Conoil Annual Report 2016

In 3 side 5 Our Business Results at a Glance 1213 Notice of Annual General Meeting Directors and Professional Advisers 14 15 Chairman’s Statement Board of Directors’ Report 19 33 The Accounts Proxy Form 91 93 E-Dividend Form Corporate Directory 95 Conoil plc/EnhancingCustomerExperience/2016 Annual Report

OVuisrion Mission Pledge VISION To be Africa’s leading petroleum marketing company MISSION To remain the industry’s flagship offering world-class products and services PLEDGE To make life abundantly convenient for our customers with top-class service delivery4 Conoil plc/EnhancingCustomerExperience/2016 Annual Report

GThoeod LifeCompanyConoil plc/EnhancingCustomerExperience/2016 Annual Report 5

FUELS & SERVICES – For a better driving experience mile after mileThe Conoil brand is a symbol of reliability and consistency. The company takes great pride in beingable to satisfy the developing needs of today’s smart and value-seeking customer. Its increasinginvestment in research and the continuous improvement in products and services give it a clearedge over competition. With an enviable retail marketing network of 385 stations that are efficientlyoperated, it provides premium service to thousands of customers on a daily basis. This is supportedby an effective and efficient distribution system that guarantees constant availability of products. Itconstantly looks beyond providing petroleum products, to enhancing customers’ experience on theforecourt. To this end, it runs an integrated marketing model covering fuels and non-oil productsthat deliver convenience, value and optimum service. Inspired by a dogma to satisfy customersultimately, it has reinforced personalized and efficient service to customers in a pleasant, welcomingenvironment, while adhering to strict safety parameters. In a proven demonstration of responsivenessto customers’ needs, and to maintain a clear competitive advantage, the company has commencedthe installation of sophisticated dispensing pumps at its service stations to render an even moresecure, convenient and seamless service to customers. It persistently pushes new frontiers, and willcontinue to strengthen its capacity to deliver superior service and fuels to customers. Conoil keepsyour vehicle running efficiently and smoothly, giving you a better driving experience, mile after mile.6 Conoil plc/EnhancingCustomerExperience/2016 Annual Report

AVIATION - Expanding your horizonConoil aviation delivers happiness to hundreds of passengers by expanding their horizon andkeeping them safe in the sky. Advanced technology, strict adherence to safety standards and customersatisfaction are the cornerstones of its operations. The passion for performance propels it to providequality fuel to a host of local and international airlines, resulting in a steady growth rate over theyears. Its cutting-edge facilities pan Nigeria supplies aviation fuel of supreme quality and correctquantity. It utilizes state-of-the-art technology to deliver superior customer service in an efficientand cost-effective way. Every passing day, it adds to its strength by engaging in rigorous researchand quality management, and its enviable market share is a testimony to its satisfactory fuels andservices. The aviation team is well-qualified, capable, and highly trained, ensuring that it providesfirst-class service in this critical safety area. Its utmost dedication makes it the preferred fueller of allmajor domestic and international airlines in the country.Conoil plc/EnhancingCustomerExperience/2016 Annual Report 7

LUBRICANTS - One-stop shop for lubrication solutionConoil is one of the largest players in Nigeria’s life of vehicles. The Company continues tolubricant industry. It has a brand reputation as the develop and expand its product offerings toproducer of the only engine oil that touches the customers, with a broad array of automotiveheart of your engine. Equipped with the expertise engine oils, gear oils, transmission oilsand technology to provide the ideal lubricant and greases that meet your engine needssolutions for your specific needs, Its engine oils in various pack sizes. Conoil consistentlycontain the precise properties that your application provides top quality lubricants that areand operating conditions require. Conoil’s top- environmentally-friendly and technologicallyclass lubricant range – Quatro and Golden superior in quality, while following stringentSuper Motor Oil - originated with highly refined environmental regulations. Quatro andbase stock and efficient additive technology, Golden Super are designed for on and offprovide the best in performance and protection. road applications, ranging from truck andRegular use of these engine oils maintain engine bus transportation to construction, mining,cleanliness, prevent wear and ensures good low agriculture and power generation. Acrosstemperature fluidity. The protective layer formed industries, Conoil’s premium lubricantsby the award-wining lubricants deliver reduced deliver world class protection, excellentfriction and wear, increased viscosity, resistance performance and maximum operationalto corrosion and oxidation, thereby extending the reliability.8 Conoil plc/EnhancingCustomerExperience/2016 Annual Report

SPECIALIZED PRODUCTS - Delivering energy to fuel your growthSpecialized Product unit, an experienced leader in the delivery of high quality bulk fuel to industrialcustomers, is strategically tailored to cater to the needs of diverse sectors of the economy. With arobust system in place that ensures an efficient, reliable supply of petroleum products to customers,no matter their location, Conoil fuels the growth of industries. It recognizes that dependability ofsupply is of critical importance to its customers and has beefed up its fleet of world-class trucks,which are always on the road to serve you, supplying all your fuel needs. Every day, hundreds ofvehicles roll out of its depots to travel vast stretches of the country to reach customers, touchingthe lives of multitude of people across the country by meeting their energy needs. Through itsvehicle management and tracking system, it ensures that each product is delivered to customersat the right time and in the right quantity and quality. It supplies all types of fuels to variousmagnitude of businesses including breweries, telecommunications companies, multinationals,banks etc. all with a unique personal touch. Conoil understands the importance of partnership.It understands the importance of having deliveries where and when it is needed. It understandsthat customers need the keenest prices to keep costs at a minimum. It doesn’t just provide service,it provides peace of mind.Conoil plc/EnhancingCustomerExperience/2016 Annual Report 9

DEPOTS - Strategic storage for safe deliveryPivotal to Conoil’s operations are the depots, customers simultaneously. It has an extensivewhich are strategically located around the transportation infrastructure that facilitates thecountry. The key imperatives that drive its depot transmission and distribution of petroleum productsoperations are Health, Safety and Environment. quickly and efficiently. Its commitment to continueThis safety culture ensures that petroleum to provide excellent service to customers is behindproducts are safely stored and handled, the decision to embark on a massive expansion ofwithout leakages that could damage the soil or its infrastructure and capabilities. These projectswater table. Keeping in view the significance will increase operational speed, convenience,of catering to the ever rising energy demands safety, efficiency and seamless product distribution,of the country, it prides itself on running and leaving room for zero delays. It corroborates amaintaining a sophisticated storage and supply sustainable competitive edge with consistent andinfrastructure. Its dedication to provide superior reliable personalized service. Its continued successdepository services, backed by vast storage is due to its operational excellence.facilities, spurs it to provide products to different10 Conoil plc/EnhancingCustomerExperience/2016 Annual Report

CONGAS - Enhancing the quality of lifeCongas enhances quality of life by being a reliable and efficient supplier of clean, convenientand safe cooking gas. At the core of its operations is customer convenience. It therefore regularlyimplements new initiatives in order to satisfy its customers and provide optimum value. It strivesto continually develop and improve its products and services, encouraging innovation to meet thedeveloping needs of customers. Congas possesses special characteristics that are unique to it. Itsoperations are underpinned by excellence and quality; It deploys modern technology to handlecustomer service in an efficient and cost-effective way; Its highly qualified technical team arealways on hand to provide value-added services to customers, ranging from giving expert adviceto rendering support. This has substantially strengthened its position in the market and earned itthe reputation of a dynamic and innovative entity. You can always count on Congas.Conoil plc/EnhancingCustomerExperience/2016 Annual Report 11

RESULTS AT A GLANCERevenue 2016 2015 %Profit before taxation N’000 N’000 ChangeTaxation 85,023,546Profit for the year 4,280,549 82,919,220 2.5Retained earnings (1,442,665) 3,448,397 24.1Share capital 2,837,884 (1,140,840) 26.5Shareholders’ funds 14,293,934 2,307,557 23.0 346,976Per share data 18,465,680 13,537,907 5.6Earnings per share (kobo) 346,976 -Dividend per share (kobo)Net assets per share (kobo) 17,709,653 4.3 409 333 23.0 3.3 310 300 4.3 2,661 2,552 12 Conoil plc/EnhancingCustomerExperience/2016 Annual Report

