Oando Nigeria Plc’s accumulated losses of N151.16 billion could threaten future dividend payment, further raising concerns about the financial stability of a firm groaning under huge debt. Negative retained earnings in the balance sheet mean a corporate entity has recorded more losses than profit through its existence.
While Oando recorded a profit of an N7.12 billion in the nine periods to September 2017, from a loss of N35.88 billion the previous year, the indigenous oil and gas giant’s recurring losses, huge gearing ratios, and poor working capital position are enough to enrage owners. Oando has negative working capital of N251.95 billion as of September 2017, which means the firm has working capital challenges as current assets can no longer cover current liabilities.
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The company is indebted and has huge debt in its balance as total borrowings (both long and short term) stood at N240.14 billion as at September 2017. Debt to equity ratio was 121 per cent. The 2016 audited financial statement of Oando shows directors’ emolument, salaries and remuneration of N1.93 billion is 55.30 per cent of net income of N3.49 billion. This package is overly generous for a firm that is striving.
Little wonder the shareholders of the indigenous oil and giant have accused management of financial impropriety and mismanagement of shareholders’ investment for personal gains. “The annual report is there for everybody. “For three years, the financial operations of Oando Plc have been worrisome on critical matters affecting our investment. No dividends have been paid since 2013 financial year,” said Muhktar Muhktar National Coordinator of Trusted Shareholders Association.
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The Nigerian Stock Exchange had suspended trading on the shares of Oando Plc as directed by the apex regulator, the Securities and Exchange Commission. The apex regulator said it suspects insider dealings, discrepancies in the shareholdings structure of the company, related party transaction not conducted at arm’s length and breach of corporate governance code. Oando Plc was reported to SEC by two of its shareholders, Gabriel Volpi and Alhaji Mangal over allegation that Wale Tinubu has mismanaged the firm, and is thus pushing for his removal from the board.
BALA AUGIE
