allowance (Note 17.1) (222,596)

Total investment in subsidiaries 11,032,291

AmountN’000

17.1 Impairment lossesImpairment allowance at 31 Dec 2015 222,596Impairment allowance during the year 324,885Balance at 31 December 2016 547,481

Company

The consolidated nancial statements include the nancial statements of Forte Oil Plc and itssubsidiaries; Forte Upsteam Services (FUS) Limited, AP Oil and Gas Ghana Limited (APOG) andAmperion Power Distribution Company Limited and its subsidiary (Amperion Group) all made up to 31December 2016.

During the year, additional impairment losses recognised in respect of investment in AP Oil and GasGhana Limited. These losses attributable to the carrying value of investment greater than therecoverable amount of the investment.The impairment loss has been included in the statement of protor loss in the separate nancial statements.




2016

2015

2016

2015

2016

2015

N’0

00

N’0

00

N’0

00

N’0

00

N’0

00

N’0

00

18.

Defe

rred

tax a

ssets

an

d lia

bilit

ies

18.1

Th

e G

rou

p

a)

Reco

gn

ised

defe

rred

tax a

ssets

an

d lia

bilit

ies

Defe

rred tax

ass

ets

and li

abili

ties

are

attributa

ble

to the f

ollo

win

g:

Pro

pert

y, p

lant and e

quip

ment

-

-

2,2

24,3

08

73,5

78

(2,2

24,3

08)

(73,5

78)

Tra

de r

eceiv

able

s-

-

(5

63,5

37)

-

563,5

37

-

Oth

er

rece

ivable

s-

-

(

1,1

64,9

65)

-

1,1

64,9

65

-

Oth

er

liabili

ties

-

-

(

434)

3

36

434

(336)

Loss c

arr

y-fo

rward

s165,1

52

131,1

41

-

-

165,1

52

131,1

41

165,1

52

131,1

41

495,3

72

73,9

14

(330,2

20)

57,2

27

Bala

nce

Jan

uary

-

2016

Reco

gn

ized

in p

ro

t o

r

loss

Eff

ect

of

fore

x

u

nctu

ati

on

s

Reco

gn

ized

in o

ther

co

mp

reh

en

-

siv

e in

co

me

Bala

nce

Decem

ber-

2016

N’0

00

N’0

00

N’0

00

N’0

00

N’0

00

b)

Mo

vem

en

t in

tem

po

rary

dif

fere

nces d

uri

ng

th

e y

ear

Pro

pert

y, p

lant and e

quip

ment

(

73,5

78)

(

2,1

50,7

32)

-

-

(

2,2

24,3

09)

Tra

de r

eceiv

able

s -

563,5

37

-

-

5

63,5

37

Oth

er

rece

ivable

s -

1,1

64,9

65

-

-

1,1

64,9

65

Oth

er

liabili

ties

(3

36)

773

-

-

434

Loss c

arr

y-fo

rward

s 131,1

41

(1

2,5

18)

46,5

29

-

1

65,1

52

57,2

27

(433,9

75)

46,5

29

-

(330,2

21)

Net

Assets

Lia

bilit

ies



20

16

20

15

20

16

20

15

20

16

20

15

N’0

00

N’0

00

N’0

00

N’0

00

N

’00

0N

’00

0

18

.2T

he

Co

mp

an

y

a)

Re

co

gn

ised

de

ferr

ed

ta

x a

ss

ets

an

d l

iab

ilit

ies

De

ferr

ed t

ax a

sse

ts a

nd

lia

bili

ties

are

att

rib

uta

ble

to

th

e f

ollo

win

g:

Pro

pe

rty,

pla

nt

an

d e

qu

ipm

en

t-

-

2

,13

8,1

97

-

(2,1

38

,197

)

-

Tra

de

re

ce

iva

ble

s-

-

(5

58

,25

7)

-

55

8,2

57

-

Oth

er

rece

iva

ble

s-

-

(1

,16

4,9

65

)

-

1

,16

4,9

65

-

Oth

er

liab

ilitie

s-

-

2

,61

9

-

(2

,61

9)

-

-

-

4

17

,59

4

-

(4

17

,59

4)

-

Ba

lan

ce

Ja

nu

ary

-

20

16

Re

co

gn

ize

d

in p

ro

t o

r

los

s

Eff

ec

t o

f fo

rex

u

nc

tua

tio

ns

Re

co

gn

ize

d

in o

the

r

co

mp

reh

en

-

siv

e in

co

me

Ba

lan

ce

De

ce

mb

er-

20

16

N’0

00

N’0

00

N’0

00

N

’00

0N

’00

0

b)