NOTICE OF ANNUAL GENERAL MEETINGNotice is hereby given that the forty-seventh Annual and Allied Matters Act CAP C 20 LFN 2004, anyGeneral Meeting of the members of Conoil Plc will member may nominate a shareholder as a memberbe held at Le Meridien Ibom Hotel and Golf Resort, of the Audit Committee by giving in writing,Uyo, Akwa Ibom State on Friday, 11 August, 2017 notice of such nomination at least 21 days beforeat 11.00 am for the transaction of the following the date of the Annual General Meeting. Suchbusiness: nominations should be guided by the requirements of the Securities & Exchange Commission’s CodeORDINARY BUSINESS of Corporate Governance for Public Companies in Nigeria, 2011.1. To receive the Report of the Directors and the Statement of Financial position as at 31 December, 5. Right of Shareholders To Ask Questions 2016 together with the Statement of Profit or Loss Shareholders have a right to ask questions not and Other Comprehensive Income for the year only at the meeting but also in writing prior to the ended on that day and the Reports of the Auditors meeting and such questions must be submitted to and the Audit Committee thereon. the Company Secretary on or before the 28 July, 2017.2. To declare a dividend.3. To elect and re-elect Directors. 6. Unclaimed Dividend Warrants and Share4. To fix the remuneration of the Directors. Certificates5. To authorize the Directors to fix the remuneration Several Dividend Warrants and Share Certificates of some members remain unclaimed or, are yet of the Auditors. to be presented for payment or returned to the6. To elect members of the Audit Committee. Company for revalidation. A list of such members will be circulated with the Annual Report for theNOTES: year ended 31 December, 2016. Those who are affected are advised to write to the Company’s1. Proxy Registrars.A member of the Company entitled to attend andvote is entitled to appoint a proxy to attend and vote 7. e-Dividend Mandateinstead of him or her. A proxy need not also be a Shareholders are hereby advised to open bankmember of the Company. A Proxy Form is enclosed accounts, stockbroking and CSCS accounts for theand if it is to be valid for the purposes of the meeting, purpose of timely receipt of dividend payments. Ait must be stamped by the Commissioner of Stamp detachable e-dividend mandate activation form isDuties and deposited at the office of the Registrar, attached to this Annual Report and also available atMeristem Registrars Limited, 213, Herbert Macaulay the office of the Registrars to enable all shareholdersWay, Adekunle, Yaba, Lagos not less than 48 hours furnish particulars of their bank accounts / CSCSbefore the time fixed for the meeting. details to the Registrars as soon as possible.2. Payment of Warrants BY ORDER OF THE BOARDIf the dividend recommended by the Directorsis approved at the Annual General Meeting, the Conrad Eberemudividend warrants will be posted on 21 August, 2017 Company Secretary / Legal Adviserto members whose names appear in the Register of FRC/2017/NBA/00000016701Members at the close of business on 7 July, 2017. 30 June, 20173. Closure of Register Conoil Plc,The Register of Members and the Transfer Books of the Bull Plaza,Company will be closed from 10 July, 2017 to 14 July, 38 / 39, Marina,2017, both days inclusive, to enable the preparation Lagos. and payments of dividends.4. Nominations for The Audit CommitteeIn accordance with Section 359(5) of the CompaniesConoil plc/EnhancingCustomerExperience/2016 Annual Report 13

DIRECTORS AND PROFESSIONAL ADVISERS Directors: Dr. Mike Adenuga (Jr), GCON - Chairman Mr. Sanjay Mathur (Indian) - Ag. Managing Director Appointed on 11 May, 2017 Mr. Tejbir Singh Sawhney (Indian) - Managing Director - Director Resigned on 30 September, 2016 Dr. M. E. Omatsola - Director Mr. Mike Jituboh - Director Mr. Ike Oraekwuotu - Director Engr. Babatunde Okuyemi - Director Mr. Joshua Ariyo - Director Appointed on 11 May, 2017 Mr. Ademola Idowu - Director Appointed on 11 May, 2017 Arch. Harcourt Adukeh Miss. Abimbola Michael-Adenuga - Executive Director Appointed on 11 May, 2017 Mr. Bamidele Ogunnaike - Executive Director Mr. Wasiu Adeyinka Adebiyi - Executive Director Appointed on 11 May, 2017 Mr. Akin Fabunmi - Executive Director Resigned on 21 June, 2016 Resigned on 11 May, 2017 Company Secretary: Mr. Conrad Eberemu RC Number: 7288 Registered Office: Bull Plaza 38/39 Marina Lagos Auditors: Nexia Agbo Abel & Co 43 Anthony Enahoro Street Utako FCT Abuja www.nexianigeria.com Registrars: Meristem Registrars Limited 213 Herbert Macaulay Way, Adekunle Yaba, Lagos Email: [email protected] www.meristemregistrars.com Bankers: Sterling Bank Plc First Bank of Nigeria Limited Guaranty Trust Bank Plc 14 Conoil plc/EnhancingCustomerExperience/2016 Annual Report

CHCAHIRAMIRAMNA’SNS’STASTTEAMTEEMNETNTOur esteemed shareholders, distinguished Notwithstanding the challenging and uncertainmembers of the Board of Directors, ladies and economic terrain under which we operatedgentlemen, it is with great sense of joy and in 2016, our balance sheet gives us somefulfilment that I welcome you again to the 47th considerable sense of fulfillment that the futureannual general meeting of your company. of our great company is indeed assured.As it is the practice, I am delighted to present to you We delivered a healthy performance that ison this historic occasion, yet another impressive consistent with our pledge and resolve to you atperformance recorded during our last annual general meeting.the financial year ended 31stDecember, 2016. We will continue to offerAlthough our industry is Nigerians, in every part of thebecoming increasingly tough, country, world class servicescompetitive and volatile, I am and products through ourpleased to inform you that retail stations and other viablewe have good reason to be channels available to us, with aconfident in the capability, view to enriching their lives andability and zeal of our team to surmount the living standards.challenges. With our management’s in-depth As a prelude to our financial performance forknowledge of the market and their consistent the year, please permit me to present a reviewexcellent performance on all parameters, we of important issues of 2016 that influenced ourhave enough reason for this optimism. operations, achievements and operating results, and our outlook for 2017.Conoil plc/EnhancingCustomerExperience/2016 Annual Report 15

CHAIRMAN’S STATEMENT (CONT’D)2016 SOCIO-ECONOMIC TRENDS volatility. This hindered, a great deal, the business projections of all marketers.The Nigerian economy experienced seriouschallenges in 2016. With global oil prices The Federal Government tried to ameliorate theplummeting to below $40 per barrel, down from situation when, in the middle of the year in review,highs of $115 in 2014, the economy slipped into it took the decision to de-peg the naira from therecession by the first quarter of that year after dollar and introduced a managed float to allowcontracting by 1.54 percent. for a more flexible exchange market.The slump in global crude prices was not helped The partial reform in the foreign exchange market,either by the decline in Nigeria’s oil production, and the government’s directive to upstream oilwhich remained the main stay of the country’s producers to make available dollars for majoreconomy. Production averaged 1.833 million marketers to import, however, yielded little or nob/d compared to 2.13 million b/d in 2015. This impact forcing marketers to halt fuel importationreduction has largely been attributed to vandalism by the third quarter of 2016.in the Niger Delta region. The spate of militantattacks on gas pipelines also significantly affected Despite the economic turbulence, expectationsquite a number of the country’s social and economic were that the improvement in the macroeconomicfacilities particularly electricity generation, thereby environment recorded especially in the fourthworsening power supply and increasing cost of quarter of 2016 and the efforts of the Federalproduction as companies relied on alternative Government to maintain fiscal discipline, wouldpower sources. stimulate economic activity in the short to medium- term.In the same vein, the decline in oil production andglobal oil prices severely affected the revenue of Suffice to say that the developments enumeratedthe Federal Government leading to a combination above, adversely impacted our business andof spending cuts and scarcity of foreign exchange. significantly increased our operating costs.The Naira struggled against increasing foreign However, there are hopes that the Federalexchange demands and dwindling supply leading Government would reverse the odds in 2017to increasing variances between official and black and ensure a congenial business climate that willmarket rates. propel sustainable growth.The effect was also felt, in real terms, by the PROGRESS REPORTcritical sectors of the economy which contractedby 4.32 percent compared to a decline of 1.46 Our financial report shows 2.5 per cent growth inpercent recorded in 2015. Headline inflation rose our business with an appreciable leap in turnoversignificantly to 18.55 percent at the end of 2016 from N82.91 billion in the previous year tofrom 9.62 percent in January. N85.02 billion; while our gross profit stood at N4.28 billion against N3.45 billion recorded lastOf course, the downstream petroleum industry year. The profit after tax increased from N2.30had its fair share of the contracted economy. The billion to N2.84 billion, representing 23 per centforeign exchange scarcity and the prohibitive cost increase. Earnings per share increased by 23 perof funds were major hindrances to marketers’ cent from 333 kobo to 409 kobo.bid to aggressively import petroleum products.Predictably, the commercial banks were reluctant Given this commendable performance, yourand unwilling to give credit lines to support Directors have decided to recommend for yourthe business of the downstream because of its16 Conoil plc/EnhancingCustomerExperience/2016 Annual Report

CHAIRMAN’S STATEMENT (CONT’D)consideration and approval, the sum of N2.15 billion that our company’s strength and real sourceto be paid out as dividend for 2016. If approved, this of wealth creation is the knowledge, skill,amount shall translate to 310 kobo for every 50 kobo creativity and commitment of our employees. Asshare held, subject to the deduction of appropriate mentioned earlier, we are blessed with a soundwithholding tax at the time of payment. This proposed management team and a dedicated, industriousdividend represents 3.3 per cent increase over what and dynamic workforce. Their unwaveringwas paid last year. adherence to our values of professionalism, hard work, discipline and innovation, in additionSUSTAINABILITY to our Management’s leadership, were critical contributors to the success in our operations andIt is satisfying that we were able to maintain our their utmost well-being shall continue to be ofoperations on the part of growth despite the pervasive paramount importance to the Company.economic uncertainty and peculiar hardships that theindustry, and indeed the country, endured throughout In summary, our 2016 scorecard reflects2016. We succeeded in laying strong foundation to our steadfast and unalloyed commitment toenhance our overall efficiency and ability to deliver internal excellence, cost efficiency, manpoweroutstanding results in the years ahead. development and strategic planning and proactive investments. It is also a reflection of theThis performance, despite challenges enumerated remarkable support and loyalty we enjoyed fromabove, indeed, is modestly impressive. We owe our customers and patrons, esteemed dealers,the excellent results to our strong resolve to keep distributors, transporters, suppliers and otherimproving on our operational performance by partners.constantly renewing our products and services tomeet the ever-changing demands of customers. Your SAFETY AND SOCIAL RESPONSIBILITYcompany proactively capitalised on every emergingopportunity in the sector and explored new income At Conoil, we passionately believe thatstreams so as to boost its relevance in the market Corporate Social Responsibility embodies anand to constantly grow its market share. ardent commitment and social pact with all our stakeholders. Thus, the company is committed toWe launched initiatives to strengthen our income creating enduring partnerships for sustainablebase in the core segments of the business, especially development whilst adding immense value to theRetail, Lubricants, and Aviation. Our sales force was diverse communities in which we operate.reinforced with core competencies. We concentratedon moving products to the doorsteps of customers During the year in review, we endeavored towith exceptional service offerings while upgrading give back to the less privileged residents of ourour facilities to world-class standard to delight our host communities. It is my pleasure to report tocustomers and attract new patronage. you that in the last two years, we partnered with TSL to construct the Ibeto Junction/MarcobarQuatro and Golden Super Motor oil (GSMO), our Road, a 3-kilometer long modern road in Porttop quality lubricants continued to record success Harcourt to enhance the living standards of thewith very high potentials. We consolidated on our people and promote commerce and industry indominance in the aviation business, investing in the community. I must add that this gesture ismodern equipment and winning strategic customers. in addition to our yearly financial support to the Bundu – Ama community which is the heart ofMost importantly, our strategy to sustain our growth our Port Harcourt operations office.in the midst of challenging times is anchored onour human resource. It is no overstatement to say We will continue to tailor our business to showConoil plc/EnhancingCustomerExperience/2016 Annual Report 17

