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MOBIL OIL NIGERIA plc Unaudited Financial Statements for the period ended March 31st, 2014

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Page 1: MOBIL OIL NIGERIA plc - ExxonMobilcdn.exxonmobil.com/~/media/global/files/nigeria/mobil_oil_nigeria... · Mobil Oil Nigeria plc. was incorporated as a Private Limited ... Premium

MOBIL OIL NIGERIA plc

Unaudited Financial Statements for the

period ended March 31st, 2014

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Mobil Oil Nigeria plc

Statement of Significant Accounting Policies

31 March, 2014

The CompanyMobil Oil Nigeria plc. was incorporated as a Private Limited Liability Company in 1951. It became a public limited

liability company in 1978 and its share capital is listed on the Nigerian Stock Exchange.

The issued share capital is held 60% by ExxonMobil Oil Corporation, Fairfax, U.S.A., and 40% by other investors.

The Company was formed principally for the marketing of petroleum products. Petroleum products the company

sells include; Premium Motor Spirit (PMS), Diesel, Aviation fuel, kerosene and lubricants. Petrol, Diesel, Kerosene and

lubricants are mainly sold through the company’s service stations while Aviation fuel through the aviation domestic

and international terminal at Murtala Mohammed Airport.All the fuels which the Company sells are purchased from the Nigerian National Petroleum Corporation and from

other third party suppliers. Lubricants are blended locally or purchased from associated companies.

The company also has some investment properties which are leased out to a related party at market rate in an arm’s

length transaction.

Statement of ComplianceThe financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS)

issued by the International Accounting Standards Board (IASB).

Significant accounting policies1 Basis of measurement

The financial statements have been prepared under the historical cost convention.

2 Presentation of financial statements

The preparation of the financial statements in conformity with IFRS requires the use of estimates and assumptions

that affect the reported amounts of assets and liabilities, disclosures at the date of the financial statements and the

reported amounts of revenues and expenses during the reporting period. Although these estimates are based on the

directors' best knowledge of current events and actions, actual results may differ from those estimates.

3 Jointly controlled assets

The Company has jointly controlled assets with Total Nigeria for storage and handling of jet fuel to aircrafts in its

Aviation Domestic Terminal of Murtala Mohammed airport. In addition, the Company has a twenty percent (20%)

interest in the Joint Users Hydrant Installation used to refuel aircraft at Murtala Mohammed Airport international

terminal. The Company combines its share of the joint assets income and expenditure, assets and liabilities and cash

flow on a line-by-line basis with similar items in the Company’s financial statements. The Company classifies its share

of the jointly controlled assets, according to the nature of the assets; while operating costs of the joint facility are

shared based on throughputt. Mobil Oil Nigeria plc. has no obligation to decommission these assets and has not recognized any decommissioning

costs.

4 Investment Property

Investment property is recognised as an asset when it is probable that the future economic benefits associated with the

property will flow to the Company and its costs can be measured reliably.

Investment property is initially recognised at cost. Transaction costs are included in the initial measurement.

Costs include costs incurred initially and costs incurred subsequently to add to, or to replace a part of, or service a

property. Where a replacement part is recognised in the carrying amount of the investment property, the carrying

amount of the replaced part is derecognised.Subsequent costs are included in the carrying amount of the investment property or recognized as a separate asset as

appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company

and the cost of the item can be measured reliably.

Cost model

Investment property is carried at cost, less depreciation and any accumulated impairment losses.

Depreciation is provided to write down the cost, less estimated residual value over the useful life of the property,

which is as follows:

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Mobil Oil Nigeria plc

Statement of Significant Accounting Policies (Contd.)

31 March, 2014

5 Property plant and equipment

All categories of property, plant and equipment are initially recorded at cost. Cost includes expenditures that are

directly attributable to the acquisition of the asset. Subsequent costs are included in the asset's carrying amount or

recognized as a separate asset as appropriate, only when it is probable that future economic benefits associated with

the item will flow to the Company and the cost of the item can be measured reliably. Interest is capitalized as an

increase in property, plant and equipment on major capital projects during construction. All property, plant and

equipment are stated at historical cost less depreciation. Repairs and maintenance costs are charged to the statement of

income during the period in which they are incurred.Residual values, method of amortization and useful lives of the assets are reviewed consistently and adjusted when

appropriate.Impairment losses and gains and losses on disposals of property, plant and equipment and are included in Statement

of Comprehensive Income.Incomplete construction relates to uncompleted project which are not depreciated. Upon completion, balances are

reclassified to the relevant asset category for depreciation.

The useful lives of items of property, plant and equipment have been assessed as follows:

6 Intangible assets

The Company’s intangible assets are classified into two groups:

a) Software costs:

These are acquired computer software licenses and are capitalised on the basis of costs incurred to acquire and bring to

use the specific software. The costs are amortised on a straight line basis over 15 years which is the estimated useful

life of the software. Costs associated with maintaining computer software programs are recognized in expense as

incurred.

b) Franchise costs:

These are capitalised amounts paid to UAC for giving the Company the right to use the "Mr. Biggs" Brand in Mobil

retail outlets. Amortisation is calculated using the straight line method to allocate the franchise costs over the period of

the agreement between Mobil and UAC, which has a contractual life of 10years.

