Nigeria oil. Picture: REUTERS/AKINTUNDE AKINLEYE The auditor of Nigerian oil and gas producer Oando Plc has questioned the company’s ability to remain in business as it continues to incur losses and struggles with a heavy debt burden.
Oando, which is listed on the JSE and Nigerian Stock Exchange, recorded losses of 18.3-billion naira (R720.4m) for the year.
EY had already flagged concern about its ability to stay in business in previous years. In the 2018 results, the firm noted that the company’s liabilities exceeded its assets by 63-billion naira (R2.5bn) — roughly the same size as its market capitalisation on both the Nigerian Stock Exchange and the JSE. Graphic: KAREN MOOLMAN An asset deficiency When liabilities exceed assets in a smaller company with unpredictable cash flows, puts it at there is a higher risk of it defaulting in on its obligations to creditors. and, ultimately, becoming bankrupt.
“The conditions, along with other matters, indicate that a material uncertainty exists that may cast significant doubt on the company and the group’s ability to continue as a going concern,” EY noted in its audit opinion.
The share price dropped 9.73% in Nigeria after the release of the results on Monday.
The share has been under pressure since July 2017 when a shareholder dispute prompted Nigeria’s Securities Exchange Commission (SEC) to conduct a forensic audit into allegations of financial mismanagement and insider trading.
The SEC imposed a six-month long suspension of Oando shares on both the Nigerian and Johannesburg exchanges, but this was lifted in April 2018. last year. The audit report has not yet been released. of remained under pressure as the market awaits the outcome of a forensic audit by the Nigerian securities exchange commission.
In its annual results released on Monday
But Oando’s unlisted parent company, which is also called Oando, as a group of companies, reported a 46% increase in taxed profit to 28.7-billion naira (R1.1bn) for the year to December due to stronger commodity prices and higher oil production. , compared with 19.7bn naira (R775m) in the previous year.
Oando is the subject of a shareholder dispute which, in 2017, caused Nigeria’s SEC to launch the probe to look into various, serious allegations including financial mismanagement and insider trading. It had imposed a six-month long suspension of Oando shares on both the Nigerian and Johannesburg exchanges, but this was lifted in April last year. The audit report is however yet to be released.
The listed company’s management […]