Mo

ve

me

nt

in t

em

po

rary

dif

fere

nc

es d

uri

ng

th

e y

ear

Pro

pe

rty,

pla

nt

an

d e

qu

ipm

en

t

-

(2

,138

,19

7)

-

-

(

2,1

38

,19

7)

Tra

de

re

ce

iva

ble

s

-

55

8,2

57

-

-

5

58

,25

7

Oth

er

rece

iva

ble

s

-

1

,16

4,9

65

-

-

1,1

64

,96

5

Oth

er

liab

ilitie

s

-

(2,6

19

)-

-

(2

,61

9)

-

(4

17

,59

4)

-

-

(41

7,5

94

)

As

se

tsL

iab

ilit

ies

Ne

t




Dec-16 Dec-15 Dec-16 Dec-15N’000 N’000 N’000 N’000

19. Inventories

White products 1,636,842 6,743,550 1,600,672 6,553,955

Raw materials 1,115,648 1,676,911 1,115,648 1,457,946

Packaging materials 133,668 30,374 133,668 30,374

Semi-nished goods of lubricants 150,626 249,254 150,626 249,254

Finished goods of lubricants 858,500 712,302 815,714 679,811

Chemicals 760,011 647,480 - -

4,655,295

10,059,871

3,816,328

8,971,340

19.1


20. Other assetsConsumables 744,636 389,579 112,305 125,625

20.1


21. Trade and other receivables

Trade receivables (Note 21.1) 21,576,629 17,733,127 4,069,464 6,672,183 Receivable from related parties (Note 31) 5,522,627 5,986,180 8,114,709 6,515,081 Prepayments 4,073,692

4,602,520

3,651,416

4,176,425

Prepaid staff expenses 361,959

293,501

341,727

289,626

Petroleum Support Fund (PSF) receivable (Note 21.2) 15,089,649

6,684,083

15,085,356

6,684,083

Advance payment to suppliers 2,213,077

1,308,412

2,003,178

1,297,961

Interest receivable (Note 21.3) 2,091,493

2,029,338

2,091,056

2,028,864 Transporters' scheme 1,370,018

1,370,018

1,370,018

1,370,018 Withholding tax recoverable 445,830

750,696

36,899

241,979 Other debtors 196,705

140,844

195,778

140,432

52,941,679

40,898,719

36,959,601

29,416,652 Impairment allowance (Note 21.4) (6,122,221)

(6,002,101)

(5,744,074)

(5,744,074)

46,819,458

34,896,618

31,215,527

23,672,578

21.1

CompanyGroup

The Group carries out periodic review and nancial assessment of customers before products are supplied oncredit. Credit customers are categorised according to the determined default risk rating. High risk customers arerequired to provide bank guarantees for credit sales. The Credit Committee assesses the status of all creditcustomers periodically.See note 4.11 (Impairment) and Note 6 (Financial Risk Management).

The gross value of the inventory is N4.7 billion (Company : N3.8 billion) with an impairment allowance of N31.5million (Company : N16.5million). There is an All Asset Debenture Security on the Company - Forte Oil Plc'sassets for all its loans and trade nance lines with First Bank Nigeria Limited, Guaranty Trust Bank Plc andZenith Bank Plc.

Group Company

Group Company

Consumables include spare parts for retail outlets, equipment maintenance and stationery for ofce use. The accounting policy on inventories applies to this (see note 4.10)



21.2

21.3


21.4 Impairment allowanceAt 1 January 6,002,101

6,030,637 5,744,074

5,767,467

Increase/(decrease) during the year 17,602 (28,536) -

(23,393)

Effect of translation difference 102,518 -

-

-

Balance at 31 December 6,122,221 6,002,101 5,744,074 5,744,074

22. Cash and cash equivalentsBank balances 1,609,690 1,638,521 1,134,312 62,117

Short-term deposits (Note 22.1) 15,434,243 10,062,305 15,009,243 10,062,305

Cash and bank balances 17,043,933 11,700,826 16,143,555 10,124,422

Bank overdrafts used for cash management purposes (Note 22.2) (1,928,321) (10,268,358) (1,812,448) (10,226,394)Cash and cash equivalents in the

statement of cash ows 15,115,612 1,432,468 14,331,107 (101,972)

22.1

22.2


23. Share capital and reserves

Ordinary sharesa) Authorised ordinary shares:

4,000,000,000 ordinary shares of 50k each 2,000,000 2,000,000 2,000,000 2,000,000

b) Issued and fully paid ordinary shares of 50k each

1,310,629,267 ordinary share of 50k each 655,314 546,095 655,314 546,095

Group Company

This balance relates to outstanding subsidy, interest on delayed payments and foreign exchange differentialclaims under the PSF scheme recoverable from Petroleum Products Pricing Regulatory Agency (PPPRA) onPMS imported by Forte Oil Plc.