7 Financial Instruments

a) Initial recognition and measurement

Financial instruments are recognised initially when the Company becomes a party to the contractual provisions of the

instruments. The Company classifies its financial instruments on initial recognition as a financial asset or a financial

liability.

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Mobil Oil Nigeria plc

Statement of Significant Accounting Policies

31 March, 2014

b) Derecognition

Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have

been transferred and the Company has transferred substantially all risks and rewards of ownership.

c) The Company’s financial instruments are classified as:

i. Loans and receivables

Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active

market. They are included in current assets, except for maturities greater than 12 months after the end of the reporting

period.

Trade and other receivables

Trade receivables are measured on initial recognition at fair value, and are subsequently measured at amortised cost

using the effective interest rate method. Appropriate allowances for estimated irrecoverable amounts are recognised

in the statement of comprehensive income when there is objective evidence that the asset may be impaired. Significant

financial difficulties of the debtor, probability that the debtor will file for bankruptcy or conduct financial

reorganization, and default or delinquency in payments (more than 180 days overdue) are considered indicators that

the trade receivable is impaired. The allowance recognised is measured as the difference between the asset’s carrying

amount and the present value of estimated future cash flows discounted at the effective interest rate computed at

initial recognition.The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is

recognised in profit and loss within operating expenses. When a trade receivable is uncollectable, it is written off

against the allowance account for trade receivables. Subsequent recoveries of amounts previously written off are

credited against operating expenses in profit and loss.

Cash and cash equivalents

Cash and cash equivalents include cash in hand, deposits held at call with banks and other short-term highly liquid

investments. Bank overdrafts are recognized under current liabilities.

ii. Financial liabilities at amortized cost

Trade and other payables

Trade payables are initially measured at fair value, and are subsequently measured at amortised cost, using the

effective interest rate method

Borrowings

Borrowings are initially measured at fair value and are subsequently measured at amortised cost using the effective

interest rate method. Any difference between the proceeds (net of transaction costs) and the settlement or redemption

of borrowings is recognised over the term of the borrowings in accordance with the Company’s accounting policy for

borrowing costs.Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is

probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down

occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee

is capitalised as a pre-payment for liquidity services and amortised over the period of the facility to which it relates.

8 Current and deferred income tax

Income tax expense is the aggregate of the charge to the profit and loss account in respect of current income tax,

education tax and deferred tax.

Current income tax liabilities are recognised in line with the provisions of the Companies Income Tax Act. Education

tax is determined at 2% of assessable profits. Capital gains tax liability is charged on applicable capital asset disposals

where the proceeds are not to be reinvested in a similar asset.Deferred tax is provided using the liability method on all temporary differences arising between the tax basis of assets

and liabilities and their carrying values for financial reporting purposes in accordance with the provisions of IAS 12.

Current tax rates are used to determine deferred taxes. Income taxes are recognised in income except when they relate to items recognized in other comprehensive income, in

which case the tax is also recognised in other comprehensive income.

Deferred tax assets are recognised only to the extent that it is probable that future taxable profits will be available

against which the temporary differences can be utilized.

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current assets

against current liabilities and when deferred income taxes assets and liabilities relate to income levied by the same

taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the

balances on a net basis.

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Mobil Oil Nigeria plc

Statement of Significant Accounting Policies

31 March, 2014

9 Leases

a) Finance lease

These are leases that transfer substantially all the risks and rewards of ownership to the Company. They are recognised

at the commencement of the lease term as finance leases and are capitalized at the fair value of the leased asset or, if

lower, at the present value of the minimum lease payments. Finance lease payments are apportioned between interest

expense and repayments of debt.The Company’s finance leases relate to motor vehicles where it bears substantially all risks and rewards.Loans and

receivables

Assets acquired under lease are depreciated using the useful life of the assets. However, if there is no reasonable

certainty that the Company will obtain ownership by the end of the lease term, they are depreciated over the shorter of

the useful life and the lease term.

b) Operating lease

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor, are classified as

operating leases.

The Company owns investment properties which are leased out under operating lease agreements to related parties.

The investment properties are presented in the balance sheet in line with the accounting policy disclosed in note 4.The lease income from the operating leases are recognized in income on a straight-line basis over the lease term. They

are also received from the lessee on the same basis. Costs, including depreciation, incurred in earning the lease income

are recognized as an expense.

10 Inventories

Inventories are stated at the lower of cost and net realizable value. Cost includes expenditure incurred in acquiring

and transporting the stock to its present location. Cost is determined using the first-in, first-out (FIFO) method for

lubricant products and weighted average method for fuels products. Net realisable value is the estimated selling price

in the ordinary course of business, less applicable variable selling expenses. If the carrying value exceeds the net

realisable value, an inventory write down is recognised.

