Sound Shares Plunge after Moroccan Tax Call

Shares in London-listed Sound Energy slumped 24% on the morning of September 3 after the company reported receiving a retrospective tax bill in Morocco.

In a stock filing, Sound said it had received written notification from Moroccan tax authorities that its taxes between 2016 and 2018 had been re-assessed, to the tune of $14mn of extra corporate and value-added tax liabilities relating to historical licensing changes.

The historical changes detailed relate to the Tendrara Lakbir permit and the transfer of interest from Sound Energy Morocco SARL AU to Sound Energy Morocco East Limited," Sound said. The re-assessment arises from "a misunderstanding" of these licensing changes. Sound and its advisors will engage the authorities to "provide clarity and seek to resolve the misunderstanding," the company said.

Shares in Sound fell from £0.0214 to 0.0162 after it made its announcement. They are currently trading at £0.0160.

Sound said at the end of June it had enough cash resources to continue operating until March 2021, after raising £2.75mn ($3.65mn) to increase its cash balance to £4.2mn. It has 30 days from receiving the tax notification to respond. While it will engage will authorities to clear the misunderstanding, it intends to formally refute the assessment.