This represents the overdrawn current account balances with four Nigerian banks. These facilities have anaverage interest rate of 19% and are secured by an 'all asset debenture'.

Group Company

N2.010bn of this relates to disputed balance on interest receivable from Afribank now Skye Bank. This has beenfully impaired.

Short term deposits with banks represent placements with banks for periods between 0 - 180 days. Included inthese are unclaimed dividends amounting to N860,215,715 (Dec 2015:N799,516,310) held in a separate bankaccount in accordance with the guildlines of the Security and Exchange Commission (SEC). The unclaimeddividend deposit is restricted for use by the Company.




c) Treasury stocks

Dec-16 Dec-15 Dec-16 Dec-15

Units Units Units Units

d) Shares OutstandingIssued ordinary shares at 1 January 1,092,191

1,092,191

1,092,191

1,092,191

Treasury shares (5,599)

(5,599)

(5,599)

(5,599)

Bonus issue 218,438

218,438

Number of ordinary shares 1,305,030

1,086,592

1,305,030

1,086,592

e) Share premium 8,071,943

8,181,162

8,071,943

8,181,162

f) Retained earnings


Balance at 1 January 6,001,847 3,958,962 5,691,196 3,346,139

Prot for the year 2,601,568 4,492,406 3,235,829 4,794,578

Dividend declared (4,521,671)

(2,730,478)

(4,521,671)

(2,730,478)

Dividend withheld (20,000)

50,837 - 50,837

Reversal of dividends on forfeited shares 138,447 230,120 138,447 230,120 Balance at 31 December 2016 4,200,191 6,001,847 4,543,801 5,691,196

g) Other reserves

h)

Dec-16 Dec-15N’000 N’000

i) Non-controlling interestAt 1 January 33,198,198 31,896,549

Dividend (1,470,000) -

Share of prot for the year (see note i) 288,862 1,301,649

Balance 32,017,060 33,198,198

j) Bureau of Public Enterprises share of prot from Geregu Power Plc 1,127,849 1,749,004

BSG Resources Ltd share of prot/(loss) from Amperion Power Distribution Ltd (741,430) (395,337)

(97,556) (52,018)

288,862 1,301,649

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

Group Company

Group Company

Other reserves represent the carried forward recognised other comprehensive income and expenses plus currentyear other comprehensive income attributable to shareholders.

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

This represents 5,599,087 units (at the market value of N248 as at the date of the transfer) of the company'sexisting shares transfered to Forte Oil Plc to enable the Company recover the dividend and interest received onunpaid shares in 2009 by a shareholder. These shares were seized by the company on the ruling of the Securityand Exchange Commission (SEC). The shareholders at the 37th Annual General Meeting held on the 26th ofApril, 2016 approved the re-issue of these shares to existing shareholders of the company on a pari passu basisat the market price of N300 per share.

Shanghai Municipal Electricity Power Company Share of prot/(loss) fromAmperion Power Distribution Ltd

- -

'000 '000 '000 '000



24. Long term employee benets

The movement in the present value of the other long term employee benets was as follows:


Gratuity liability at 1 January 374,005

239,758

323,637

223,911

Charged to prot and loss 126,453

182,637

100,987

138,603

Payment during the year (13,819)

(48,390)

(10,147)

(38,877)

Gratuity liability at 31 December 486,639

374,005

414,477

323,637

Planned asset at 1 January (415,824)

(256,122)

(364,332)

(242,492)

Additional funding during the period (19,357)

(123,446)

(4,000)

(88,451)

Actual return on planned assets (53,132)

(36,256)

(46,670)

(33,389)

Balance at 31 December (over)/under

funded position (1,674)

(41,819)

(525)

(40,695)

Expense recognised in comprehensive income

Current service costs 125,744

162,701

100,987

122,561

Interest costs 709

10,436

-

9,001

Return on planned assets (53,132)

(36,256)

(46,670)

(33,389)

Remeasurement (gain) /loss 409

7,583

-

5,497

73,730

144,464

54,317

103,670

{a}

{b}

{c}

Asset volatility

Bureau of Public Enterprises (BPE) has 49% equity stake in Geregu Power Plc; BSG Resources Limited andShanghai Municipal Electricity Power Company own 38% and 5% respectively of Amperion Power DistributionLimited as at 31 December, 2016.

The planned asset is held by four fund managers : Pensions Alliance Limited (PAL); FSDH Asset ManagementLimited, Cardinal Stone Securities Limited, and Afriinvest Securities Limited.

