Financial Distress Hits 9 Firms Listed On NGX

At least nine companies listed on the Nigerian Exchange Limited, NGX, are facing significant balance-sheet pressure, with shareholders’ funds turning negative and most of them recording poor or negative returns on equity, ROE.

An analysis of financial data of the companies shows that Premier Paints Plc, Omatek Ventures Plc, NCR Nigeria Plc, Caverton Offshore Support Group Plc, Nigerian Enamelware Plc, RT Briscoe Plc, SCOA Nigeria Plc, Tripple Gee & Company Plc and Union Dicon Salt Plc recorded negative shareholders’ funds.

The negative shareholders’ funds ranged from N225.98 million to N15.5 billion, indicating that accumulated losses and other balance-sheet pressures have eroded shareholders’ capital to varying degrees. Caverton Offshore Support Group recorded the largest negative shareholders’ funds at N15.5 billion, followed by RT Briscoe with N4.86 billion, NCR Nigeria with N4.54 billion, Omatek Ventures with N2.73 billion and Union Dicon Salt with N1.35 billion.

Others are Nigerian Enamelware, N846.39 million; Tripple Gee & Company, N649.52 million; SCOA Nigeria, N563.76 million; and Premier Paints, N225.98 million.

Shareholders’ funds represent the residual interest of owners in a company after its liabilities have been deducted from its assets. When the figure becomes negative, it means a company’s liabilities exceed its assets on the balance sheet, indicating that accumulated losses and other charges have effectively wiped out the accounting value of shareholders’ equity.

The balance-sheet pressure is also reflected in the ROE of most of the companies. Using trailing twelve-month net income figures, Caverton Offshore Support Group recorded an ROE of -143.9 per cent, while RT Briscoe posted -69.1 per cent, despite recording positive net income in the last 12 months. SCOA Nigeria recorded an ROE of -40.9 per cent, despite also posting positive net income.

Tripple Gee & Company recorded an ROE of -22.2 per cent, although it posted a positive net income of N144.22 million in the last 12 months. Union Dicon Salt recorded -5.9 per cent, Premier Paints -2.2 per cent, Omatek Ventures -1.9 per cent and NCR Nigeria -6.6 per cent, despite the latter recording a positive net income of N294.92 million.

Analysts said the figures show why investors should not rely on ROE alone when assessing a company. While ROE ordinarily measures the profit generated for each naira of shareholders’ equity, its interpretation becomes more complicated when shareholders’ equity has been severely eroded or has turned negative.

The financial position of Nigerian Enamelware Plc provides a further illustration of the pressure facing some listed companies. Its audited financial statements for the year ended April 30, 2026, filed with the NGX, show that shareholders’ funds fell to negative N808.88 million from negative N728.77 million in 2025.

The company recorded a loss after tax of N80.11 million in 2026, compared with a profit of N15.48 million in the preceding year, while revenue declined by nine per cent to N1.302 billion from N1.431 billion. Its net assets per share also deteriorated to negative N10.64 from negative N9.59, while it did not recommend a dividend for the year.

The deterioration followed a sharp decline in retained earnings, which stood at about negative N1.053 billion, while total liabilities were approximately N3.698 billion against total assets of about N2.925 billion.

Despite the negative shareholders’ funds, the company’s auditors issued an unqualified opinion on the financial statements, while the board said it had assessed the company as a going concern and had no reason to believe it would not remain a going concern in the year ahead.

President of the Chartered Institute of Stockbrokers, CIS, Fiona Ahimie, said negative shareholders’ funds should be viewed as a warning sign, although the circumstances behind the position were important.

She said investors needed to determine whether the losses were structural or caused by exceptional factors, noting that the naira devaluation and foreign exchange volatility since 2023 had resulted in substantial foreign exchange losses for some Nigerian consumer and manufacturing companies.

According to her, some companies had subsequently explored equity injections or debt-to-equity conversions to strengthen their balance sheets, while relatively new businesses could also record negative equity because of initial investments and losses incurred while building scale.

“For companies, however, a persistent negative equity position cannot be ignored. It can weaken the balance sheet and reduce investor confidence. Management therefore needs to demonstrate a credible plan to restore profitability, strengthen the balance sheet and manage its financial risks,” she said.

Managing Director, Highcap Securities Limited, David Adonri, said negative shareholders’ funds meant that an enterprise was insolvent and might not continue as a going concern.

He said shareholders might need to recapitalise or downsize such businesses to rescue them from failure, adding that low ROE could also indicate that a company was not competitive, profitable or viable.

Chief Operating Officer, InvestData Consulting Limited, Ambrose Omordion, said the broader performance of the NGX should not obscure company-specific financial risks.

He noted that the NGX had recorded strong gains in aggregate market capitalisation and the All-Share Index, but individual companies could still experience severe financial stress.

“Market performance is not the same thing as corporate financial health. A rising index can coexist with companies that are losing money or operating with negative equity,” Omordion said.

He added that for shareholders of the nine companies, the immediate concern should be whether their respective businesses could restore profitability and rebuild shareholders’ funds.

Analysts said investors should monitor revenue growth, gross and operating margins, cash generated from operations, borrowings, interest expenses, retained earnings and changes in shareholders’ funds.

They also advised investors to assess whether the affected companies had credible recapitalisation or turnaround plans, noting that restoring a weakened balance sheet could require fresh equity, debt restructuring, asset sales, improved operational efficiency or a combination of these measures.