CHAIRMAN’S STATEMENT (CONT’D)much greater awareness and sensitivity to launched an Economic Recovery and Growth Plan,emerging social trends and developmental has equally expressed optimism that the economicissues around the communities we operate. We recession would end by end of second half of 2017.will also reinforce our reputation by offering vitalsupport to our host communities to promote the The recovery is predicated, among several scenarios,general well-being of the citizenry. on the back of expected increase in the country’s crude oil production and the anticipated changeEMPLOYEE POLICY in the Central Bank of Nigeria (CBN’s) foreign exchange policy.Our human resources policy will continue toensure that our employees benefit from the Distinguished shareholders, I am delighted to informhighest standards in terms of policies and you that we are seriously monitoring developmentstraining. We shall remain faithful to ideals that both in the local and global economy, and adaptingensure that everybody feels included, supported our strategies as appropriate.and valued at all times. The company’s overall strategy shall continue toWe are highly appreciative of our staff’s positively impact its current size and status, and ourdedication and are encouraged to continually investments in the required areas will continue torecruit, develop and retain the right mix of ensure effective and efficient delivery of our avowedtalented people who are aligned with our values goals.and who can drive our plans for growth. The upgrading and construction of new facilitiesWe remain committed to our policy of offering at our installations are nearing completion whichthe best career experiences and promoting an will further bolster the company’s competitive edgeenabling environment for all employees. and broaden our customer base in all segments of the business. We are relentlessly evolving bigger2017 OUTLOOK and better business prepositions with an eye on the future to continue to deliver excellent results.The global economy witnessed greatermomentum in the last quarter of 2016, facilitated In closing, let me express my gratitude to all thoseby gains in both developed, emerging markets who made it possible for us to achieve this brilliantand developing economies. Higher oil prices are result. Thank you all for your support.expected to provide the biggest boost to growth.Prices have been on the upward swing following DR. MIKE ADENUGA (JR), GCONthe majority decision taken in November by CHAIRMANmembers of the Organisation of PetroleumExporting Countries (OPEC) to cut production to1.2 million barrels per day beginning in January2017. Prices have been projected to average$60 per barrel in 2017.The International Monetary Fund (IMF) hasforecast a GDP growth of 0.6% for Nigeria in2017, and the Federal Government which has18 Conoil plc/EnhancingCustomerExperience/2016 Annual Report

BOARD OF DIRECTORS’ REPORTfor the year ended 31 December, 2016The Directors hereby submit to the members, their Annual Report together with the Audited FinancialStatements for the year ended 31 December, 2016. 1. Legal Status Conoil Plc (formerly National Oil and Chemical Marketing Plc) was incorporated in 1960 as a private limited liability company. The Company was converted to a public company on 29 August, 1991. In the year 2000, the Federal Government of Nigeria through the Bureau of Public Enterprises (BPE) bought 40% issued ordinary shares of the Company held by Shell Company of Nigeria (UK) Limited. Following the privatization of the Company, Conpetro Limited acquired 60% of the issued shares of the Company. As a result of a rights offering by the Company in 2002, Conpetro Limited now holds 74.4% of the issued capital while members of the Nigerian public hold the remaining 25.6% stake in the Company.2. Principal activities The principal activities of the Company are the marketing of refined petroleum products, manufacturing and marketing of lubricants, household and liquefied petroleum gas for domestic and industrial use. 3. Results for the year The following is a summary of the Company’s operating results: Revenue 2016 2015 %Profit Before Tax N’000 N’000 ChangeProfit After Tax 82,919,220Proposed Dividend 85,023,546 3,448,397 2.5Share Capital 4,280,549 2,307,557 24.1Shareholders’ Fund 2,837,884 2,081,856 23.0 2,151,252 346,976 346,976 17,709,653 3.3 18,465,680 4.34. Dividends The Directors recommend the payment of a dividend of 310 kobo per share on the results for the year 2016. 5. Changes on the Board of Directors The names of the Directors that served during the year are as listed on page 14. i. MR. TEJBIR SINGH SAWHNEY (Indian) resigned as Managing Director of the Company with effect from 30 September, 2016.ii. MR. WASIU ADEYINKA ADEBIYI resigned as Director of the Company with effect from 21 June, 2016.Conoil plc/EnhancingCustomerExperience/2016 Annual Report 19

BOARD OF DIRECTORS’ REPORTfor the year ended 31 December, 2016 (Cont’d)iii. MR. AKIN FABUNMI resigned as Executive Director, Finance of the Company with effect from 11 May, 2017.iv. MR. SANJAY MATHUR was appointed as Ag. Managing Director of the Company with effect from 11 May, 2017.v. MR. BAMIDELE OGUNNAIKE was appointed as Executive Director, Finance of the Company with effect from 11 May, 2017.vi. MR. JOSHUA ARIYO was appointed as Non-Executive Director of the Company with effect from 11 May, 2017.vii. MR. ADEMOLA IDOWU was appointed as Non-Executive Director of the Company with effect from 11 May, 2017.viii. ARCH. HARCOURT ADUKEH was appointed as Non-Executive Director of the Company with effect from 11 May, 2017.6. Directors’ interest in sharesThe interest of Directors, direct and indirect, in the shares of the Company as recorded in theRegister of Directors’ shareholdings and / or as notified by them for purposes of sections 275and 276 of the Companies and Allied Matters Act, CAP C 20 LFN 2004 is as follows: Directors Direct Indirect Total Total Number Number 2016 2015 Number Number *Dr. Mike Adenuga (Jr) GCON Nil 103,259,720 103,259,720 103,259,720 Mr. Tejbir Singh Sawhney (Indian) Nil Nil Nil Nil Dr. M. E. Omatsola 541 Nil 541 541 Engr. Babatunde Okuyemi 8,500 Nil 8,500 8,500 Mr. Mike Jituboh Nil Nil Nil Nil Mr. Ike Oraekwuotu Nil Nil Nil Nil Miss Abimbola Michael-Adenuga Nil Nil Nil Nil Mr. Wasiu Adeyinka Adebiyi Nil Nil Nil Nil Mr. Akin Fabunmi Nil Nil Nil Nil*Representing Conpetro Limited7. ContractsFor the purposes of Section 277 of the Companies and Allied Matters Act CAP C20 LFN2004, none of the Directors has notified the Company of any disclosable interests in contractsinvolving the Company during the year.20 Conoil plc/EnhancingCustomerExperience/2016 Annual Report

BOARD OF DIRECTORS’ REPORTfor the year ended 31 December, 2016 (Cont’d)8. ShareholdingsAs at 31 December, 2016, the range of shareholdings of the Company was as follows: Share Range No of Holders’ Holders’ Units % Units Units Cum Holders % Cum 1 1,000 126,411 88.26 126,411 52,782,264 7.61 52,782,264 10.20 141,025 26,374,907 3.80 79,157,1711,001 5,000 14,614 142,094 1.12 86,907,795 0.75 143,004 7,750,624 2.64 105,256,0885,001 10,000 1,069 0.64 143,112 18,348,293 1.09 112,807,432 0.08 143,207 2.90 132,932,01610,001 50,000 910 0.07 143,218 7,551,344 1.22 141,397,222 0.01 20,124,58450,001 100,000 108 0.01 8,465,206100,001 500,000 95500,001 1,000,000 111,000,001 and above 10 143,228 552,554,895 79.62 693,952,117 143,228 100.00 693,952,117 100.009. Major shareholdingAccording to the Register of members, no shareholder of the Company other thanConpetro Limited, as noted below, held more than 5% of the issued shares of theCompany as at 31 December, 2016.The shares of the Company were held as follows: 2016 2015 % Number of Shares % Number of SharesConpetro Limited 516,298,603 74.40 516,298,603 74.40 Conoil plc/EnhancingCustomerExperience/2016 Annual Report 21

