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By Nigel Somerville, the Deputy Sheriff of AIM | Thursday 24 May 2018
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.
I previously covered AIM-listed Victoria Oil and Gas (VOG) with reference to an after-hours warning issued after market close, but during the auction. It looked terrible, but there were mitigating factors which looked to have combined in an unfortunate fashion. This morning Victoria has issued a Q1 trading update. It is not pretty, but I have to take my hat off to the company this morning, for it gives full numbers and investors can make a rational decision.
You can read the statement HERE and I won’t try to paraphrase it. Suffice to say that does not make great reading – the principal problem being the non-renewal of a gas sale agreement. We are told that the company is confident that the situation will be resolved (and my reading suggests it is important for the Cameroon economy as there are shortages). But in the meantime it is causing plenty of problems for Victoria.
But for me the critical line is this:
Cash and cash equivalents at end of Q1 18 was $6.0 million (Q4 17: $11.4 million), trade receivables were $4.3 million (Q4 17: $6.2m), trade payables $9.1 million (Q4 17: $8.8 million) and borrowings were $23.4 million (Q4 17: $24.5 million). Net debt was $17.4 million (Q4 17: $13.1 million).
Well that’s a pretty comprehensive set of numbers: we know the cash position, the net debt and net current assets – and we can see how things have deteriorated since the previous quarter.
Well, it might be bad news but top marks to Victoria for telling all. Investors have a pretty good idea of where things are.
ShareProphets spends so much time lambasting companies for failing to fess up, or for failing to give adequate numbers that I think Victoria needs to be congratulated here. No, it is not the news investors wanted, but at least they are being given the full picture. Take note, the rest of AIM!
I wish Victoria well, and hope the gas licence is resolved soon.
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