Auditors Question Nigeria Oil Driller’s Ability to Stay Afloat
(Bloomberg) -- Ernst & Young, auditors for Nigeria’s Oando Plc, said there was material uncertainty about the energy company’s ability to continue as a going concern, even as it reported increased profit in the past financial year.
While profit after tax rose 46 percent to 28.8 billion naira ($80 million), “the company recorded comprehensive losses for the year of 18.3 billion naira and, as that date, current liabilities exceeded current assets by 63 billion naira,” the auditors said in their report accompanying the financial statements.
As a result, “a material uncertainty exists that may cast significant doubt on the company and the group’s ability to continue as a going concern,” EY said.
Oando debt rose to $2.5 billion after acquiring oil and gas assets from U.S. giant ConocoPhillips increased its finance costs and stalled growth. A shareholder dispute and an investigation by the Nigerian Stock Exchange’s Securities and Exchange Commission into possible insider trading added to the company’s woes.
Chief Executive Officer Wale Tinubu said last year the company’s borrowings will be almost 90 percent lower by the third quarter of this year.
The London Court of International Arbitration last year ordered two companies owned by Tinubu and his deputy, Mofe Boyo, to pay $680 million to Ansbury Investment Inc. following a dispute over shareholding and financial management of the energy company. Ansbury is owned by the family of Nigerian-Italian businessman Gabriele Volpi.
Oando shares slumped 9.7 percent to 5.10 naira at the close in Lagos Monday, the biggest retreat in more than a month, and were unchanged at the opening Tuesday.
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