BOARD OF DIRECTORS’ REPORTfor the year ended 31 December, 2016 (Cont’d)10. Share capital history Conoil Plc (“Company”), which commenced operations in 1927 under the name Shell Trading Company, was incorporated as a limited liability company in 1960 and converted to a public limited liability company in 1991. Prior to 1991, it had an authorised share capital of N28 million divided into 14 million ordinary shares of N2.00 each, all of which were fully issued and paid up. These shares were sub-divided into ordinary shares of 50 kobo each in 1991. In 2002, the authorised share capital of the Company was increased to N350 million divided into 700 million ordinary shares of 50 kobo each. As at 2004, 694 million ordinary shares of 50 kobo each were issued and paid up. Authorised Share Capital Issued and Fully Paid Number of Shares ConsiderationYear Increase Cumulative Increase Cumulative N N N NPre-1991 1991 47,000,000 28,000,000 28,000,000 14,000,000 Share split 1991 75,000,000 28,000,000 56,000,000 Bonus (1:1) 1995 112,000,000 Bonus (2:1) 1996 125,000,000 75,000,000 28,000,000 56,000,000 168,000,000 Bonus (2:1) 1997 150,000,000 200,000,000 28,000,000 84,000,000 252,000,000 Bonus (6:1) 1998 200,000,000 42,000,000 126,000,000 294,000,000 Bonus (6:1) 2002 200,000,000 21,000,000 147,000,000 343,000,000 200,000,000 24,500,000 171,500,000 343,000,000 Convertible 350,000,000 loan stock 171,500,000 578,294,117 693,952,117 Bonus (5:1)2003 350,000,000 117,647,059 289,147,0592004 350,000,000 57,829,000 346,976,05922 Conoil plc/EnhancingCustomerExperience/2016 Annual Report

BOARD OF DIRECTORS’ REPORTfor the year ended 31 December, 2016 (Cont’d)11. Dividend payment history Dividend Total amount of rate Dividend (gross)Div. Div. Type Year ended Declaration per share Total amount ofNo date N Dividend (net) N N12 Final 31/12/2001 21/06/2002 0.50 171,500,000.0 154,350,000.013 Final 31/12/200 2 20/06/2003 2.00 686,000,000.0 617,400,000.0 14 Final 31/12/2003 27/08/2004 3.50 2,024,029,409.5 1,821,626,468.6 Final 31/12/200 4 25/11/2005 2.0015 Final 31/12/200 5 27/10/2006 2.50 1,387,904,234.0 1,249,113,810.616 1,734,880,292.5 1,561,392,263.3 Final 31/12/2006 31/08/2007 2.7517 Final 31/12/200 7 29/08/2008 2.75 1,908,368,321.8 1,717,531,489.618 1,908,368,321.8 1,717,531,489.619 Final 31/12/200 8 18/12/2009 1.00 693,952,117.0 624,556,905.3 Final 31/12/200 9 22/10/2010 1.5020 Final 31/12/201 0 24/06/2011 2.00 1,040,928,175.5 936,835,358.021 1,387,904,234.0 1,249,113,810.6 Final 31/12/2011 30/08/2012 2.5022 1,734,880,292.5 1,561,392,263.323 Final 31/12/201 2 04/10/2013 1.00 693,952,117.0 624,556,905.3 Final 31/12/201 3 30/09/2014 4.0024 2,775,808,468.0 2,498,227,621.2 Final 31/12/2014 23/10/2015 1.0025 Final 31/12/201 5 28/10/2016 3.00 693,952,117.0 624,556,905.326 2,081,856,351.0 1,873,670,715.912. Property, plant and equipment Changes in the value of property, plant and equipment were due to additions and depreciation as shown in Note 15. In the opinion of the Directors, the market value of the Company’s properties is not lower than the value shown in the financial statements. 13. Suppliers The major supplier of the Company’s products is Nigerian National Petroleum Corporation.14. Distribution network The distribution of the Company’s products is done through its own network of branches, numerous dealers and distributors who are spread around the country. The Company has 385 dealers and distributors. Conoil plc/EnhancingCustomerExperience/2016 Annual Report 23

BOARD OF DIRECTORS’ REPORTfor the year ended 31 December, 2016 (Cont’d)Some of the Company’s major dealers and distributors are as follows:S/No. Dealer Station Location of Station 1. Alhaja Bola Alanamu Marina Service Station Marina, Lagos Island, Lagos. 2. Mrs. Julianah Ofurhe Alapere Mega Station 3rd Axial Road, Lagos – Ibadan 3. Capt. A. Adeyinka Expressway, Alapere Area, Lagos. 4. Mrs. M.O. Labinjo 5. Mrs. Lami Ahmed Kilometer 10 FAAN Local Airport, Km. 10 Agege Motor 6. Mr. Akin Olanrewaju Road, Ikeja, Lagos. 7. Mr. Samuel Dixon Airport Road Station Murtala Muhammed Airport Road, Lagos. 8. Mr. Sheyi Adebayo Herbert Macaulay Filling Plot 763, Herbert Macaulay Way, CBD, 9. Mrs. Rewane-Fabyan Station, Abuja. FCT, Abuja.10. Mr. Tunde Ogundele Kado Mega Station, Abuja B5, Cadastral Zone, Kado Estate, Kado,11. Mrs. C.O. Okonedo FCT, Abuja.12. Mrs. Rose Osipitan13. Mr. Adewale Adeleye Iganmu Station Old Apapa Road, by Costain14. Capt. Toriseju Ogisi Roundabout, Iganmu, Lagos.15. Mr. Abimbola Olawale Eric Moore Service Station Eric Moore Road, Eric Moore, Surulere,16. Mr. Kadiri Yunusa Hughes Avenue Service Station Lagos. Toll Gate Mega Station Herbert Macaulay Way, Alagomeji, Yaba,17. Mr. Samuel Okorho Lagos. Along Lagos – Ibadan Expressway, near18. Golddust Ventures old Toll gate, Alausa, Lagos.19. Philip Dillon Ikpaikpai Western Avenue Service Station Western Avenue, Barracks Bus Stop, Surulere, Lagos.20. A.M and Sons Ipaja Station Ipaja Road, Ipaja, Lagos. G.R.A. Mega Station Oba Akinjobi Road, by GRA Roundabout, Ikeja, Lagos. Cele Mega Station Cele Bus-stop, Apapa – Oshodi Expressway, Lagos. Ikate – Lekki Mega Station Ikate Elegushi/Lekki, Lekki – Epe Durumi Mega Station, Abuja Expressway, Lagos. B5, Cadastral Zone, Durumi District, Area 1, Durumi, FCT, Abuja. Lugbe Extension Mega Station Plot 199 Cadastral Zone, Airport Road, Lugbe District, F.C.T, Abuja. Utako Mega Station Utako Cadastral Zone B5, Utako District, F.C.T, Abuja. Obio Mega Station Port Harcourt – Aba Express Way, Market Junction, Port Harcourt City, Rivers State. Kaita Road, Service Station Kaita Road, Katsina.21. A. Likoro Sokoto Road, Service Station Sokoto Road, Zaria.22. Ubolo Okpanachi Garki Service Station 42, Festival Road, Area 10, Garki, F.C.T, Abuja.23. Mr. Akinyemi Omoyeni Chevron Mega Station Lekki – Epe Express Way, Chevron Roundabout, Ajah, Lagos.24. Mr. Adebambo Bashorun Ajah Mega Station Lekki – Epe Express Way, Lekki, Lagos24 Conoil plc/EnhancingCustomerExperience/2016 Annual Report

BOARD OF DIRECTORS’ REPORTfor the year ended 31 December, 2016 (Cont’d)15. Post balance sheet events There were no post balance sheet events which could have had a material effect on the state of affairs of the Company as at 31 December, 2016 and on the profit for the year to that date which have not been adequately provided for.16. Shareholders’ relations The Company is conscious of and promotes shareholders’ rights. It continues to take necessary steps to improve on same. The benefits from contributions, advice and wisdom from the shareholder members of the statutory Audit Committee remain invaluable.17. Employment and employees(i) Employment of disabled persons The Company’s employment policies ensure that there is no discrimination in considering application for employment including those of disabled persons. As at 31 December, 2016, no disabled person was in the employment of the Company.(ii) Employees involvement During the year, the Company maintained good relationship with its employees. To enhance communication between management and staff, management briefings were extended to all levels of staff during the year. These efforts were supplemented by regular consultative departmental / divisional meetings and in-house bulletins to keep employees informed on the state of the Company’s operations.(iii) Employees development The development and training of the Company’s staff continue to receive constant attention. It is the belief of the Company that the professional and technical expertise of its staff constitutes a major asset.(iv) Welfare The Company operates a contributory pension scheme under the Pension Reform Act, 2014 for the benefit of its employees.(v) Health The Company maintains well-equipped medical clinics at its head office and other major operational/manufacturing locations. This is complemented by free medical services during and after working hours by medical retainers in locations across the country.(vi) Safety and environment To enhance the health and safety of all employees, safety regulations are conspicuously displayed and enforced in all the Company’s offices and installations. The Company carries out safety and operations inspections on a regular basis. It also provides safety equipment in all its installations and retail outlets. In addition, safety training is provided for staff. Fire- fighting drills are regularly carried out to keep workers at alert in the event of a fire outbreak. The Company lays emphasis on industrial hygiene and inspection, and provides good sanitary facilities for its employees. The Company ensures non-pollution of the environment within its areas of operation. Conoil plc/EnhancingCustomerExperience/2016 Annual Report 25

