Kinetiko Energy asked to ‘please explain’ annual report issues
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Kinetiko Energy has been forced to defend its 2017 annual report after the ASX quizzed the oil and gas explorer over a lack of information provided to the auditor regarding a joint venture.
Kinetiko’s (ASX:KKO) auditor was unable to obtain sufficient evidence to provide an audit opinion on the annual report, leading the ASX to question whether the report accurately reflected its financial position.
The issue stems from a deal between Kinetiko and Badimo Gas to create a joint venture company, Afro Energy. Kinetiko owns 49 per cent of Afro while Badimo Gas holds the remaining 51 per cent stake.
Kinetiko said it could not access the complete books and financial records of Afro, leaving the auditor unable to determine the financial standing of the company.
“We do not express an opinion on the accompanying financial report of the company,” the auditor said.
“Because of the significance of the matters described in the basis for disclaimer of opinion section of our report, we have not been able to obtain sufficient audit evidence to provide a basis for an audit opinion on this financial report.”
In response to the ASX query, Kinetiko said the annual report gave a true and fair view of its financial performance and was prepared in accordance with accounting standards.
The company was working to rectify a standoff with Afro and was seeking to gain access to its books and records.
Kinetiko has appointed South African legal counsel to represent the company and was pursuing insolvency proceedings against jv partner Badimo Gas to have an administrator appointed to Badimo who can assist with assessment of and access to Afro’s financial records.
Shares in Kinetiko were steady at 2c in Tuesday afternoon trade.