schwee
14 Mar 2018
Re: Heads definitely rolling now.... As anyone will tell you EBITDA stands for earnings before I tricked the dumb auditors. On a more serious note EBITDA is meaningless as interest,tax and depreciation are real costs to any business, and are no different from other costs e.g. Payroll, rent and rates etc.
old_punter
14 Mar 2018
Re: Heads definitely rolling now.... Bill,Agree, there might be no hit to EBITDA assuming the bill from PwC is not material, which would be a considerable relief, and if so not sure why the shares need to remain suspended. Also assuming per the RNS that PwC is right there should be no problem with the tax paymentHowever, more embarrassment for management and suppliers and lenders could become more twitchy which could have a cost. Won't help shareholder sentiment either but maybe that is already priced in.I see per iii the spread is now 82-380p, what is that about?
penhome
14 Mar 2018
Re: Heads definitely rolling now.... I think some (not many) of my sympathies lie with the current CFO who has only been in the job for four months and must feel unable to trust any numbers his department comes up with.With the margin controls issue, the £5.2m material error and now the overlooked £30m for VAT, there have to be questions marks against every aspect of the accounts function including sales/stockThis is a major failure at the controller level whose competence is really the responsibility of the last CFO. I imagine the CFO is conducting a root and branch review of every aspect of the accounts and that this is one reason for all this to be hitting the fan now. Completing this review and putting new controls in place should be a fairly quick process for a CFO with Moran's experience. He can then get the auditors to double check everything while they are doing the 2017-18 audit.Cold comfort now though.Pen
cooperboy
14 Mar 2018
Re: Heads definitely rolling now.... if it makes anyone feel any better there is a guy on the message board of the lse website who claims to have 150,000 of these. ofcourse he could well be talking out of his a*** who knows? i have 5k thats bad enough-tho at least bought at £1.02 after the first crash
Bill1703
14 Mar 2018
Re: Heads definitely rolling now.... "... who were their auditors?? its inept to the point of criminality..." As per TX2, I don't think you can pin this on the auditors... they wouldn't have been involved in the forecasting which resulted in "material error" (unless specifically contracted to be, which would be outside the normal course)... and while they'd hopefully have been able to identify a future tax payment, there's not much they can do if the company simply "forgets" it is due at the end of the month.You might, of course, very well ask - what are auditors actually for? It's a very good question - they are good at confirming what the company tells them, but where the company itself is in error, how often do they spot it?A few other things... They are sticking to their £150m FY net debt forecast, which suggests they had accounted for the tax payment - just not the fact it was due this month! It wouldn't be too much of an issue, but for the fact they are fully drawn on their credit and other funding facilities - a terribly complacent position to put themselves in. And I'm still trying to get my mind round how the funding of the £30m could affect the FY EBITDA forecast - profits AFTER interest, perhaps? Could only be if it actually stops them trading normally, to some extent - drastic indeed!This is a management team - board and executive suite - which has spent money like a drunken stag party in Vegas, and is only now sobering up. A shameful failure of oversight and control - I think a wholesale (no pub intended) clear-out is on the cards, or at least should be...
TX2
14 Mar 2018
Re: Heads definitely rolling now.... The last audit would have been for 2016/ 2017 annual accounts.However if you overlook £30m VAT you wonder if sales & stock figures are a total shambles as well........
cooperboy
14 Mar 2018
Re: Heads definitely rolling now.... who were their auditors?? its inept to the point of criminality
rikid
14 Mar 2018
Re: Heads definitely rolling now.... You couldn't make this up 
Bill1703
14 Mar 2018
Heads definitely rolling now.... "... Company yesterday identified a payment due to HM Revenue & Customs of approximately £30.0 million which falls due for payment on 29 March 2018 and which has not been accrued for within its short term cash flow projections. This has created a short term funding requirement.... To the extent that the current situation creates operational difficulties, this may negatively impact the adjusted EBITDA range. ... Based on the expected adjusted EBITDA of between £55.3 million and £56.4 million, this would give rise to a covenant test result of 2.04x to 2.00x adjusted EBITDA... Following preliminary advice received from PwC, whilst there can be no guarantee, the Board believes this short term funding requirement will be satisfactorily resolved."Doesn't sound fatal, ultimately - they basically need to find £30m of funding to pay the tax man. Possibly with the tax man agreeing to give them "time to pay". But this, together with the previous forecasting error, is schoolboy-error stuff - incredibly so. Does the new CFO get a pass on this? Not so sure.... and again, yet another debacle on the CEO's watch, within a mere few days.
cooperboy
14 Mar 2018
Re: Suspended owe the inland revenue 30 million-which er noone realised?
TX2
14 Mar 2018
Re: Suspended Meanbugger makes a good point the suspension move appears to have come from the market regulator rather than either a joint move or company request.
Bill1703
14 Mar 2018
Re: Suspended "... I've seen it before where AIM believes that there is not a fair market for investors. The company will need to make some sort of clarifying statement regarding bank covenants, the board, rumours regarding takeover approaches, rumours regarding further accounting problems etc."Yes, Meanbugger - with the focus on the key banking covenants, I would guess? Further clarity on that was notably lacking from yesterday's further (non) update.While new guidance on EBITDA and debt would raise serious concerns on the ND/EBITDA covenant (2.5x supposedly), we have seen reports - and broker commentary - to suggest the situation is not so critical (ie, still comfortably within covenant) on a "covenanted" basis, given how they calculate such things. But as above - we've had nothing from the company itself to corroborate this.
Bill1703
14 Mar 2018
Re: Suspended "Usually bad news, or in this case more bad news in which case heads will roll, but tis just possible they have had an approach which may or may not lead to an offer which would be good news. "Yes, the full range of possibilities, really.Rather quick to be announcing any approach? Though they may feel duty bound to report it pretty much straight away.But also rather quick to be announcing further bad news, given their last update was 1pm yesterday. All in all, this is getting more and more bizarre...
Meanbugger
14 Mar 2018
Re: Suspended Seadoc, I've seen it before where AIM believes that there is not a fair market for investors. The company will need to make some sort of clarifying statement regarding bank covenants, the board, rumours regarding takeover approaches, rumours regarding further accounting problems etc. Only when AIM is satisfied that the market has enough information for shareholders to be able to take an informed view on the company's prospects will they allow trading to re-commence.
old_punter
14 Mar 2018
Re: Suspended Usually bad news, or in this case more bad news in which case heads will roll, but tis just possible they have had an approach which may or may not lead to an offer which would be good news.