11 Employee Benefits

a) Short term benefits

The cost of short-term employee benefits, (those payable within 12 months after the service is rendered, such as paid

vacation and sick leave, and non-monetary benefits such as medical care), are recognised in the period in which the

service is rendered and are not discounted.

The expected cost of compensated absences is recognised as an expense as the employees render services that increase

their entitlement or, in the case of non-accumulating absences, when the absence occurs.

b) Post-employment benefits

The Company operates a defined benefit pension plan approved by the National Pension Commission. These are

retirement plans that define the amount of pension benefit to be provided and are generally funded by payments to

independent pension fund administrators.

The defined benefits plans define an amount of pension benefit that an employee will receive on retirement usually

dependent on one or more factors as determined by the actuary. The defined benefit obligation is calculated by the

actuary using the projected unit credit method.

Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are recognized in

the statement of other comprehensive income in the periods in which they arise.

Pension cost represents the increase in the actuarial present value of the obligation for pension benefits based on

employee service during the year and the interest on this obligation in respect of employee service in previous years,

net of the expected return on plan assets.

Pension costs are recognized as expenses in the statement of comprehensive income.

12 Provisions and contingencies

Provisions are recognized as best estimates on balance sheet dates. They are recognised when the company has a legal

or constructive obligation as a result of past events and where it is more likely than not that an outflow of resources

will be required to settle the obligation. A reliable estimate of the amount to settle the obligation must also be possible

before a provision is made. The measurement of provisions takes into consideration the time value of money and risk

specific to the obligation. The increase in provision due to the passage of time is recognised as an interest expense.

The carrying amount of provisions are regularly reviewed and adjusted for new facts or changes in law, regulation.

Where the above conditions are not met, a contingent asset/liability is disclosed.

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Mobil Oil Nigeria plc

Statement of Significant Accounting Policies (Contd.)

31 March, 2014

13 Revenue Recognition

Revenue from the sale of all petroleum products (PMS, Aviation fuel, Diesel, Kerosene and lubricants) is recognised at

fair value of consideration received or receivable net of taxes and discounts on sales when the significant risk and

rewards of ownership have been transferred and title passed to the customer. Revenue is recognized when the following conditions have been met

• The company has transferred to the buyer the significant risks and rewards of ownership of the goods.

• The company does not retain managerial involvement usually associated with ownership nor effective control over

the goods sold• The amount of revenue can be measured reliably

• It is probable that the economic benefits associated with the transaction will flow to Mobil oil Nigeria plc.

• The costs incurred in respect of the transaction can be measured reliably.

14 Interest Income

Interest income is recognised in the Company’s financial statements using the effective interest rate method.

15 Other Income

Other income refers to all other sources of income apart from the sale of petroleum products which the Company

receives. It includes amongst others; rental income and back court income. Rental income refers to rent the Company gets from its investment property and service stations. This income is

recognised when due for payment according to the contract terms in place.Backcourt income refers to income recognised from the use of the food court on some of the Company’s service

stations by UAC. It is charged at a percentage of total revenue recognised by the UAC at the food courts.

16 Borrowing Costs

Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are

capitalised as part of the cost of that asset until such time as the asset is ready for its intended use. The amount of

borrowing costs eligible for capitalisation is determined as follows:Actual borrowing costs on funds specifically borrowed for the purpose of obtaining a qualifying asset less any

temporary investment of those borrowings.

Weighted average of the borrowing costs applicable to the entity on funds generally borrowed for the purpose of

obtaining a qualifying asset. The borrowing costs capitalised do not exceed the total borrowing costs incurred. The

capitalisation of borrowing costs commences when:

• expenditures for the asset have occurred;

• borrowing costs have been incurred, and

• activities that are necessary to prepare the asset for its intended use or sale are in progress

Capitalisation is suspended during extended periods in which active development is interrupted and ceases when

substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are complete. All

other borrowing costs are recognised in an expense in the period they are incurred.

17 Translation of foreign currencies

The Company’s presentation currency and functional currency is Nigerian Naira. Transactions in foreign currencies

are recorded at the official rates of exchange on the transaction date. Assets and liabilities denominated in foreign

currency are translated at the applicable official rates of exchange on the balance sheet date. Exchange gains and losses

are included in the profit and loss account of the period in which they arise.

18 Segment Reporting

The Company has two business segments - Petroleum Products Marketing & Property Business. These business

segments have been grouped in a manner consistent with internal reporting and as provided to the chief operating

decision maker (Executive Directors). The Company's activities that are significantly integrated or interdependent are

not considered as separate business segments.

19 Dividend payable

Proposed dividends for the year are recognised as a liability after the balance sheet date when declared and approved

by shareholders at the Annual General Meeting.

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Mobil Oil Nigeria plc

Statement of Significant Accounting Policies (Contd.)

31 March, 2014

20 Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of shares are recognized

as a deduction from equity.

21 Deferred income

This relates to advance rent received from investment property. The current portion is amortized to income within one

year on a straight line basis while the non-current portion is initially carried at initial cost and subsequently at face

value.22 Impairment

a) Financial assets

At each reporting date the company assesses all financial assets, other than those at fair value through profit or loss, to

determine whether there is objective evidence that a financial asset or group of financial assets has been impaired.

