SHARES in Oando, a Nigerian indigenous energy group, tumbled 27.5 percent to 29 cents on the JSE yesterday after it informed its shareholders that its net earnings for full year 2019 would be significantly lower compared to the previous year due to the Covid-19 pandemic.
Listed on the Nigerian Exchange and the JSE, the group released its earnings guidance for year 2019 yesterday, without disclosing the amount the earnings would slide by.
According to the company, the reduction in earning was due to the adverse impact of the Covid-19 pandemic on the global demand for oil in 2020, which resulted in lower forecast oil prices.
"This triggered a re-assessment of the expected future cash flows from our oil and gas assets. Accordingly, we have taken the prudent approach of recognising a substantial impairment of a portion of the group’s intangible assets that arose from acquisitions done in prior years," the company said.
Following the successful resolution of a disruptive and value-destructive long-standing shareholder dispute, it had decided to recognise a significant impairment on a category of the group’s intangible and financial assets arising from the financing and settlement of the resolution.
"Despite the above, we remain fully committed to returning the group to profitability by pursuing organic and inorganic growth opportunities in the upstream, and increasing our trading volumes," the company said.