Oando Plc today released its financial statements for the 12 months ended December 2017 and first quarter ended March 2018.
The company recorded revenue of N497 billion for the year ended December 2017 compared to N455 billion reported for the year ended December 2016.
The Group’s profit after tax for the year ended December 2017 was N19.7 billion up 405% compared to N3.9 billion recorded a year earlier.
The company has been in the eyes of the storm since July last year due to a petition from two aggrieved shareholders, Gabriel Volpi and Dahiru Mangal. They accused the senior management of poor running of the firm. Dahiru Mangal has since withdrawn his petition.
The SEC then ordered a forensic audit based on its preliminary findings. After a legal battle with the regulators, the company then stood down its opposition to the audit.
The battle has also led to several victims. Suspended Director General of the Securities and Exchange Commission (SEC) Mounir Gwarzo has alleged he was suspended by Minister of Finance Kemi Adeosun because of a refusal to stop the audit. She however denied the allegations, accusing him of blackmail.
Acting Director-General Abdul Zubair was redeployed because of his removal of a technical suspension placed on the stock.
Here a few reasons why investors should be cautious despite the positive results.
The company remains loss making
Oando (the company) however remains loss making. It made a loss of N30.6 billion for the 12 months ended December 2017, and N3.9 billion for the three months ended March 2018.
Oando (the company) comprises
- Oando Energy Resources Inc., Canada, which is engaged in production operations and other E & P companies operating within the Gulf of Guinea.
- Oando Trading Dubai and Oando Trading Bermuda which is into the supply and distribution of petroleum products.
A large proportion of Oando’s loans were taken on behalf of the company to fund its acquisition of upstream assets.
Key Audit matter
The company’s auditors Ernest and Young have also expressed concern about Oando’s ability to remain a going concern.
Negative retained earnings
Negative Q1 2018 retained earnings of N136 billion at the group level mean the company is a long way from paying dividends, except it decides to offset these losses from its share premium, and is able to defray a significant portion of its liabilities.
Unknown results of the forensic audit
There has been no word however of the results of the forensic audit, despite today’s release of its results.
Kemi Adeosun, while defending her redeployment of the Acting SEC DG stated that the technical suspension of the stock should not have been lifted till her ministry, SEC, the NSE and the Johannesburg Stock Exchange (JSE), where Oando has a dual listing had reviewed the report of the forensic audit submitted by the team of professionals appointed by SEC to investigate the company.
On going tussle with shareholders
The case between the company’s senior management and an aggrieved key shareholder Gabriele Volpi is currently ongoing. Several retail investors have also petitioned the House of Representatives.
Out performed the NSE ASI
Oando closed at N9.15 in today’s trading session on the NSE. The company has outperformed the NSE All-Share Index (ASI) year to date, as it is up 57.75% since a technical suspension on its shares were lifted. Investors would be better off cashing out their gains pending a much clearer direction.
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