The Company adopts the following criteria when considering the financial assets not at fair value, in the books:

• Indication of any material decline in market value.

• Significant changes with long term adverse impacts that have taken place during the period or will take place in

the near future.

• Material changes in interest rates.

• Evidence of adverse economic performance

Impairment losses are reversed when an increase in the financial asset's recoverable amount can be related objectively

to an event occurring after the impairment was recognised, subject to the restriction that the carrying amount of the

financial asset at the date that the impairment is reversed shall not exceed what the carrying amount would have been

had the impairment not been recognized.

b) Tangible and intangible assets

Impairment test is carried out on group of fixed assets only when events or changes in circumstances indicate that the

carrying amount of the assets may not be recoverable.

The Company assesses at each end of the reporting period whether there is any indication that an asset may be

impaired. If any such indication exists, the Company estimates the recoverable amount of the asset.If there is any indication that an asset may be impaired, the recoverable amount is estimated for the individual asset. If

it is not possible to estimate the recoverable amount of the individual asset, the recoverable amount of the cash-

generating unit to which the asset belongs is determined.The recoverable amount of an asset or a cash-generating unit is the higher of its fair value less costs to sell and its

value in use. If the recoverable amount of an asset is less than its carrying amount, the carrying amount of the asset is

reduced to its recoverable amount. That reduction is recognised as an impairment loss.

An impairment loss of assets carried at cost less any accumulated depreciation or amortisation is recognised

immediately in profit or loss. Any impairment loss of a revalued asset is treated as a revaluation decrease.

23 Key Accounting Estimates and Jungements

In preparing the financial statements, management is required to make estimates and assumptions that affect the

amounts represented in the financial statements and related disclosures. Use of available information and the

application of judgment is inherent in the formation of estimates. Actual results in the future could differ from these

estimates which may be material to the financial statements. Significant judgments include:

a) ProvisionsProvisions made in the financial statements are determined by management using estimates based on the information

available. Additional disclosures of provisions are included in the provisions note (Note 20). The provision made by

management during the year is 100% of the litigation claim filed against the company.

Provisions for litigation claims are classified as non-current liabilities based on the time frame for legal cases to be

settled.

b) Defined benefit pension plansDefined benefit plan assets and obligations are subject to significant volatility as market values and actuarial

assumptions change. The assumptions used in determining the net cost/income for pensions include the discount

rate, mortality rates, and expected increase in salaries. Any change in these assumptions will impact the carrying

amount of the pension obligation.

The Actuary determines the appropriate discount rate to use at the end of the year based on the interest rates of

government bonds with extrapolated maturities corresponding to the expected duration of the defined benefit

obligation. The interest rate is used to determine the present value of estimated future cash outflows to be required to

settle the pension obligations.

Due to the complexity of valuation, the underlying assumption and its long term nature, a defined benefit obligation is

highly sensitive to changes in these assumptions. All the assumptions are reviewed at each reporting date.

Under the accounting policy applied, experienced gains or losses are recognised immediately in the statement of other

comprehensive income.

Pension Fund Administrators manage the pension funds in accordance with National Pension Commission

(PENCOM) regulations.

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Mobil Oil Nigeria plc

Unaudited Statement of Financial Position

As at 31 March, 2014

=N='000

Assets

Non-current assets

Property plant and equipment 2a 7,014,343 7,111,042

Lease assets 2b 20,785 605

Intangible assets 3 128,553 134,706

Investment property 4 22,015,845 20,695,199

Deferred tax 11 713,048 350,964

Prepayments 5 1,707,179 1,525,090

Total non-current assets 31,599,753 29,817,606

Current assets

Inventories 6 5,433,906 4,509,924

Assets held for sale 4 - 128,075

Trade and other receivables 7 5,430,949 5,311,211

Cash and cash equivalents 16 4,097,751 961,706

Total current asset 14,962,606 10,910,916

Total assets 46,562,359 40,728,522

Equity and Liabilities

Equity

Share capital 180,298 180,298

Share premium 14,380 14,380

Reserves 18 13,207,218 9,342,953

Total capital and reserves 13,401,896 9,537,631

Current liabilities

Current tax payable 13 3,031,730 1,940,830

Payables and other liabilities 8 10,668,384 7,913,886

Current portion of deferred income 9b 1,413,218 4,526,160

Total current liabilities 15,113,332 14,380,876

Non current liabilities

Pension plan asset /(reserve) 12 1,327,923 1,253,087

Long-term borrowings 10 1,122,508 1,086,259

Deferred income 9a 15,596,700 14,470,669

Total non-current liabilities 18,047,131 16,810,015

Total liabilities 33,160,463 31,190,891

Total Equity and Liabilities 46,562,359 40,728,522

(0) 0

March 2014 December 2013Note

The financial statements, accounting policies and the notes were approved by the Board of Directors on April 25, 2014 and signed on its behalf by:

