Yet another problem in accounting has been revealed at Goals Soccer Centres (GOAL). This morning they disclosed in a trading update the discovery of “certain accounting errors” and are reviewing their accounting practices. As a result, the board now expects full year results to be below expectations and publication of the 2018 results has been delayed.
The even worse news is that they have breached their banking covenants so are having to have one of those difficult conversations with their bankers. The share price has fallen 30% this morning (at the time of writing).
Goals is an operator of soccer pitches which listed on AIM as long ago as 2004. Revenue has been flat for the last few years and profits variable. Net debt approximates to revenue which is never a good sign. The company changed auditors from KPMG to BDO in June 2018 and in July 2018 the CFO resigned from the board “with immediate effect” to join his family business but continued in his role as CFO. A new “interim” CFO was not appointed until the 15th January 2019.
After this “own goal”, the company suggests it “will take a more prudent approach” in future. But it reinforces the need to reform the accounting and auditing professions because we are very likely to be told that this issue extends back for more than one year.
Note: I have never held shares in this company despite the fact there was some enthusiasm for it among investors at one time. The share price peaked at 425p in late 2007 but it’s been steadily downhill since. It’s now 38p. I was always doubtful whether there was any real money to be made enabling amateurs to play soccer.
Roger Lawson (Twitter: https://twitter.com/RogerWLawson )