Auditors attach 'going concern' warning to Delek

Yitzhak Tshuva Photo: Tamar Matsafi
Yitzhak Tshuva Photo: Tamar Matsafi

The warning attached to the company's 2019 financial results comes as the energy company attempts to sell off assets and renegotiate debts.

The auditors of Delek Group Ltd. (TASE: DLEKG) have attached a 'going concern' warning to the company's fourth quarter and 2019 financial results, which were published today. The company finds itself in troubled waters following the huge fall in the price of oil and gas worldwide during the coronavirus crisis and the major fall in the value of the Group's assets since the end of 2019, which have wiped billions of shekels off its market cap.

Delek said, "Due to the Covid-19 crisis and the material drop in oil and gas prices that occurred after the balance sheet date, due to the plans the company is promoting with institutional debenture holders and financial institutes in order to strengthen collateral and to reach agreements on the terms of credit and due to the fact that as of the date of the approval of the financial statements, these agreements have not yet been formulated and signed, the company's auditors have added to the financial statements a note drawing attention to the issue of 'going concern'. As stated in the financial statements, the company is expecting to reach an agreed plan concerning an update of the financial covenants and credit terms, strengthening of the collateral and reinforcing its capital."

A 'going concern' qualification is the last thing that Delek Group, controlled by Yitzhak Tshuva, needs as it sells off assets and negotiates with the Group's bondholders.

Delek delayed publishing its financial results for the first quarter, market sources believe, in its last minute attempts to prevent the auditors from including a 'going concern' qualification in the financial statement.

Delek Group's revenue in 2019 was NIS 8.8 billion, compared with NIS 8.1 billion in 2018. The company's revenue in the fourth quarter of 2019 was NIS 2.7 billion, compared with NIS 2 billion in the corresponding quarter of 2018. The increase was mainly due to expansion of the company's oil and gas operations in the UK North Sea. Delek Group's net profit in 2019 was NIS 786 million.

Delek Group CEO, Idan Wallace said, "In recent months, the global energy sector has experienced unparalleled and extreme volatility. Delek Group is a strong company with quality assets and a clear positive net asset value. Delek Group's excellent assets, the determination with which we work day and night, and the business measures that we promote, will allow us to get through the crisis and come out of it stronger."

Published by Globes, Israel business news - www.globes-online.com - on May 3, 2020

© Copyright of Globes Publisher Itonut (1983) Ltd. 2020

Yitzhak Tshuva Photo: Tamar Matsafi
Yitzhak Tshuva Photo: Tamar Matsafi
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