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Mobil Oil Nigeria plc

Unaudited Statement of Total Comprehensive Income

For the Period Ended 31 March 2014

=N='000

Turnover 22,410,962 19,142,475

Cost of sales (19,378,585) (17,052,594)

Gross profit 3,032,377 2,089,881

Other income 14 632,289 492,213

Selling and distribution expenses (1,273,488) (1,209,060)

Administrative expenses (482,078) (437,196)

Other non-operating income /(expense) * 15 2,787,860 (906)

Operating profit 4,696,960 934,932

Finance income 55,842 7,597

Finance costs (5,539) (18,432)

Profit before taxation 4,747,263 924,097

Taxation 13 (882,998) (299,903)

Profit for the period 3,864,265 624,194

Basic earnings per share (kobo) 1,072 173

Items that will not be reclassified to profit or loss

Actuarial gains /(losses) - -

Other comprehensive income net of tax - -

Total comprehensive income for the period 3,864,265 624,194

Statement of Other Income

Statement of Income Note Jan - Mar 2014 Jan - Mar 2013

Jan - Mar 2014 Jan - Mar 2013

Note: * Included in other non-operating income is the sum of N2,851,584,800 which relates to profit on sale of a surplus property.

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Mobil Oil Nigeria plc

Unaudited Changes in Equity

For the Period Ended 31 March 2014

=N='000

2014 March

Share

capital

Share

premium

Total share

capital

Reserves Accumulated other

reserves Total equity

At the beginning of the year 180,298 14,380 194,678 10,249,955 (907,002) 9,537,631

Comprehensive Income for the period - - - 3,864,265 - 3,864,265

At the end of the period 180,298 14,380 194,678 14,114,220 (907,002) 13,401,896

2013 December

Share capital Share

premium

Total share

capital

Reserves Accumulated other

reserves Total equity

At the beginning of the year 180,298 14,380 194,678 8,572,146 (2,176,856) 6,589,968

Comprehensive Income for the period - - - 3,480,785 - 3,480,785

Dividend payment - - - (1,802,976) - (1,802,976)

Other Comprehensive Income/(loss) for the period - - - - 1,269,854 1,269,854

At the end of the period 180,298 14,380 194,678 10,249,955 (907,002) 9,537,631

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Mobil Oil Nigeria plc

Unaudited Statement of Cash Flows

For the Period Ended 31 March 2014

=N='000

OPERATING ACTIVITIES

Operating Profit 4,696,960 934,932

Adjustment for non cash items

Depreciation of fixed assets 272,685 152,803

Provision for pension plan 107,507 151,048

Amortization of intangible assets 6,153 7,606

(Gain) / Loss on disposal of fixed assets (2,787,860) -

(2,401,515) 311,457

Changes in current assets and liabilities

Decrease/(Increase) in inventories (923,982) (1,080,164)

Decrease/(Increase) in due from associated companies (113,486) (144,443)

Decrease/(Increase) in foreign currency deposit for imports (16,934) 64,990

Decrease/(Increase) in trade debtors and bridging claims 253,294 (493,876)

Decrease/(Increase) in other debtors and prepayments (424,701) 81,384

Increase/(Decrease) in due to associated companies (259,917) 464,393

Increase/(Decrease) in trade creditors 2,899,787 (1,434,375)

Increase/(Decrease) in other creditors and accruals 94,448 (326,700)

Increase/(Decrease) in unamortised rental income (1,986,911) 612,642

Net changes in current assets and liabilities (478,402) (2,256,149)

Income taxes paid (17) -

Witholding tax credit utilised (154,165) (193,048)

Retirement benefits paid (32,671) -

Net cash generated from operating activities 1,630,190 (1,202,808)

INVESTING ACTIVITIES

Purchase of fixed assets (1,575,954) (1,314,410)

Proceeds from disposal of assets 2,975,077 1,268

Interest received 55,842 7,597

Net cash used in investing activities 1,454,965 (1,305,545)

FINANCING ACTIVITIES

Increase/(Decrease) in overdraft - 1,565,408

Long-term borrowings 36,249 741,332

Increase/(Decrease) in lease obligations 20,180 (4,801)

Interest charges (5,539) (18,432)

Net cash used in financing activities 50,890 2,283,507

Net Increase/(Decrease) in cash and cash equivalents 3,136,045 (224,846)

Cash and cash equivalents at beginning of the period 961,706 243,697

Cash and cash equivalents at end of the period 4,097,751 18,851

(1) 20,640

Jan - Mar 2014 Jan - Mar 2013Note

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Mobil Oil Nigeria plc

Notes to the Unaudited Interim Financial StatementFor the Period Ended 31 March 2014

1 The Company

The Company was incorporated as a private limited liability company in 1951. It became a public limited liability company in 1978 and its

share capital is listed on the Nigerian Stock Exchange.

The issued share capital is held 60% by ExxonMobil Oil Corporation, Fairfax, U.S.A., and 40% by other investors.

