Oando Plc’s external auditor, BDO Professional Services Chartered Accountants is not backing down on its previous opinion that Oando is threatened with a huge financial crisis that may lead to it termination as a going concern or liquidation.
Oando has continued to incur loss as its liability is on the rise.
The group’s financial statement for the year ending 2022 reveals that the firm which posted N30.6bn comprehensive profit in 2021, fell into loss of N56.8bn in 2022, NewsNGR can confirm.
The accounts reveal that OANDO’s net liability rose to N197.2bn from N129bn in 2021.
The books further reveals that the group recorded unaudited positive revenue variance of N1.99tn in 2022 against N804.8bn in 2021.
However, the increase in revenue did not translate to a relative increase in gross margin and positive cash flows from operations.
As a result, Oando could not achieve planned repayment of outstanding borrowings of N816.3bn out of which N686.6bn was due within twelve months. The interest that accrued on the borrowing but was not paid was N154.6bn as of December 31, 2023.
The auditor hired by OANDO said that the oil giant now suffers N3tn funding gap.
“The Group and the Company continue to incur losses and reversal of this trend is dependent on successful outcomes of its planned actions to refinance its debts in order to manage the funding gap of N3 trillion and the attainment of revenue in the Group’s forecast for the year ending 31 December 2024.
“As stated in the note, if the planned actions are successful, it will only address 32 per cent of the Group’s projected funding gap,” BDO said.
NewsNGR understands that the management has additional plans to address the 68 per cent funding gap shortfall.
But there are currently no written agreements in place for such funding plans and there can be no assurance that such will be available in the immediate future, the auditor revealed.
BDO said, “These conditions together with other matters, indicate the existence of a material uncertainty that may cast significant doubt on the Group’s and the Company’s ability to continue as a going concern and therefore may be unable to realize its assets and settle its liabilities in the ordinary course of business.
“The financial statements are yet to include any adjustments to the amounts and classification of assets and liabilities that may be necessary, should the Group not continue as a going concern as there has neither been any intention by the Directors to liquidate or cease the operations of the Group nor is there any legislation to cause the same.”
The group still hopes to return to profitability but it is dependent on successful completion of the acquisition of NAOC’s working interest in OML 60 – 63 and revenues from the OML 60 – 63 assets.
In the 2021 financial statement where BDO first publicised its concerns about the group’s going concern, the auditor also predicted that the Oando will return.
However, the forecast was highly dependent on the stability of crude oil prices within the current range, Oando’s ability to engage in activities that will increase production volume and revenues from OML 60-63 through execution of approved well workover activities, and intensified security surveillance to arrest crude oil theft.