At least nine companies quoted on the Nigerian Exchange Limited are facing serious financial pressure, with their shareholders’ funds falling into negative territory and several recording negative Returns on Equity.
An analysis of financial information reviewed by Vanguard identified 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 as the affected companies.
Their negative shareholders’ funds range from N225.98 million to N15.5 billion, suggesting that accumulated losses and other financial pressures have significantly eroded the companies’ equity.
Caverton Offshore Support Group has the largest negative shareholders’ funds at N15.5 billion. It is 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.
The other companies recorded negative shareholders’ funds of N846.39 million for Nigerian Enamelware, N649.52 million for Tripple Gee & Company, N563.76 million for SCOA Nigeria and N225.98 million for Premier Paints.
Shareholders’ funds represent what remains for a company’s owners after its liabilities are deducted from its assets. A negative figure indicates that the company’s liabilities are greater than its assets, usually as a result of accumulated losses and other balance-sheet pressures.
Negative returns raise concerns
The financial difficulties are also reflected in the Return on Equity figures of several of the companies.
Based on their Trailing Twelve Months net income, 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 during the period.
SCOA Nigeria recorded an ROE of -40.9 per cent, while Tripple Gee & Company posted -22.2 per cent despite making N144.22 million in net income over the last 12 months.
Union Dicon Salt recorded -5.9 per cent, Premier Paints -2.2 per cent and Omatek Ventures -1.9 per cent.
NCR Nigeria recorded a negative ROE of -6.6 per cent despite reporting N294.92 million in net income during the last 12 months.
Analysts have cautioned that investors should not assess a company’s financial health using ROE alone, particularly when shareholders’ equity has been severely depleted.
ROE generally indicates how much profit a company generates from shareholders’ equity. However, when equity is negative, interpreting the ratio becomes more difficult.
Analysts say investors should also consider earnings quality, cash flow, the movement in shareholders’ funds and the company’s ability to meet its financial obligations.
Nigerian Enamelware faces fresh pressure
Nigerian Enamelware Plc provides another example of the financial challenges confronting some listed companies.
Its audited financial statements for the year ended April 30, 2026, filed with the NGX, showed that shareholders’ funds declined further to negative N808.88 million, compared with 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 the previous year.
Revenue also fell by nine per cent to N1.302 billion from N1.431 billion, while net assets per share dropped to negative N10.64 from negative N9.59.
The company did not recommend a dividend for the year.
Its retained earnings stood at approximately negative N1.053 billion, while total liabilities were about N3.698 billion, compared with total assets of approximately N2.925 billion.
Despite the financial challenges, the company’s auditors issued an unqualified opinion on its financial statements. The board also said it had assessed the business as a going concern and expected it to remain operational in the coming year.
The figures show that while negative shareholders’ funds represent a serious warning, they do not automatically mean a company has stopped operating or is immediately insolvent.
Analysts warn about erosion of capital
Market analysts have advised investors to treat sustained negative shareholders’ funds as an important warning sign.
They said affected companies would need to demonstrate a clear strategy for restoring profitability and rebuilding their capital base.
According to analysts, investors should determine whether the financial weakness is temporary or a result of deeper structural problems.
The situation could also affect dividend payments, as companies with accumulated losses and weak cash flows may have to retain funds for working capital, debt repayment, capital expenditure or balance-sheet restructuring.
Investors have therefore been advised to monitor revenue growth, profit margins, operating cash flow, borrowings, interest costs, retained earnings and movements in shareholders’ funds.
They should also assess whether management has a credible turnaround or recapitalisation strategy. Depending on the circumstances, such measures could include fresh equity, debt restructuring, asset sales and operational improvements.
Experts give different perspectives
President of the Chartered Institute of Stockbrokers, Fiona Ahimie, described negative shareholders’ funds as a warning sign but stressed that investors should consider the circumstances behind the position.
She said accumulated losses could reduce a company’s ability to pay dividends and obtain financing, but added that investors should determine whether the losses were caused by structural problems or exceptional events.
Ahimie cited the naira devaluation and foreign exchange volatility from 2023, which caused substantial foreign exchange losses for several Nigerian consumer and manufacturing companies. In some cases, the losses weakened shareholders’ funds even though the underlying businesses remained viable.
She said some companies responded by considering equity injections or debt-to-equity conversions to strengthen their balance sheets.
Ahimie also noted that newer businesses could temporarily have negative equity because of initial investments and losses incurred while building their operations. She said the key issue was whether such businesses had a realistic route to profitability and positive cash flow.
David Adonri, Managing Director of Highcap Securities Limited, however, said negative shareholders’ funds indicated that a business was insolvent and potentially unable to continue as a going concern.
He said affected shareholders could consider recapitalising or downsizing the business to prevent failure.
Adonri also noted that when a company’s ROE is below its cost of funds or the average internal rate of return in its industry, it could indicate weak competitiveness, profitability and viability.
Meanwhile, Chief Operating Officer of InvestData Consulting Limited, Ambrose Omordion, pointed out that strong overall performance by the NGX does not necessarily mean that every listed company is financially healthy.
He advised investors not to allow gains in the All-Share Index or overall market capitalisation to conceal company-specific risks.
Omordion said investors in the nine companies should focus not only on share-price movements but also on whether the businesses can return to profitability and rebuild their shareholders’ funds.
Source: Vanguard