2a Property plant and equipment movement analysis

Plant Fixtures

and and Motor Incomplete

Land Buildings Equipment Fittings Vehicles Construction Total

N'000 N'000 N'000 N'000 N'000 N'000

Cost

At beginning of the period 718,268 3,892,688 5,707,713 300,379 284,954 677,157 11,581,159

Additions - 60,809 1,680 - - (5,251) 57,238

Transfers from Incomplete Construction - 40,075 69,455 4,720 - (114,250) -

Disposals - (1,037) (51,810) (7,145) (4,005) - (63,997) At end of the period 718,268 3,992,535 5,727,038 297,954 280,949 557,656 11,574,400

Depreciation

At beginning of the period - (1,353,192) (2,762,479) (165,848) (188,598) - (4,470,117)

Charge for period - (61,156) (74,387) (10,148) (6,223) - (151,914)

Disposals - 1,037 50,585 6,347 4,005 - 61,974 At end of the period - (1,413,311) (2,786,281) (169,649) (190,816) - (4,560,057)

Net book value

31 December 2013 718,268 2,579,224 2,940,757 128,305 90,133 557,656 7,014,343

1

Plant Fixtures

and and Motor Incomplete

Land Buildings Equipment Fittings Vehicles Construction Total

N'000 N'000 N'000 N'000 N'000 N'000

Cost

At beginning of the period 686,854 3,787,818 5,684,694 336,610 338,623 453,823 11,288,422

Additions - 74,253 123,318 6,841 - 626,812 831,224

Transfers from Lease - - - - 29,754 - 29,754

Transfers 31,414 106,495 264,249 1,320 - (403,478) -

Disposals - (75,878) (364,548) (44,392) (83,423) - (568,241) At end of the period 718,268 3,892,688 5,707,713 300,379 284,954 677,157 11,581,159

Depreciation

At beginning of the period - (1,255,110) (2,715,468) (185,877) (236,731) - (4,393,185)

Charge for period - (150,815) (329,762) (24,026) (27,296) - (531,899)

Transfers from Lease - - - - (7,438) - (7,438)

Disposals - 52,733 282,751 44,055 82,867 - 462,406 At end of the period - (1,353,192) (2,762,479) (165,848) (188,598) - (4,470,117)

Net book value

31 December 2012 718,268 2,539,496 2,945,234 134,531 96,356 677,157 7,111,042

The Company was formed principally for the marketing of petroleum products. All the fuels which the Company sells are purchased from the Nigerian

National Petroleum Corporation and other third party suppliers. Lubricants are blended locally or purchased from associated companies.

March 2014

December 2013

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Mobil Oil Nigeria plc

Notes to the Unaudited Interim Financial Statement

For the Period Ended 31 March 2014 N'000

2b Leasehold asset movement analysis

Leasehold Land Motor Vehicles Total

50 years below

N'000 N'000 N'000

Cost

At beginning of the period 2,275 - 2,275

Additions - 21,525 21,525

At end of the period 2,275 21,525 23,800

Depreciation

At beginning of the period (1,670) - (1,670)

Charge for period - (1,345) (1,345)

At end of the period (1,670) (1,345) (3,015)

Net book value

31 December 2013 605 20,181 20,7850

Leasehold Land Motor Vehicles Total

50 years below

N'000 N'000 N'000

Cost

At beginning of the period 2,275 29,754 32,029

Transfers - (29,754) (29,754)

At end of the period 2,275 - 2,275

Depreciation

At beginning of the period (1,670) (1,101) (2,771)

Charge for period - (6,337) (6,337)

Transfers - 7,438 7,438

At end of the period (1,670) - (1,670)

Net book value

31 December 2013 605 - 605

3 Intangible assets movement analysis

March 2014 Software Costs Franchise Costs Total

N'000 N'000 N'000

Cost

At beginning of the period 201,551 133,278 334,829

At end of the period 201,551 133,278 334,829

Amortization

At beginning of the period (96,298) (103,825) (200,123)

Amortization for the period charged to expense (3,359) (2,794) (6,153)

At end of the period (99,657) (106,619) (206,276)

Net Book Value

31 December 2013 101,894 26,659 128,553

128,553

December 2013 Software Costs Franchise Costs Total

N'000 N'000 N'000

Cost

At beginning of the period 201,551 133,278 334,829

At end of the period 201,551 133,278 334,829

Amortization

At beginning of the period (82,861) (87,805) (170,666)

Amortization for the period charged to expense (13,437) (16,020) (29,457)

At end of the period (96,298) (103,825) (200,123)

Net Book Value

31 December 2013 105,253 29,453 134,706

Intangible assets are made up of the cost of upgrading the Company's computer systems and the franchise

cost paid, which gives the Company the right to use named brands in Mobil service stations. The assets are

amortised using straight line method with a useful life of fifteen and ten years for the software and franchise

cost respectively.