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 ination risk.

The present value of the dened benet plan liability is calculated using a discount rate determined by referenceto high quality corporate bond yields; if the return on plan assets is below this rate, it will create a plan decit.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 areasonable portion of the plan assets should be invested in equity securities and in real estate to leverage thereturn generated by the fund.

The assets are placed in Treasury bills, Bonds with quoted market price in the active Nigerian bond market andFixed deposits are placements with nancial institutions and do not have quoted prices.

The actuary valuation report was signed in January 2017 by Miller Kingsley (FRC/2013/NAS/00000002392) ofKMC Actuarial Services a Fellow of the Society of Actuaries, USA.

Long term employee benet expense is recognised in administrative expenses in the statement of prot or loss.

Group Company

The Group operates a funded long term employees plan (gratuity) for qualifying employees of the Group. Underthe plan, the employees are entitled to a lump sum benets on attainment of a retirement age or ondisengagement after contributing a specic number of years in service. No other post-retirement benets areprovided to these employees. The most recent actuarial valuations of the present value of the dened benetobligation were carried out as at 31st December 2016 by KMC Acturial Service. The present value of the denedbenet obligation, and the related current service cost and past service cost, were measured using the ProjectedUnit Credit Method with acturial valuation being carried out at the end of each reporting period.




Life Expectancy

Salary Risk

Changes in bond yields

Ination Risk

a) Discount rate/average rate of return on assets 16.05% per annumb) Average rate of salary increase 10% per annumc) Ination rate 12% per annumd) Mortality rate A49/52 English Life Tables

Sensitivities

Revised dened benet obligations-300 basis point change in investment return+300 basis point change in investment return10% higher withdrawals10% less withdrawals20% higher mortality20% lower mortality10% higher salary increase rate10% lower salary increase rate

Percentage change in base results-300 basis point change in investment return+300 basis point change in investment return10% higher withdrawals10% less withdrawals20% higher mortality20% lower mortality10% higher salary increase rate10% lower salary increase rate

N’000

355,734

307,992

347,329

316,414

345,973

317,727

357,570

308,851

7.2%-7.2%4.7%

-4.7%4.3%

-4.3%7.8%

-6.9%

In estimating the present value of the dened benet obligation, certain assumptions on nancial environment,attrition rates of withdrawal from service and death of staff likely to be experienced were made. The signicantactuarial assumptions used are summarized as follows:

The majority of the plan's assets are either unaffected by xed interest bonds or loosely correlated with equitiesination, meaning that an increase in ination will also increase dect.

The present value of the dened benet plan liability is calculated by reference to the future salaries of planparticipants. As such, an increase in the salary of the plan participants will increase the plan’s liability.

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.

The present value of the dened benet plan liability is calculated by reference to the best estimate of themortality of plan participants during their employment. An increase in the life expectancy of the plan participantswill increase the plan’s liability.

A decrease in corporate bonds yield will increase plans liabilities.

The weighted average future service of the plan is about 22 years. The average weighted duration of the closestNigerian bond as at the valuation date, 31st December 2016, is the 12.40% FGN Mar maturity of 20 years and agross redemption yield of about 16.05%.

The scheme liabilities has been tested against investment return, salary increase rate, withdrawal rates andmortality rates with the following results:

Interest Rate Risk



Methodology

Changes in sensitivity test basis

There are no changes in sensitivities to account for.

Maturity prole of active members

Future Service

No of

Members

Dened

Benet

Obligation Total SalaryN’000 N’000

Less than 5 years - - - Up to 5 and less than 10 years - - - Up to 10 and less than 15 years 1 3,445 12,614 Up to 15 and less than 20 years 19 129,954 296,705 Up to 20 years 77 198,452 557,973

97 331,851 867,292

25. Loans and borrowings


Non-currentLong term borrowings (note 25.1) 17,394,641 13,951,682 2,172,169 2,976,673 Debenture(25.2) 8,704,594 - 8,704,594 -

26,099,235 13,951,682 10,876,763 2,976,673

Current Import nance facilities (note 25.3) 19,884,425 11,233,994 19,884,425 11,233,994 Term loans (note 25.1) 1,511,417 2,523,813 805,339 792,419

21,395,842 13,757,807 20,689,764 12,026,413

47,495,077 27,709,489 31,566,527 15,003,086

25.1 Group N11bn (Company N2.82bn) of this relates to long term nancing for the acquisition of Geregu Power Plantby Forte Oil Plc through its subsidiary Amperion Power Distribution Company Limited.Group N8.5bn (Companynil) of this also relates to the Power Intervention Loan granted to Geregu Power Plc through the Central Bank ofNigeria.