BOARD OF DIRECTORS’ REPORTfor the year ended 31 December, 2016 (Cont’d)18. Compliance with code of corporate governance In the conduct of its business, Conoil Plc ensures the observance of the highest standard of corporate governance. It complies particularly with the provisions of Code of Best Practices on Corporate Governance in Nigeria. The Company adopts a responsible approach in its activities by maintaining a high standard of openness and accountability while also taking into consideration the interest of stakeholders. During the year under review, Conoil Plc duly observed all regulations guiding its activities. Conoil Plc established structures/mechanism to enhance its internal control while the effectiveness of measures for enhancing operational and compliance control are constantly reviewed. Complaints Management Policy Framework The Company is in full compliance with the rule of the Securities and Exchange Commission which provides that “all Capital Market Operators should develop a Complaints Policy Framework on how to resolve complaints arising from issues covered under the Investment and Securities Act, 2007 (ISA). This rule became effective in February 2015. Securities Trading Policy In compliance with Rule 17.15, Disclosure of Dealings in Issuers’ Shares, Rulebook of the Exchange 2015 (Issuers Rule), the Company is currently finalizing its Securities Trading Policy as mandated by the Issuers Rule. The Policy when effective, applies to all Directors, members of the Audit Committee, employees of the Company and any other person in possession of insider information. The rule prevents these persons from dealing in the Company’s shares during the Non-Authorized Trading Period, in accordance with the Investment and Securities Act 2007; and the Post Listing Rules of The Nigerian Stock Exchange.”18.1 The Board The Board during the period of year 2016 had a Non-Executive Director as Chairman, four (4) other non-executive Directors and four (4) executive Directors. It provided the required leadership for the Company for prudent and effective risk management while it also ensured that resources were available to enable the Company achieve its aims. The Board also reviewed the performance of Management. The Board during the year held four (4) meetings on 21 April, 2016; 22 June, 2016; 29 August, 2016 and 10 November, 2016. Attendance at the meetings was excellent. 21 April, 22 June, 22 June, 10 November,Names of Directors 2016 2016 2016 2016Dr. Mike Adenuga (Jr) GCON P P PPTejbir Singh Sawhney (Indian) A PDr. M.E. Omatsola P P PAMr. Wasiu Adeyinka Adebiyi P RMiss. Abimbola Micheal-Adenuga P P PPMr. Akin Fabunmi P PMr. Ike Oraekwuotu P P RRMr. Mike Jituboh P PEngr. Babatunde Okuyemi A A PP PP PP PP AAAttendance keys: P=Present; A=Absent with apology; N=Not yet appointed; R=Resigned26 Conoil plc/EnhancingCustomerExperience/2016 Annual Report

BOARD OF DIRECTORS’ REPORTfor the year ended 31 December, 2016 (Cont’d)18.2 Board Committees: In observance of the Code of Best Practices in Corporate Governance, the Board established the following committees:I. The Executive Board Committee The Executive Board Committee, led by the Acting Managing Director and comprising the Executive Directors, sets the Company’s priorities and targets, allocates resources and ensures the effective running of the Company. The Executive Board ensures that the Company’s resources are fully utilized to meet the Company’s goals. The Committee held five meetings on 4 January, 2016; 19 April, 2016; 16 June, 2016; 11 October, 2016 and 9 December, 2016. Attendance at the meetings was excellent. Names 4 January, 19 April, 16 June, 11 October, 9 December, 2016 2016 2016 2016 2016Mr. Tejbir Singh Sawhney (Indian) A AP A AMr. Wasiu Adeyinka Adebiyi P PP A AMiss Abimbola Micheal-Adenuga P P PMr. Akin Fabunmi P PP P P PPAttendance keys: P=Present; A= Absent with apologyII. Operation Review Committee Members of this Committee are one Executive Director, two non-executive Directors and a Financial Consultant with the non-executive Director as Chairman of the Committee. The Committee deliberates on matters relating to the general Operating Expenditure (OPEX), Capital Expenditure (CAPEX), general finance and administration of the Company and reports same to the Board. The Committee held two (2) meetings on 7 January, 2016 and 8 December, 2016. Attendance at the meetings was excellent. Names 7 January, 2016 8 December, 2016Dr. M.E. Omatsola P PMr. Mike Jituboh P PMr. Akin FabunmiMr. Peter K. Awokulehin (Financial P PConsultant) P PAttendance key: P=Present Conoil plc/EnhancingCustomerExperience/2016 Annual Report 27

BOARD OF DIRECTORS’ REPORTfor the year ended 31 December, 2016 (Cont’d)III. Risk Management Committee The Committee is responsible for evaluating and handling issues relating to risk management in the Company. The Committee held three (3) meetings on 12 January, 2016, 29 July, 2016 and 12 September, 2016. Attendance at the meetings was excellent.Names 12 January, 2016 29 July, 2016 12 September, 2016Dr. M.E. Omatsola P P PMr. Tejbir Singh Sawhney A P AMr. Ike Oraekwuotu P P PMr. Akin Fabunmi P P PAttendance keys: P=Present; A= Absent with apology IV. Remuneration Committee The Committee acts on behalf of the Board on all matters related to the workforce. The Committee held two (2) meetings on 13 May, 2016 and 16 September, 2016. Attendance at the meetings was excellent. The members are as follows:Names 13 May, 2016 16 September, 2016Mr. Ike Oraekwuotu P P PMr. Mike Jituboh P P A Miss Abimbola Michael-Adenuga P Mr. Wasiu Adeyinka Adebiyi P Attendance keys: P=Present; A=Absent with apology28 Conoil plc/EnhancingCustomerExperience/2016 Annual Report

BOARD OF DIRECTORS’ REPORTfor the year ended 31 December, 2016 (Cont’d)18.3 Audit Committee In compliance with Section 359 (3) of the Companies and Allied Matters Act, CAP C20 LFN 2004 and Section 11, Part E of the amended Code of Corporate Governance, the Company has in place an Audit Committee consisting of six members, three of whom are representatives of shareholders, one Executive Director and two Non-Executive Directors with the Company Secretary/Legal Adviser as the Secretary. The Committee has as its Chairman, a member representing the shareholders and holds meeting from time to time to deliberate on Audit Scope and Plan, the Time Table of the Company for the year, the Audited Accounts and unaudited trading results of the Company. They also review the Management Letter prepared by the External Auditors of the Company.The Committee carries out an oversight of the Company’s financial controls, the internal auditfunctions as well as assessing the external audit process including relating with the externalauditors. These are in addition to the review of the risk management systems. In the performance of its functions, the Committee has unrestricted, directaccess not just to the internal audit department but also to the external auditors.Any member may nominate a shareholder as member of the Audit Committee, by givingnotice in writing of such nomination to the Company Secretary at least 21 days before theAnnual General Meeting. The Committee held four (4) meetings on 28 April, 2016, 26 May,2016, 21 June, 2016 and 26 September, 2016. Attendance at the meetings was very good. 28 April, 26 May, 26 2016 2016 21 June, September,Names Designation 2016 2016Mr. Oladepo Olalekan Chairman rep. of P P P PAdesina Shareholders P P P PChief Joshua Oluwole Member rep. of P P P POginni Shareholders P P P PMr. Jonathan Akin Member rep. ofFawibe ShareholdersMr. Mike Jituboh Non-Executive DirectorMr. Ike Oraekwuotu Non-Executive Director A P P PMr. Akin Fabunmi Executive Director PP P PAttendance keys: P=Present; A=Absent with apology Conoil plc/EnhancingCustomerExperience/2016 Annual Report 29

BOARD OF DIRECTORS’ REPORTfor the year ended 31 December, 2016 (Cont’d)18.4 Management CommitteesI. Executive Management Committee The Committee is comprised of Senior Management staff and Heads of Department. The Committee holds its meetings every Friday to deliberate on daily management operations, business reviews, targets and sundry issues. Members of the Committee are: The Managing Director Chairman Executive Director, Retail Member Finance Director Member Executive Director, Business Operations Member Financial Adviser Member General Manager, Process and Expenditure Member Chief Operating Officer, Aviation Member Head, Retail Business Member Head, Internal Audit Member Head, Central Operations Unit Member Head, Apapa Installation Member Head, Imports Member Head, Supply and Distribution Member Head, Lubricants Business Member Corporate Affairs Manager Member IT Manager Member Financial Controller Member Treasurer Member Company Secretary/Legal Adviser Member II. Tender Committee The Committee holds its meetings every Tuesday and Thursday to conduct negotiation to obtain the most technically and commercially competitive bid/vendor. The Committee thereafter makes recommendation to the Management or the Board as the case may be. The members of the Committee are as follows: Finance Director Chairman Financial Adviser Member Head, Internal Audit Member Head, Apapa Installation Member Procurement Manager Member Head of User Department concerned Member30 Conoil plc/EnhancingCustomerExperience/2016 Annual Report

BOARD OF DIRECTORS’ REPORTfor the year ended 31 December, 2016 (Cont’d) III. Import Committee The Committee is responsible for the procurement of petroleum products and to ensure that petroleum products are available to the Company timely and at the best possible price. The Committee meets as the need arises on every transaction. The Committee thereafter makes recommendation to the Management or the Board as the case may be for approval. Members of the Committee are as follows: Managing Director Chairman Finance Director Member Head, Imports Member Head, Central Operations Unit Member Head, Internal Audit MemberIV. Process & Expenditure Committee The Committee sits to consider all processes and identify areas of bottlenecks that may impede smooth and speedy resolution of issues with a view to having better control in running of the Company. The Committee also scrutinizes all proposed expenditures of the Company to determine that the expenditures are reasonable and fair. The Committee meets every week. The members of the Committee are as follows: General Manager, Process & Expenditure Chairman Financial Controller Member Head, Internal Audit Member 18.5 Conoil Plc and its shareholders In its interaction with its shareholders, the Company lays emphasis on effective communication. Through its reports and the Annual General Meeting, the Board renders stewardship to the Company’s shareholders. Outside these, the Board has in place other avenues for interaction with shareholders such as other less formal meetings and contacts. The inclusion of the representatives of the shareholders in the Audit Committee ensures that the shareholders are kept abreast of developments in the Company.18.6 Donations and Corporate Social Responsibility There were no donations in the year. The company undertook corporate social responsibility as shown in the table below. S/N In Port Harcourt Duration Cost Estimate 1. Ibeto Junction to Marcobar Road 2014 - 2016 N147,000.000.00 Construction jointly executed with TSL 2. Financial support to Bundu-Ama Annually Varied Sums Community (host community) at year ends 3. 3 Nos. Catwalk Construction for Pedestrians Up to 2017 N1,000,000.0018.7 Internal Financial Controls The Company has in place procedures and structures for an effective control environment that promotes an orderly and efficient conduct of the Company’s business. These include the safeguarding of the Company’s assets and the maintenance of proper accounting records and financial information among others. The Audit Committee also plays a vital role in ensuring a sound system of internal control. Conoil plc/EnhancingCustomerExperience/2016 Annual Report 31

