Embattled five-a-side football pitch operator Goals Soccer Centres (LSE:GOAL) suspended trading in its shares on Wednesday after revealing an accounting blunder totalling at least £12m.
The business, which counts Mike Ashley’s Sports Direct as one of its major shareholders, said it has been working with its auditors to assess historical accounting errors and policies. This has led it to conclude that there has been a ‘substantial misdeclaration’ of VAT going back several years meaning it cannot be clear on its exact financial position. Although Goals is yet to establish the final value of this error, it added that the figure currently stands at around £12m.
The company said it plans to contact the UK tax office immediately and is in discussions with its lenders to agree to new facilities. However, it believes that the error may lead to a ‘material change’ in its overall financial position while its new VAT accounting policies could impact profitability moving forward.
‘The company is currently unable to provide clarity to the extent of that impact without the receipt of further information,’ it added. ‘As a result, the company has requested that its shares be suspended from trading on AIM.’
Goals, which owns 50 sites including several in North America, first announced that it was working to resolve accounting errors in a profit warning earlier this month. It also revealed that it had exceeded one of its banking covenants and was in discussions with the lender to renegotiate the terms of its facility.
The news, posted on 8 March, forced the business to delay the publication of its 2018 full year result. These were originally due to be released on 12 March. Alongside the delay, the firm said it now expects its results for the 12 months to be ‘materially below expectations’, wiping more than a third from its market value.
‘It is likely that the Board will take a more prudent approach both for 2018 full year results and going forward,’ the firm added, before highlighting its strong trading performance in the first two months of 2019.