Group Company

This note provides information about the contractual terms of the Group’s interest-bearing loans and borrowings,which are measured at amortised cost.

The approach for conducting the sensitivity was a recalculation of the accrued benet obligation on the schemefor each revised assumption. The percentage difference between the new result and the base result provides ameasure of the sensitivity to the change.

There are two categories of employees in Forte Oil Plc; rst category are those on direct long term contract withthe company, while the second category are Associates on secondment to Forte from other companies. Only theformer are covered by this longterm benet.




25.2

a

bbibii dispose any of its assets above the sum of Five Billion Naira (N5,000,000,000);

c

25.3

There is an all asset debenture security as collateral to the banks for these long term borrowings.

26. Deferred fair value gain on loan

2016 2015 2016 2015N’000 N’000 N’000 N’000

Deferred fair value gain on loanNon-current 1,021,572 1,432,781 - -

1,021,572 1,432,781 - -

Current 454,032 440,855 - -

454,032 440,855 - -

1,475,604 1,873,636 - -

These represent the benet of a BOI intervention loan at a below-market rate of interest measured as thedifference between proceeds received and the fair value of the loan based on prevailing market interest rates.Thisamount is recognised in prot or loss over the year the related expenditure is incurred.

This note provides information about the contractual terms of the Group’s interest-bearing loans and borrowings,which are measured at amortised cost.

Group Company

The net proceeds were used to renance existing commercial bank loan obligations and to immediately nancethe company’s retails outlet expansion strategy.

In November 2016, The company issued N9billion unsecured corporate bonds for a 5year tenor and at a couponand effective interest rate of 17.5% and 19.43% respectively

Borrowinge are initially measured at fair value, net of transaction costs incurred. Borrowings are subsequentlymeasured at amortised cost. Any differences between the proceeds (net of transaction costs) and the redemptionvalue is recognised in the statement of prot or loss over the period of the borrowings using the effective interestmethod. The carrying values of borrowings approximate their fair value.

Import nance facilities represents short term borrowings obtained to fund letters of credits for petroleum productimportation. These facilities are secured with the product nanced, the Petroleum Subsidy Fund receivable onthem if applicable and the Company's sinking fund account included in short term deposits (Note 22).

The restriction to the bonds issued are as follows but not limited to below:-give prior notice to the Trustees of any proposed redemption and, if it shall have given Notice to the Bondholdersof its intention to redeem any Bonds, duly proceed to redeem such Bonds accordingly. not (and procure that none of its Subsidiaries shall) without the consent of the Bondholders and Trusteesincur any Indebtedness above the sumn of Five Billion Naira (N5,000,000,000.00);

give to the Trustees and Bondholders a Notice prior to the acquisition of any company/business/assets where thecost of such acquisition when aggregated with the cost of any other acquisition of any company/business/assetsby the Issuer during the nancial year of the proposed acquisition, exceeds the total sum of Five Billion Naira(N5,000,000,000).



Cu

rren

cy

No

min

al

Inte

rest

rate

Year

of

Matu

rity

Pre

se

nt

va

lue

Carr

yin

g a

mo

un

tP

rese

nt

va

lue

Carr

yin

g

am

ou

nt

N'0

00

N'0

00

N'0

00

N'0

00

Th

e G

rou

p

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rms

an

d d

eb

t re

pa

ym

en

t s

ch

ed

ule

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rms

an

d c

on

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ons o

f o

uts

tan

din

g lo

an

s w

ere

as

follo

ws:

Se

cure

d t

erm

loa

nN

aira

20

.50

%2

02

02

,33

6,7

29

2,7

07

,27

3

3,3

16

,83

1

3,1

39

,19

9

Se

cure

d t

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loa

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aira

23

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02

07

,57

1,6

33

8,9

27

,25

5

9,0

94

,32

2

8,1

46

,32

0

Se

cure

d t

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loa

n w

ith G

ove

rnm

en

t G

ran

tN

aira

7.0

0%

20

20

5,3

25

,29

3

8,4

76

,90

0

5,6

60

,76

6

6,4

33

,71

9

Se

cure

d t

erm

loa

nN

aira

18

.50

%2

01

72

57

,02

4

27

0,2

35

63

0,8

08

62

9,8

93

17

.5%

me

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m t

erm

bon

dN

aira

17

.50

%2

02

16

,96

2,4

79

8,7

04

,59

4

-

-

Tra

de

n

an

ce li

ne

sN

aira

17

.50

%2

01

71

9,8

84

,42

5

19

,88

4,4

25

11,2

33

,99

4

11,2

33

,99

4

42

,33

7,5

83

48

,97

0,6

81

29

,93

6,7

21

2

9,5

83

,12

5

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e C

om

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27. Trade and other payables