December 2013

March 2014

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Mobil Oil Nigeria plc

Notes to the Unaudited Interim Financial Statement

For the Period Ended 31 March 2014

=N='000

4

20,695,199 13,164,228

1,497,191 8,155,120

- (128,075)

(57,119) (32,057)

(119,426) (464,017)

Closing balance 22,015,845 20,695,199

1

450,186 1,930,945

(116,427) (476,080)

5 Prepayments (Non-Current)

Rent 1,528,931 1,338,703

Employee benefits 53,290 54,180

Loan 124,958 132,207

Prepayment and deferred charges 1,707,179 1,525,090

6 Inventories

Raw materials 4,066,879 3,559,978

Finished products 1,367,027 949,946

Total 5,433,906 4,509,924

7 Trade debtors and other receivables

Trade debtors 1,889,695 2,044,650

Bridging claims 277,609 375,948

Other debtors 737,708 465,355

Current portion of prepayments 68,570 159,372

Foreign currency deposit for imports 54,994 38,060

Advances and employee receivables 410,547 359,256

Due from associated companies 1,872,340 1,758,854

Value Added Tax net receivable 119,486 109,716

Total 5,430,949 5,311,211

Aging analysis of trade debtor

Current 1,844,124 2,015,676

Overdue 1 - 30 Days 24,805 26,402

Overdue 31 - 60 days 19,802 -

Overdue 61 - 90 days 822 142

Overdue 91 - 180 days 142 297

Overdue 181 days - 2,133

Total 1,889,695 2,044,650

8 Payables and other liabilities

Trade creditors 7,085,121 4,185,334

Other creditors 2,627,686 2,431,326

Accruals 51,107 153,019

Lease obligation 20,180 -

Due to associated companies 884,290 1,144,207

Total 10,668,384 7,913,886

December 2013March 2014

The fair value of financial liabilities included above aproximates the carrying amount.

Investment Property

Opening balance

Additions

Disposals

Depreciation

Amounts recognized in profit and loss for the period

Rental income from investment property

Direct operating expenses from rental generating investment property

This represents prepaid rent for company owned service stations, prepaid employee benefits and prepaid loan.

Asset held for sale

The investment property previously disclosed as asset held for sale was disposed during the period. The gain on disposal has been

reported as part of other non-operating income in the Statement of Comprehensive Income.

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Mobil Oil Nigeria plc

Notes to the Unaudited Interim Financial Statement

For the Period Ended 31 March 2014

=N='000

9 Deferred revenue

9a (a) Portion of deferred revenue due after one year (Non-current) 15,596,700 14,470,669

9b (b) Portion of deferred revenue due within a year (Current) 1,413,218 4,526,160

10 Long-term Borrowings

(a) Borrowings due after one year (Non-current) 1,122,508 1,086,259

The lender of the term loan is Zenith Bank plc and it is due to mature in October 2023

11 Deferred income tax

(a) Deferred tax movement

At beginning of the period 350,964 283,963

Current period charge/(provision) 362,084 67,001

At the end of the period 713,048 350,964

(b) Deferred tax

Deferred tax asset

Retirement benefits 424,935 400,988

Advance rent 2,505,327 2,231,765

Deferred tax on remmitable service charge 38,153 -

Others 27,878 14,541

Total deferred tax asset 2,996,293 2,647,294

Deferred tax liability

Accelerated depreciation (2,208,994) (2,222,079)

Capital gains tax rollover (74,251) (74,251)

Total deferred tax liability (2,283,245) (2,296,330)

Net deferred tax asset/(liability) 713,048 350,964

12 Pension plan liability

Movement Analysis:

At beginning of the period (1,253,087) (2,530,145)

Provision for the period (107,507) (604,197)

Payments made during the period 32,671 13,824

Additional Provision - 1,867,431

At the end of the period (1,327,923) (1,253,087)

Reconciliation of amount recoginised in the statement of financial position

Defined Benefit Obiligation (5,554,127) (5,339,333)

Funded Asset 4,226,204 4,086,246

Net Liability at the end of the period (1,327,923) (1,253,087)

March 2014 December 2013

The Company operates a defined benefit pension plan. As at the end of the reporting years, the outstanding obligations as valued by

the actuary, comprised of both unfunded reserves and funded assets. The requirements of Section 39 of the Pension Reforms Act

specifies that any deficit is funded within 90 days.The pension plan liability balance at the end of the year represents the shortfall of

the cumulative funding over the benefits liability accrued in income.

This represents advance rent for the company's real estate occupied by a related party company, Mobil Producing Nigeria Unlimited.

The fair value of financial liabilities included above approximates the carrying amount.