BOARD OF DIRECTORS’ REPORTfor the year ended 31 December, 2016 (Cont’d)19. Conoil Plc And The Law Conoil Plc ensures compliance with the laws and regulations guiding its operations in Nigeria. The Company has in place the following policies which are available on the website of the Company: www.conoilplc.com i. Securities Trading Policy ii. Complaint Management Policy iii. Code of Conduct and Business Ethics iv. Anti-Bribery and Corruption Policy v. Anti-Money Laundering and Combating Terrorism Financing Policy vi. Market Conduct Policy 19.1 Regulatory Compliance The Company submitted its Audited Financial Statements for the year ended 31 December, 2016 out of time to the Nigerian Stock Exchange (NSE) and was penalized by the Exchange for the sum of N2.3 million in 2016. Apart from this, the Company complied with other laws and regulations.19.2 Interaction with the society The Company in its activities pays due attention to ethical values, complies with legal requirements and takes into consideration the various stakeholders comprising not just its members but also the general populace and communities where it carries on business. The Company ensures maximum care for the environment where it operates by maintaining the highest environmental standards. Being an employer, supplier and consumer, Conoil Plc contributes to the economic growth of the country.20. Auditors The Auditors, Messrs Nexia Agbo Abel & Co. have indicated their willingness to continue in office in accordance with Section 357 (2) of the Companies and Allied Matters Act CAP C20 LFN 2004. A resolution will be proposed authorising the Directors to determine their remuneration. By Order of the BoardConrad EberemuCompany Secretary / Legal Adviser FRC/2017/NBA/00000016701 9 June, 2017Conoil Plc, Conoil plc/EnhancingCustomerExperience/2016 Annual ReportBull Plaza,38 / 39, Marina,Lagos.32

AccouTnhtes Statement of Directors’ Responsibilities 34 33 35 Independent Auditor’s Report Report of the Audit Committee 39 40 Statement of Profit or Loss and other Comprehensive Income Statement of Financial Position 41 42 Statement of Changes in Equity Statement of Cash Flows 4344 Notes to the Financial Statements Statement of Value Added 89 90 Five-Year Financial Summary Conoil plc/EnhancingCustomerExperience/2016 Annual Report

STATEMENT OF DIRECTORS’ RESPONSIBILITIESfor the year ended 31 December, 2016The Directors of Conoil Plc (“the Company”) are responsible for the preparation of the financialstatements that give a true and fair view of the financial position of the Company as at 31 December,2016, and the results of its operations, cash flows and changes in equity for the period ended, incompliance with International Financial Reporting Standards (“IFRS”) and in the manner requiredby the Companies and Allied Matters Act of Nigeria and the Financial Reporting Council of NigeriaAct, 2011. In preparing the financial statements, the Directors are responsible for: • properly selecting and applying accounting policies; • presenting information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information; • providing additional disclosures when compliance with the specific requirements in IFRSs are insufficient to enable users to understand the impact of particular transactions, other events and conditions on the Company’s financial position and financial performance; and • making an assessment of the Company’s ability to continue as a going concern The Directors are responsible for: • designing, implementing and maintaining an effective and sound system of internal controls throughout the Company; • maintaining adequate accounting records that are sufficient to show and explain the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company, and which enable them to ensure that the financial statements of the Company comply with IFRS; • maintaining statutory accounting records in compliance with the legislation of Nigeria and IFRS; • taking such steps as are reasonably available to them to safeguard the assets of the Company; and • preventing and detecting fraud and other irregularities. Going Concern The Directors have made an assessment of the Company’s ability to continue as a going concernand have no reason to believe the Company will not remain a going concern in the year ahead. The financial statements of the Company for the year ended 31 December, 2016 were approvedby the Directors on 9 June, 2017. On behalf of the Directors of the CompanyMr. Sanjay Mathur Mr. Bamidele Ogunnaike Mr. Ike Oraekwuotu Managing DirectorFRC/2017/NIM/00000016851 Finance Director Director FRC/2013/ICAN/00000001162 FRC/2016/NIM/00000015427 34 Conoil plc/EnhancingCustomerExperience/2016 Annual Report

43 Anthony Enahoro Street Utako District, Abuja-Nigeria. T: +234 (0) 809. 238. 4074 W: www.nexianigeria.comINDEPENDENT AUDITOR’S REPORTTO THE SHAREHOLDERS OF CONOIL PLC ON THEAUDIT OF THE FINANCIAL STATEMENTSOpinionWe have audited the accompanying financial statements of Conoil Plc which comprise the statementof financial position as at 31 December, 2016, the statement of profit or loss and other comprehensiveincome, statement of changes in equity, statement of cash flows for the year then ended, a summaryof significant accounting policies and other explanatory information set out on pages 44 to 88.In our opinion, the financial statements present fairly, in all material respects, the financial position ofConoil Plc as at 31 December, 2016 and the financial performance and cash flows for the year thenended in accordance with the International Financial Reporting Standards, Companies and AlliedMatters Act CAP C20 LFN 2004 and the Financial Reporting Council of Nigeria Act No 6, 2011.Basis for opinionWe conducted our audit in accordance with International Standards on Auditing (ISAs). Ourresponsibilities under those standards are further described in the Auditor’s Responsibilities for theAudit of the Financial Statements section of our report. We are independent of the Company inaccordance with the requirements of the Institute of Chartered Accountants of Nigeria ProfessionalCode of Conduct and Guide for Accountants (ICAN Code) and other independence requirementsapplicable to performing audits of financial statements in Nigeria. We have fulfilled our other ethicalresponsibilities in accordance with the ICAN Code and in accordance with other ethical requirementsapplicable to performing audits in Nigeria. The ICAN Code is consistent with the International EthicsStandards Board for Accountants Code of Ethics for Professional Accountants (Parts A and B). Webelieve that the audit evidence we have obtained is sufficient and appropriate to provide a basis forour opinion.Key audit mattersKey audit matters are those matters that, in our professional judgement, were of most significancein our audit of the financial statements of the current period. These matters were addressed in thecontext of our audit of the financial statements as a whole, and in forming our opinion thereon, andwe do not provide a separate opinion on these matters.Conoil plc/EnhancingCustomerExperience/2016 Annual Report 35

INDEPENDENT AUDITOR’S REPORT TO THESHAREHOLDERS OF CONOIL PLC ON THEAUDIT OF THE FINANCIAL STATEMENTS (Cont’d)Revenue recognitionSee note 3.3 and note 5 to the financial statements.Key audit matter How our audit addressed the matterRevenue is a significant measure of the - Our audit procedures include testing of the performance of the Company. design, existence and operating effectiveness of There is a risk of misstatement of revenue dueto inadequate cut-off procedures or wrong internal control procedures implemented as well application of IFRS 15. as test of details to ensure accurate processing of revenue transactions. - We obtained and reviewed sales documents to ensure revenue were recognised in line with IFRS 15. - We performed substantive analytical procedures and investigated differences in excess of the threshold. - We reviewed basis of valuation of foreign denominated contracts. - We performed cut-off tests to ensure that revenue were not under/over stated.Contingent liabilitiesSee note 3.14 and note 35 to the financial statements.Key audit matter How our audit addressed the matterContingent liabilities relate to estimates including - We received the list of outstanding litigation costs related to litigation and claims. TheCompany is exposed to a number of litigation and claims and discussed the developments in and claims from suppliers. In recognising thecontingent liabilities, the Directors determine the new and outstanding litigation and claims.their best estimate of related expenses andliabilities based on their judgment of specific - We considered management’s assessment details of the individual litigation and claims.Since actual expenses will depend on the of the possible outcome of the litigation and future outcome of the litigation and claims, theprovision for contingent liabilities is subject to claims for selected cases by discussing the inherent uncertainty. matters with the legal team. - We corroborated the discussion held with management with confirmations from solicitors. - We recomputed the provisions for significant provisions.Other information The directors are responsible for the other information. The other information comprises theDirectors’ Report which we obtained prior to the date of this auditor’s report. The other informationdoes not include the financial statements and our auditor’s report thereon.36 Conoil plc/EnhancingCustomerExperience/2016 Annual Report

INDEPENDENT AUDITOR’S REPORT TO THESHAREHOLDERS OF CONOIL PLC ON THEAUDIT OF THE FINANCIAL STATEMENTS (Cont’d)Our opinion on the financial statements does not cover the other information and we do not express anyform of assurance thereon. In connection with our audit of the financial statements, our responsibilityis to read the other information and, in doing so, consider whether the other information is materiallyinconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appearsto be materially misstated.Based on the work we have performed on the other information that we obtained prior to the date ofthis auditor’s report, if we conclude that there is a material misstatement of this other information, weare required to report that fact. We have nothing to report in this regard. Responsibilities of management and those charged with governance for the financialstatements Management is responsible for the preparation and fair presentation of the financial statements inaccordance with the Companies and Allied Matters Act CAP C20 LFN 2004, the Financial ReportingCouncil of Nigeria Act No 6, 2011, the International Financial Reporting Standards and for suchinternal control as the directors determine is necessary to enable the preparation of financial statementsthat are free from material misstatement, whether due to fraud or error.In preparing the financial statements, the directors are responsible for assessing the Company’s abilityto continue as a going concern, disclosing, as applicable, matters related to going concern and usingthe going concern basis of accounting unless the directors either intend to liquidate the Company orto cease operations, or have no realistic alternative but to do so. Auditor’s responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a wholeare free from material misstatement, whether due to fraud or error, and to issue an auditor’s reportthat includes our opinion. Reasonable assurance is a high level of assurance, but is not a guaranteethat an audit conducted in accordance with ISAs will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material if, individually or in theaggregate, they could reasonably be expected to influence the economic decisions of users taken onthe basis of these statements.As part of an audit in accordance with ISAs, we exercise professional judgement and maintainprofessional scepticism throughout the audit. We also: - Identify and assess the risks of material misstatement of the 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 opinion. The risk 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.- 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 Company’s internal control. Conoil plc/EnhancingCustomerExperience/2016 Annual Report 37