Current trade and other payablesTrade payableNNPC accounts payable 10,098,080

2,930,039

10,098,080

2,930,039

Trade creditors 15,908,195

15,448,978

4,427,439

9,657,813

Petroleum Equilisation Fund (PEF) payable (Note 27.1) 1,858,723

1,649,804

1,858,723

1,649,804

Inventory accruals (Note 27.2) 8,915,511

6,963,963

4,744,752

5,536,441

Intercompany payable 1,189,911

-

518,483

-

Customer deposits for products 1,876,191

3,525,241

1,933,746

3,575,354

39,846,611

30,518,025

23,581,223

23,349,451

Non-trade payables and other creditorsNon-trade payables and other creditors (Note 27.3) 4,553,953

3,665,470

2,826,467

2,988,236

4,553,953

3,665,470

2,826,467

2,988,236

44,400,564

34,183,495

26,407,690

26,337,687

Non-current trade and other payablesRefundable security deposits 397,615

400,487

397,615

400,487

397,615

400,487

397,615

400,487

27.1

27.2

27.3

Group Company

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

This consists of tranporters freight account, withholding tax liabilities, VAT, rents received in advance, PAYE,NSITF, and unclaimed dividends.

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 whiteproducts (excluding deregulated products) from specic PPMC depots to approved areas. Bridging allowancesare compulsory contributions on each litre of white product lifted, to assist the Federal Government defraycosts arising from bridging claims. Bridging claims are usually set off against bridging allowances to establishthe net amount due to, or from the PEF, an organ of the Federal Government of Nigeria responsible formanaging the process.




28. Financial instruments

Credit riskExposure to credit risk

Trade and receivables (Note 21) 46,819,458 34,896,618 31,215,527 23,672,578 Cash and cash equivalents (Note 22) 15,115,612 1,432,468 14,331,107 (101,972)

61,935,070 36,329,086 45,546,634 23,570,606

Forex exposureBank balances denominated in other currencies 385,296 188,804 209,042 129,276

Trade and other receivables denominated in other currencies 1,911,384 991,755 - 334,205

liabilities dominated in other currencies (20,967,026) (21,188,699) (18,166,553) (20,697,104)

(18,670,346) (20,008,140) (17,957,511) (20,233,623)

Gross Impairment Gross ImpairmentDec-16 Dec-16 Dec-15 Dec-15N'000 N'000 N'000 N'000

Impairment losses

The GroupThe aging of loans and receivables at the reporting date was:0-2 months 19,415,663 470,525 11,367,376 92,378 2-3 months 749,284 33,033 6,163,271 33,033 3-6 months 1,980,454 22,596 1,284,802 22,596 6-12 months 13,213,934 782,430 4,408,874 1,652,554 More than 12 months 18,581,322 4,813,637 17,674,396 4,201,540

53,940,656 6,122,221 40,898,719 6,002,101

CompanyGroup

The carrying amount of nancial assetsrepresents the maximum credit exposure.The maximum exposure to credit risk at thereporting date was:




Gross Impairment Gross ImpairmentDec-16 Dec-16 Dec-15 Dec-15N'000 N'000 N'000 N'000

The CompanyThe aging of loans and receivables at the reporting date was:0-2 months 2,190,108 92,378 7,870,207 92,378 2-3 months 811,770 33,033 3,622,408 33,033 3-6 months 1,073,030 22,596 457,622 22,596 6-12 months 13,611,604 782,430 3,662,188 782,430 More than 12 months 20,281,319 4,813,637 13,804,227 4,813,637

37,967,831 5,744,074 29,416,652 5,744,074

Analysis of nancial assets specically impaired.

The GroupTrade receivables 2,845,822 2,238,997 4,228,125 2,118,884 Interest receivable 2,010,355 2,010,362 2,010,355 2,010,355 Transporter's scheme receivable 1,370,018 1,370,018 1,370,018 1,370,018 Advances to contractors 500,000 500,000 500,000 500,000 Receivables from former employees 2,844 2,844 2,844 2,844

6,729,039 6,122,221 8,111,342 6,002,101

The CompanyTrade receivables 2,101,315 1,860,857 3,707,867 1,860,857 Interest receivable 2,010,355 2,010,355 2,010,355 2,010,355 Transporter's scheme receivable 1,370,018 1,370,018 1,370,018 1,370,018 Advances to contractors 500,000 500,000 500,000 500,000 Receivables from former employees 2,844 2,844 2,844 2,844

5,984,532 5,744,074 7,591,084 5,744,074

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



28

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29. Contingencies

a) Guarantees

b) Pending litigation and claims

c) Financial commitments

30. Transactions with key management personnelLoan to directorsNo loan to directors was issued during the year ended 31 December 2016.