Additional Provision relates to Actuarial gains & losses recognized in Other Comprehensive Income (OCI)

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Mobil Oil Nigeria plc

Notes to the Unaudited Interim Financial StatementFor the Period Ended 31 March 2014

=N='000

13 Current tax analysis:

Movement in current income tax balance

At beginning of the period 1,940,830 1,171,254

Payments (17) (1,306,567)

Provision for the period 1,245,082 2,306,797

Withholding tax credit (154,165) (230,654)

At the end of the period 3,031,730 1,940,830

Taxation charge for the period

Based on profit for the period :

Company income tax 907,323 441,705

Capital gains tax 271,474 -

Education tax 66,285 33,104

Current taxes 1,245,082 474,809

Deferred tax Profit & Loss (362,084) (174,906)

Deferred tax Other Comprehensive income - -

Total Company Deferred taxes (362,084) (174,906)

Taxation Charge Profit & Loss 882,998 299,903

Taxation Charge Other Comprehensive income - -

Total company Taxation charge 882,998 299,903

14 Other income

Rent income 515,167 420,508

Gain/(Loss) on foreign exchange transactions (508) 3,009

Back-court income 40,290 37,727

Others 77,340 30,969

Total 632,289 492,214

15 Other non-operating income /(expense)

Profit/(Loss) on disposal of investment property 2,851,585 -

` Profit/(Loss) on disposal of fixed assets (63,725) (906)

Total 2,787,860 (906)

16 Cash and cash equivalents

Short-term bank deposits 4,097,751 961,706

Cash intransit - -

At the end of the period 4,097,751 961,706

17 Dividends

At beginning of the period - -

Dividend Proposed - 1,802,976

Dividend Paid - (1,802,976)

At the end of the period - -

18 Reserves

At the beginning of the period 9,342,953 6,395,290

Profit for the period 3,864,265 3,480,785

Other comprehensive income/(loss) for the period - 1,269,854

Dividend paid - (1,802,976)

At the end of the period 13,207,218 9,342,953

March 2014 December 2013

Of the 4,098M short-term bank deposits at the end of March 2014, 15M is domiciled in dollars and subject to exchange rate

The tax charge comprises of company income tax at 30% of taxable income plus education tax at 2% of taxable income before capital

allowances.

March 2014 December 2013

March 2014 March 2013

Included in the Rent Income is N450M relating to rents received from a related party.

Page 15

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Mobil Oil Nigeria plc.

Notes to the Unaudited Interim Financial Statement

For the Period Ended 31 March 2014

19 Segmental Information

A The segment results for the period ended 31 March 2014 are as follows:

Turnover 22,410,962 - 22,410,962

Cost of sales (19,378,585) - (19,378,585)

Operating expense (1,639,139) (116,427) (1,755,566)

Other income 182,103 450,186 632,289

Other non-operating income /(expense) * (263) 2,788,123 2,787,860

Finance income 55,842 - 55,842

Finance costs (5,539) - (5,539)

Profit before taxation 1,625,381 3,121,882 4,747,263

Taxation (524,512) (358,486) (882,998)

Profit for the period 1,100,869 2,763,396 3,864,265

The segment results for the period ended 31 March 2013 are as follows:

Turnover 19,142,475 - 19,142,475

Cost of sales (17,052,594) - (17,052,594)

Operating expense (1,629,635) (16,621) (1,646,256)

Other income 135,649 356,564 492,213

Other non-operating income /(expense) * (906) - (906)

Finance income 7,597 - 7,597

Finance costs (18,432) - (18,432)

Profit before taxation 584,154 339,943 924,097

Taxation (190,789) (109,114) (299,903)

Profit for the period 393,365 230,829 624,194

B Reconciliation of segment asset and liabilities to total assets and liabilities as at 31 March 2014

Segmented total assets (excl. cash and cash equivalents & deferred tax) 20,036,245 21,715,315 41,751,560

Segmented total liabilities (17,205,277) (15,955,186) (33,160,463)

Deferred tax 713,048 - 713,048

Cash and cash equivalents 4,097,751 - 4,097,751

Segmented net asset 7,641,767 5,760,129 13,401,896

Capital expenditure 78,763 1,497,191 1,575,954

Reconciliation of segment asset and liabilities to total assets and liabilities as at 31 December 2013:

Segmented total assets (excl. cash and cash equivalents & deferred tax) 18,864,672 20,551,180 39,415,852

Segmented total liabilities (16,719,777) (14,471,114) (31,190,891)

Deferred tax 350,964 - 350,964

Cash and cash equivalents 961,706 - 961,706

Segmented net asset 3,457,565 6,080,066 9,537,631

Capital expenditure 831,224 8,155,120 8,986,344

Segment assets consist primarily of Investment property, property, plant and equipment, leasehold properties, intangible assets, long

term investments, stock, long term receivables, debtors and other receivables. Unallocated assets comprise deferred taxation and cash

and short term deposits.

Segment liabilities comprise current taxation, unamortized rental income, payables and other liabilities and provision for liabilities &

charges. Unallocated liability is deferred taxation.

Capital expenditure comprises additions to property, plant and equipmentand intangible assets.

Petroleum

Products

Marketing

Property Business Total

As at 31 March 2014, the Company had two reportable business segments:

Property Business - This is the lease out of Company buildings to associated and other third party companies.

Management has determined operating segments based on the performance reports reported to the Chief Operating Decision Maker

(CODM). The Petroleum Products Marketing segment generates revenue from the sale of white products and company lubricants while

the Property business generates income from the rent paid on MONs investment properties leased out solely (100%) to a related party.

Page 16