INDEPENDENT AUDITOR’S REPORT TO THESHAREHOLDERS OF CONOIL PLC ON THEAUDIT OF THE FINANCIAL STATEMENTS (Cont’d)- Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.- Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists relating to events or conditions that may cast significant doubt on the Company’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 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 Company to cease to continue as a going concern.- Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. We communicate with the board of directors regarding, among other matters, the planned scope andtiming of the audit and significant audit findings, including any significant deficiencies in internal controlthat we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevantethical requirements regarding independence, and to communicate with them all relationships andother matters that may reasonably be thought to bear on our independence, and where applicable,related safeguards. Report on other legal and regulatory requirements In compliance with the requirements of the Sixth Schedule of the Companies and Allied Matters Act CAPC20 LFN 2004, we confirm that: (i) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit; (ii) the Company have kept proper books of account, so far as appears from our examination of those books; and (iii) the statements of financial position and comprehensive income are in agreement with the books of account and returns. Tolulope Fasanya - FRC/2012/ICAN/00000000109 for: Nexia Agbo Abel & Co Chartered Accountants Abuja, Nigeria 9 June, 201738 Conoil plc/EnhancingCustomerExperience/2016 Annual Report

REPORT OF THE AUDIT COMMITTEEfor the year ended 31 December, 2016In compliance with the provisions of Section 359 (6) of the Companies and Allied Matters Act (CAPC20) Laws of the Federation of Nigeria, 2004, we confirm that we have: 1. Reviewed the scope and planning of the audit requirements 2. Reviewed the External Auditors’ Management Letter for the year ended 31 December, 2016 as well as the Management’s response thereon; and 3. Ascertained that the accounting and reporting policies of the Company for the year ended 31 December, 2016 are in accordance with legal requirements and agreed ethical practices. In our opinion, the scope and planning of the audit for the year ended 31 December, 2016 wereadequate and Management’s responses to the External Auditors’ findings were satisfactory. In addition, the scope, planning and reporting of these Financial Statements were in compliancewith the requirement of the Financial Reporting Standards as adopted by the Company. Mr. Oladepo Olalekan Adeshina*ChairmanFRC/2013/NIM/0000000367831 May, 2017Members of the Audit CommitteeMr. Joshua Oluwole OginniMr. Babatunde AderenleMr. Mike JitubohMr. Ike OraekwuotuMr. Joshua Ariyo*Waiver obtained from the FRC to allow the Chairman sign the Report of the Audit Committeeas a non member of a professional accounting body.Conoil plc/EnhancingCustomerExperience/2016 Annual Report 39

STATEMENT OF PROFIT OR LOSS AND OTHERCOMPREHENSIVE INCOMEfor the year ended 31 December, 2016Revenue Note 2016 2015Cost of sales N’000 N’000Gross profit 5 6 85,023,546 82,919,220Other operating income (70,882,997) (71,381,463)Other gains and losses 7 14,140,549 11,537,757Distribution expenses 8Administrative expenses 9 2,280,235 2,718,438Finance cost 10 155,237 2,533,281Profit before tax 11 (2,697,837) 12 (2,534,598) (6,885,734)Income tax expense (7,995,977) (3,757,508)Profit for the year 13 (1,764,897) 3,448,397Other comprehensive income for the year net taxes 4,280,549Total comprehensive income (1,442,665) (1,140,840)Earnings per share 2,837,884 2,307,557Basic earnings per share (kobo) 2,837,884 2,307,557 14 409 333The notes on pages 44 to 88 form part of these financial statements.40 Conoil plc/EnhancingCustomerExperience/2016 Annual Report

STATEMENT OF FINANCIAL POSITIONas at 31 December, 2016 Note 2016 2015 N’000 N’000AssetsNon-current assets 15 2,438,466 3,169,460Property, plant and equipment 16 63,680 74,294Intangible assets 17 347,550Investment property 18 10 397,200Other financial assets 19 163,045 10Prepayments 13 2,749,942Deferred tax assets 97,104Total non-current assets 5,762,693 1,994,988 5,733,056Current assets 20 5,255,596Inventories 21 16,383,929 5,550,287Trade and other receivables 19 135,890 28,024,348Prepayments 22 42,295,355Cash and bank balances 189,116Total current assets 64,070,770 29,890,557 63,654,308Total assets 69,833,463 69,387,364Equity and liabilitiesEquity 23 346,976 346,976Share capital 23 3,824,770 3,824,770Share premium 24 14,293,934 13,537,907Retained earnings 17,709,653Total equity 18,465,680Non - Current liabilities 501,697Distributors’ deposits 27 502,859 693,515Deferred tax liabilities 13 428,694Decommissioning liability 28 52,141 38,200Total non-current liabilities 1,233,412 983,694 18,235,913Current liabilities 22 8,990,872 28,859,842Borrowings 26 37,358,764Trade and other payables 13 4,034,453 3,348,544Current tax payable 50,444,299Total current liabilities 50,384,089 51,677,711Total liabilities 51,367,783 69,387,364Total equity and liabilities 69,833,463These financial statements were approved by the Board of Directors on 9 June, 2017 and signed on its behalfby:Mr. Sanjay Mathur Mr. Bamidele Ogunnaike Mr. Ike Oraekwuotu Managing Director Finance Director Director FRC/2017/NIM/00000016851 FRC/2013/ICAN/00000001162 FRC/2016/NIM/00000015427 Conoil plc/EnhancingCustomerExperience/2016 Annual Report 41

STATEMENT OF CHANGES IN EQUITYas at 31 December, 2016 Share capital Share Retained Total equity N’000 premium earnings N’000 N’000 N’000Balance at 1 January 2015 346,976 3,824,770 11,924,301 16,096,047Profit for the year 2,307,558 2,307,558Other comprehensive income (net of tax)Total comprehensive income 346,976 3,824,770 2,307,558 2,307,558Dividends to shareholders (693,952) (693,952)Balance at 31 December, 2015 13,537,907 17,709,653Balance at 1 January, 2016 346,976 3,824,770 13,537,907 17,709,653Profit for the year 2,837,884 2,837,884Other comprehensive income (net of tax)Total comprehensive income 346,976 3,824,770 2,837,884 2,837,884Dividends to shareholders (2,081,856) (2,081,856)Balance at 31 December, 2016 14,293,934 18,465,680The notes on pages 44 to 88 form part of these financial statements. 42 Conoil plc/EnhancingCustomerExperience/2016 Annual Report

STATEMENT OF CASH FLOWSfor the year ended 31 December, 2016 Note 2016 2015 N’000 N’000Profit before tax 4,280,549 3,448,397 Adjustments to reconcile profit before tax to net cash provided: Interest from bank deposits 7 (2,151) (1,719) 7 (1,905,104) (2,544,932)Interest on delayed subsidy payment 11 11 1,762,796 3,751,819Interest on bank overdraft 15 2,101 5,689 16Accretion expense 17 1,184,287 1,329,065 13 49,650 49,650Depreciation of property, plant and equipment 10,614 10,614 15Depreciation of investment property 7 (44,948)Amortisation of intangible assets 11 24Withholding tax credit 22 Changes in working capital: (Increase)/decrease in inventories 294,691 (34,092) 11,627,704 16,483,649Decrease in trade and other receivables (14,266,521) 8,807,476(Increase)/decrease in trade and other payables 1,162 3,350 8,190,021Increase in distributors’ deposits 26,113,774 (2,153,497) (1,776,533) (408,910)Cash generated by operations 5,627,614 (294,611)Tax paid 24,042,630Value added tax paid Net cash generated in operating activities Cashflows from investing activities Purchase of property, plant and equipment (453,293) (571,139) 1,907,255 2,546,651Interest received 1,453,962 1,975,512Net cash generated by investing activities Cashflows from financing activities Interest paid (1,764,897) (3,757,508) (2,081,856) (693,952)Dividends paid (3,846,753) (4,451,460)Net cash used in financing activities Net increase in cash and cash equivalents 21,649,839 3,151,666 11,654,643 8,502,977Cash and cash equivalents at 1 January 33,304,482 11,654,643Cash and cash equivalents at 31 DecemberThe notes on pages 44 to 88 form part of these financial statements. Conoil plc/EnhancingCustomerExperience/2016 Annual Report 43

NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December, 2016 1. The Company Conoil Plc (“The Company”) was incorporated in 1960. The Company’s authorised share capital is 700,000,000 ordinary shares of 50k each. The Company was established to engage in the marketing of refined petroleum products and the manufacturing and marketing of lubricants, household and industrial chemicals. 1.1 Composition of Financial Statements The financial statements are drawn up in Nigerian Naira, the financial currency of Conoil Plc, in accordance with IFRS accounting presentation. The financial statements comprise: - Statement of profit or loss and other comprehensive income - Statement of financial position - Statement of changes in equity - Statement of cash flows - Notes to the financial statements Additional information provided by the management includes: - Value added statement - Five-year financial summary 1.2 Financial period These financial statements cover the financial year from 1 January, 2016 to 31 December, 2016 with comparative figures for the financial year from 1 January, 2015 to 31 December, 2015. 2. Adoption of new and revised International Financial Reporting Standards (IFRS) and Interpretations by the International Financial Reporting Interpretations Committee (IFRIC) Accounting standards and interpretations issued but not yet effective The following revisions to accounting standards and pronouncements that are applicable to the Company were issued but are not yet effective. Where IFRSs and IFRIC interpretations listed below permit early adoption, the Company has elected not to apply them in the preparation of these financial statements. The full impact of these IFRSs and IFRIC Interpretations is currently being assessed by the company, but none of these pronouncements are expected to result in any material adjustments to the financial statements. Effective for the financial year commencing 1 January, 2017 - Amendments to IAS 7: Disclosure Initiative Effective for the financial year commencing 1 January, 2017 - Amendments to IAS 12: Recognition of Deferred Tax Assets for Unrealised Losses Effective for the financial year commencing 1 January, 2018 - Amendments to IFRS 2: Classification and Measurement of Share-based Payment Transactions 44 Conoil plc/EnhancingCustomerExperience/2016 Annual Report

NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December, 2016 (Cont’d) Effective for the financial year commencing 1 January, 2018 - IFRS 9 Financ ial Instr uments Effective for the financial year commencing 1 January, 2018 - IFRS 1 5 Reven ue from Contracts with Customers Effective for the financial year commencing 1 January, 2019 - IFRS 16 - Leases All standards and interpretations will be adopted at their effective date and their implications on the Company are stated below: Standard/ Date issued EffectiveInterpretation not yet by IASB date periodseffective as at beginning on31 December, 2016 or after Summary of the requirements and assessment of impactIAS 7 Disclosure 29 January, 1 January, Initiative 2016 2017 Early This amends IAS 7 Statement of adoption is Cashflowtoclarifythatentitiesshall permitted provide disclosures that enable users of the financial statements to evaluate changes in liabilities arising from financial activities. The Company will adopt the amendments for the year ending 31 December, 2017.IAS 12 Recognition 19 January, 1 January, The amendment to IAS 12 Income of Deferred 2016 2017 Taxesclarifiesthefollowingaspects: Tax Early • Unrealised losses on debt Assets for adoption is instruments measured at fair Unrealised permitted value and measured at cost for tax Losses purposes give rise to a deductible temporary difference regardless of whether the debt instrument’s holder expects to recover the carrying amount of the debt instrument by sale or by use. • The carrying amount of an asset does not limit the estimation of probable future taxable profits. • Estimates for future taxable profits exclude tax deductions resulting from the reversal of Conoil plc/EnhancingCustomerExperience/2016 Annual Report 45

NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December, 2016 (Cont’d)Standard/Interpretation Date issued Effective Summary of the requirementsnot yet effective as at by IASB date periods and assessment of impact31 December, 2016 beginning on or afterIAS 12 Recognition 19 January, 1 January, deductible temporary differences. of Deferred 2016 2017 • An entity assesses a deferred Tax Assets for Early tax asset in combination with Unrealised adoption is other deferred tax assets. Losses permitted Where tax law restricts the utilisation of tax losses, an entityIFRS 9 Financial 24 July, 1 January, would assess a deferred tax Instruments 2014 2018 asset in combination with other Early deferred tax assets of the same type. adoption is The Company will adopt the permitted amendments for the year ending 31 December, 2017. The IASB issued the final IFRS 9 Financial Instruments Standard, which replaces earlier versions of IFRS 9 and completes the IASB’s project to replace IAS 39 Financial Instruments: Recognition and Measurement. This standard will have a significant impact on the Company, which include changes in the measurement bases of the Company’s financial assets to amortised cost, fair value through other comprehensive income or fair value through profit or loss. Even though these measurement categories are similar to IAS 39, the criteria for classification into these categories are significantly different. In addition, the IFRS 9 impairment model has been changed from an “incurred loss” model from IAS 39 to an “expected credit loss” model, which is expected to increase the provision for bad debts recognised in the Company. The amendments apply retrospectively. The Company will adopt the amendments for the year ending 31 December, 2018.46 Conoil plc/EnhancingCustomerExperience/2016 Annual Report

NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December, 2016 (Cont’d)Standard/Interpretation Date issued Effective Summary of the requirementsnot yet effective as at by IASB date periods and assessment of impact31 December, 2016 beginning on or afterIFRS 2 Classification 20 June, This clarifies the standard in relation to and 2016 1 January, the accounting for cash-settled share- Measurement of 2018 based payment transactions that Share-based Early include a performance condition, the Payment adoption is classification of share-based payment Transactions permitted transactions with net settlement features, and the accounting for modifications of share-based payment transactions from cash-settled to equity-settled.IFRS 15 Revenue from 28 May, 1 January, This standard replaces IAS 11 contract with 2014 2018 construction Contracts, IAS 18 customers Early Revenue, IFRIC 13 Customer Loyalty adoption is Programmes, IFRIC 15 Agreements for permitted the Construction of Real Estate, IFRIC 18 Transfer of Assets from Customers and SIC-31 Revenue – Barter of Transactions Involving advertising Services. The standard contains a single model that applies to contracts with customers and two approaches to recognizing revenue: at a point in time or over time. The model features a contract-based five–step analysis of transactions to determine whether, how much and when revenue is recognised. This new standard will most likely have a significant impact on the Company, which will include a possible change in the timing of when revenue is recognised and the amount of revenue recognized. The Company will adopt the amendments for the year ending 31 December, 2018. Conoil plc/EnhancingCustomerExperience/2016 Annual Report 47

NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December, 2016 (Cont’d)Standard/Interpretation Date issued Effective Summary of the requirementsnot yet effective as at by IASB date periods and assessment of impact31 December, 2016 beginning on 13 January, or afterIFRS 16 Leases 2016 1 January, Under IFRS 16, the distinction made up 2019 to now between operating leases and finance leases will no longer apply with respect to the lessee. For all leases, the lessee recognizes a right of use to an asset and a lease liability. The right of use is amortized over the contractual term in line with the rules for intangible assets. The lease liability is recognized in accordance with the rule for financial instruments pursuant to IAS 39 (or IFRS 9 in future). Write-downs on the asset and interest on the liability are presented separately in the income statement. There are exemptions when accounting for short-term leases and low-value leased assets. The disclosures in the notes to the financial statements will be extended and should provide a basis for users to assess the amount, timing as well as uncertainties in relation to leases. For lessors, however, the rules in the new standard are similar to the previous rules in IAS 17. They will continue to classify leases either as a finance lease or an operating lease. The directors of the Company do not anticipate that the application of these amendments to IFRS 16 will have any impact on the Company’s financial statements.48 Conoil plc/EnhancingCustomerExperience/2016 Annual Report

NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 December, 2016 (Cont’d)3 . S ignificant accounting policies3 .1 S tatement of compliance The annual financial statements are prepared in accordance with International Financial Reporting Standards (IFRSs) and the requirements of the Companies and Allied Matters Act (CAMA) and the Financial Reporting Council of Nigeria Act. The financial statements have been prepared on the historical cost basis. Historical cost is generally based on the fair value of the consideration given in exchange for the assets. The principal accounting policies adopted are set out below. 3 .2 A ccoun ting p rinciples and policies The financial statements have been prepared in accordance with the Company’s accounting policies approved by the Board of Directors of the Company. 3.3 Revenue recognition Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and services provided in the normal course of business, net of discounts and sales related taxes (where applicable). Exchanges of petroleum products within normal trading activities do not generate any income and therefore these flows are shown at their net value in both the statement of profit or loss and other comprehensive income and the statement of financial position. 3 .3.1 Sale of good s R evenue from t he sale of goo ds is re cognise d when all the followi ng con ditions are satisfied:- the Company has transferred to the buyer the significant risks and rewards of ownership of the goods; - the Company retains neither continuing managerial involvement to the degree 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 the entity; and - the costs incurred or to be incurred in respect of the transaction can be measured reliably. 3 .3.2 I nteres t revenue Interest income is recognised when it is probable that the economic benefits will flow to the Company and the amount of revenue can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount on initial recognition. Conoil plc/EnhancingCustomerExperience/2016 Annual Report 49

NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December, 2016 (Cont’d) 3.3.3 S ervice income Service income represents income from Entity’s property at service stations while rental income represents income from letting of the entities building. Both service income and rental income are credited to the statement of comprehensive income when they are earned. 3.4 F oreign currency translation The financial statements of the Company are prepared in Nigerian Naira which is its functional currency and presentation currency. In preparing the financial statements, transactions in currencies other than the Company’s functional currency (foreign currencies) are recognised at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting year, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. 3 .5 P ensio ns and other post-employment benefits The Company operates a defined contribution pension plan for its employees and pays fixed contributions into a separate entity. The Company has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior years. In addition, payments to defined contribution retirement benefit plans are recognised as an expense when employees have rendered service entitling them to the contributions. The Company also operated a gratuity scheme for its qualified employees prior to 2008 which it has discontinued. 3 .6 T axatio n T he tax expens e repre sents th e sum of the ta x currently payable and deferred tax. 3.6.1 C urren t tax The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the statement of comprehensive income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Company’s liability for current tax is calculated using tax rate s that h ave bee n enac ted or substan tively e nacted at the reporting date. 3 .6.2 Deferr ed tax Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will50 Conoil plc/EnhancingCustomerExperience/2016 Annual Report