Directors Chairman Directors ChairmanN’000 N’000 N’000 N’000

Directors emolumentsFee 600 800 600 800

Allowances 5,495 6,674 5,495 6,674

6,095 7,474 6,095 7,474

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

Key management personnel and compensation

Group 2016 20151. Group Chief Executive Ofcer Akin Akinfemiwa Akin Akinfemiwa

2. Group Executive Director - Finance and Risk Management Julius Omodayo-Owotuga Julius Omodayo-Owotuga

3. Manager Director- AP Oil and Gas Ghana Ltd Ukpai Okwara Ukpai Okwara 4. Managing Director - Forte Upstream Services Ltd Seyi Alabi Vacant5. Chief Executive Ofcer - Geregu Power Plc Adeyemi Adenuga Adeyemi Adenuga

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

The Company is engaged in lawsuits that have arisen in the normal course of business. The contingent liabilitiesin respect of pending litigation and claims amounted to N388 million at 31 December 2016 (31 December 2015 :N6.8 billion). In the opinion of the directors, and based on independent legal advice, the Company is not expectedto suffer any material loss arising from these claims. Thus, no provision has been made in these consolidatednancial statements.

The Directors are of the opinion that all known liabilities and commitments, which are relevant in assessing thestate of affairs of the Group, have been taken into consideration in the preparation of these consolidated nancialstatements.

2016 2015

The Group has 217 employees in December 2016 and 232 in December 2015. The total number of employees forthe company were 171 in December 2016 and 182 in December 2015.




Transactions with key management personnel


Key management personnel compensation comprised:Short-term employee benets:- Salaries including allowances 194,006 185,428 144,719 142,224

194,006 185,428 144,719 142,224

Post-employment benets:

- Dened contribution to compulsory pension fund scheme 12,524 13,128 9,560 10,906 Dened benet gratuity scheme 24,251 23,193 18,090 21,444

230,781 221,749 172,369 174,574

Dec-16 Dec-15 Dec-16 Dec-15Range Number Number Number NumberBelow N1,000,000 1 3 - - N1,000,001 - N2,000,000 2 2 - - N2,000,001 - N3,000,000 46 43 39 37N3,000,001 - N4,000,000 10 28 6 24N4,000,001 - N5,000,000 41 47 37 43N5,000,001 - N6,000,000 34 34 30 28N6,000,001 - N7,000,000 31 26 22 18N7,000,001 - N8,000,000 11 6 11 4N8,000,001 - N9,000,000 12 12 2 2N9,000,001 - N10,000,000 2 - 1 - N10,000,001 and above 27 31 23 26

Total 217 232 171 182

*These are annual emoluments

The Group The Company

Group Company

Key management of the Group are the executive members of Forte Oil Plc. Key management personnelremuneration includes the following expenses:

31

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Dec-16 Dec-15 Dec-16 Dec-15N'000 % N'000 % N'000 % N'000 %

Turnover 148,605,261

124,617,238

131,613,962

108,853,855

Other income 2,347,180

4,050,967

2,428,950

3,730,957

Finance income 1,887,824

3,470,012

1,356,995

3,142,423

152,840,265

132,138,217

135,399,907

115,727,235

Bought in materials and services: - Local (112,253,412)

(73,392,950)

(99,889,012) (62,409,672)

- Imported (24,034,207)

(41,660,652)

(24,034,207)

(41,040,450)

Value added 16,552,646

100

17,084,615

100

11,476,688

100

12,277,113

100

APPLIED AS FOLLOWS:

To pay employees:Salaries, wages and other staff costs 2,580,841

16

2,422,025

14

2,069,216

18

1,955,843

16

To pay Government:Taxation 2,449,814

15

1,218,387

7

2,206,653

19

1,037,177

8

To pay providers of capital:Interest on borrowings 6,169,742

37

5,145,818

30

2,622,410

23

3,091,295

26

Retained in the businessDepreciation and amortisation 2,461,819

15

2,504,330

15

1,342,580

12

1,398,220

11

Prot transferred to reserves 2,890,430

17

5,794,055

34

3,235,829

28

4,794,578

39

16,552,646 100 17,084,615 100 11,476,688 100

12,277,113

100

The Group The Company

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 thefuture creation of more wealth.

