Home Business News Supreme Court orders Conoil to pay N13.2 billion to Vitol S.A

Supreme Court orders Conoil to pay N13.2 billion to Vitol S.A

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Downstream petrol retailer, Conoil Plc, may end 2018 on a negative note, going by a recent judgment awarded against the firm.

In the company’s annual report for the 12 months ended December 2017, the downstream oil firm disclosed that a Supreme Court judgment had ordered it to pay the sum of N13.2 billion to Vitol S.A.  The case had dragged on in the legal system for close to 10 years before judgment was given by the Supreme Court.

Judgement was recently given against the Company in the earlier disclosed suit between Conoil Plc and its former suppliers of Automotive Gas Oil (AGO); Vitol S.A. The commercial dispute which arose in 2008 had been contested through the High Court and the Court of Appeal but was finally decided by the Supreme Court in the month of December 2017. The board has resolved that the judgement sum of $43,322,497.57 (N13.2 billion) should be shared between the Company and Synopsis Enterprises Limited and disbursement be made to the Judgment Creditor in the ratio of 85% (N11.2 billion) by the Conoil Plc
and 15% (N2 billion) by Synopsis Enterprises Limited. The reason for this being that Synopsis Enterprises Limited as a sister Company to Conoil Plc consummated the transaction on behalf of the Company that led to the commercial dispute

Why the judgment is a heavy blow

Conoil’s retained earnings as at December 31, 2017, amounted to N13,721,190,000. Deducting its share of the judgment (amounting to N11.2 billion) leaves the company with just N2,521,190,000 in its kitty. In the event of the second judgment sum of N4.3 billion being awarded against the firm, this would leave the company with negative retained earnings.

Companies with negative retained earnings are barred from paying dividends.

The company’s auditors had also flagged the litigation and claims by suppliers as a key audit matter.

Good times continue

Despite the heavy judgment sum and another hanging like the sword of Damocles, Conoil intends paying shareholders dividends for the 2017 financial year. For the 2017 financial year, it has proposed a dividend of N2.00 per share amounting to N1,387, 904,000.

Poor corporate governance

While the terms of the agreement between Conoil Plc and Synopsis are unknown, it is puzzling that Conoil would bear the bulk of the judgement sum.  Conoil’s Chairman, Mike Adenuga, also has significant interests in Synopsis Enterprises Limited.

Coronation Research

One would have expected that the firm would have made some provision for the judgement as the case dragged through several courts.

Coronation Research

Conoil’s late release of financial statements has become a tradition of some sort. The company’s financial statements for the 2017 financial year were submitted to the Nigerian Stock Exchange (NSE) on June 1, 2018.

2016 financial statements were uploaded to the NSE portal on June 21, 2017. Financial statements for the 2015 financial year were submitted on September 8, 2016. The firm is yet to release its financial statements for the first quarter ended March 2018, which other listed majors have since done.

Conoil closed at N32 on Thursday, during trading session on the Nigerian Stock Exchange (NSE). Year-to-date, the stock is down 14.29%.

About Conoil Plc

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 August 21, 1991.

In the year 2000, the Federal Government, through the Bureau of Public Enterprises (BPE) bought 40% of the issued ordinary shares of the company held by Shell Company of Nigeria (UK) Limited.

Following the privatisation of the company, Conpetrol Limited acquired 60% of the issued shares of the company. Following a rights issue by the company in 2002, Conpetrol Limited now holds 74.4% of the issued capital, while members of the Nigerian public hold the remaining 25.6% stake in the company. Conpetrol Limited is ultimately controlled by Mike Adenuga.

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.

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