Included in depreciation and amortisation for the Group is the depreciation for the turbines used for power generation which inincluded in cost of sales of the statement of comprehensive income for the Group in line with the provisions of IFRS.

Other National DisclosuresConsolidated Statement of Value Added for the year ended 31 December 2016



2016

2015

2014

2013

2012

2016

2015

2014

2013

2012

N’0

00

N’0

00

N’0

00

N’0

00

N’0

00

N’0

00

N’0

00

N’0

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N’0

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Sha

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8,0

71,9

43

8,1

81,1

62

8,1

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62

6,9

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62,2

92,5

76

8,0

71,9

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8,1

81,1

62

8,1

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62

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76

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(2

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(7,7

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4,2

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91

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5,7

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4,54

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96

3,3

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4,8

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12

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91

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20

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17

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82,8

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06

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N

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ng

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60

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98

31

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49

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90

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77

46

,280,7

43

44

,334,6

69

42

,349,3

07

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11

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32

13

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44

Curr

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69

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21

59

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49

82

,145,5

88

46

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68

32,7

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45

49

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91

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58

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29

28

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24

Non-c

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28

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25

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72

3,3

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60

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Assets

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56

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40

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22

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Th

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om

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2015

2014

2013

2012

2016

2015

2014

2013

2012

N’0

00

N’0

00

N’0

00

N’0

00

N’0

00

N’0

00

N’0

00

N’0

00

N’0

00

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Reven

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14

8,6

05,2

61

12

4,6

17,2

38

17

0,1

27,9

78

12

8,0

27,7

44

90,9

84,2

15

13

1,6

13,9

62

10

8,8

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55

15

6,7

14,8

40

117,5

41,4

34

78

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42

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62

8,6

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48

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36,7

39

6,2

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56

2,8

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02

6,7

07,8

97

5,7

80,6

27

5,3

38,6

57

5,4

58,8

39

2,5

31,8

75

Pro

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re in

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me t

ax

5,3

40,2

44

7,0

12,4

42

6,0

06,2

98

6,5

24,5

50

1,1

49,8

05

5,4

42,4

82

5,8

31,7

55

4,2

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42

6,1

11,3

30

87

6,4

03

Pro

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2,8

90,4

30

5,7

94,0

55

4,4

56,6

17

5,0

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97

1,0

07,5

07

3,2

35,8

29

4,7

94,5

78

2,6

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13

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32

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4,4

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arn

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32.2

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4.3

2

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T

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Other National Disclosures (Cont’d)Financial Summary for the year ended 31 December 2016


Proxy Form

38TH ANNUAL GENERAL MEETING to be held at the Shell Hall, MUSON Center 8/9 Marina Street, Onikan, Lagos on July 05, 2017 at 9:00 a.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 July 05, 2017 and at any adjournment thereof. Dated this …….day of ……………….2017.

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

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.

NUMBER OF SHARES HELD:

RESOLUTIONS AGAINST

ADMISSION CARD

Please admit *-------------------------------------------------------------------------* to the 38th Annual General Meeting of the members of Forte Oil Plc holding at the Shell Hall, MUSON Center 8/9 Marina Street, Onikan, Lagos on July 05, 2017 by 9.00am.

IF YOU ARE UNABLE ATTEND THE MEETINGA 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 June 28, 2017. 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

FOR

Report of the Directors, the Balance Sheet together with the Profit and Loss Account s at 31st December 2016

To re-elect Mr. Christopher Adeyemi as a Director

To ratify the appointments of Mr. Nicolaas Vervelde, Mrs. Salamatu Suleiman and Dr. (Mrs) Mairo Mandara as Non- Executive Directors

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

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.



Premium Multigrade Premium Multigrade Engine OilEngine Oil

Premium Multigrade Engine Oil

www.forteoilplc.comAvailable at all Forte Oil retail stations

Customer Care Line: +234 1 277 6122

@ForteOilNg

D N TRA UD SE TT ES DE T

S 4IN 6C 9E 1

Cleans engine

Coolsengine

Excellent coldstarting

characteristics

Perfect protectionagainst wear and

tear

Extended draininterval

VERITAS REGISTRARS



Veritas Registrars

E-Dividend Mandate

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


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 SecretaryFO House, 13 Walter Carrington CrescentVictoria Island, LagosFRC/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 .............…………………………………

Postal Address……………………………….................................………

Telephone Number …………………….....................................………

Date……………………………………….....................................………

CSCS Account Number………………………………………..................



Notes



13 Walter Carrington CrescentVictoria Island, Lagos, Nigeria.

2016 Annual Report2016 Group Financial Results at a Glance for the year ended 31 December, 2016 FOR...

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