Accounting and Audit

Brydon Audit Review and FRC Update

Readers probably don’t need to be reminded of the poor reputation of auditors and accountants. The announcement yesterday from Staffline Group (STAF) reiterates the point. They note the latest analysis indicates that 2018 profits were overstated by about £4 million. The CFO, Mike Watts, has left with immediate effect. Sir Donald Brydon has published his review of the audit market and makes recommendations for significant changes. This is what he says in a preface: “The quality and effectiveness of audit has become an ...

FRC Fines Grant Thornton £650k, Ted Baker and Tullow

A ShareSoc member emailed us to give his view: This is terrible. Why wouldn’t the FRC name the partner and the company involved, especially when Grant Thornton has been responsible for so many mishaps. We attend meetings with FRC and are always assured things will be different. All that happens is new people takeover, warm the seats for a few years, take the money and move on. In the other article , the former NAO leader Sir Amyas Morse , a former PWC global ...

M&G Property Fund Closed and M&C Saatchi Accounting Problems

The really bad news yesterday for many investors was that the £2.5 billion M&G Property Portfolio Fund had been closed to redemptions. This is of course an open-ended fund where sales of units by investors causes the manager to sell some investments to realise cash to meet those redemptions. The fund holds a number of large retail shopping centres in the portfolio which must be particularly difficult to sell at the present time. The fund has seen withdrawals of over £1 ...

Ted Baker Audit Failure, SRT Marine Big Deals

The bad news this morning for holders of retailer Ted Baker (TED) is that the company has announced an independent review of its inventory. It says it has identified that the value of inventory held on its balance sheet has been overstated. It estimates that the figure is up to £25 million and that it relates to prior years. This looks like yet another audit failure (the auditors are KPMG). The share price is down 10% today at the time of writing ...

De La Rue, Excessive Debt, Victoria and Link’s Debt Monitor

Link Asset Services have issued a note pointing out that De La Rue (DLAR) has net debt that now exceeds its market cap. The high debt in the company and recent falling revenue no doubt accounts for much of the recent fall in the share price, although the report of an investigation by the Serious Fraud Office (SFO) cannot have helped. But if you read the last interim report which was issued a couple of days ago, there are lots of ...

Mello Event, ProVen and ShareSoc Seminars and Lots More News

It’s been a busy last two days for me with several events attended. The first was on Tuesday when I attended the Mello London event in Chiswick. It was clearly a popular event with attendance up on the previous year. I spoke on Business Perspective Investing and my talk was well attended with an interesting discussion on Burford Capital which I used as an example of a company that fails a lot of my check list rules and hence I have ...

GB Group, Patisserie Holdings, FRC Stewardship Code and Halma

The stock market seems to be in limbo as business waits to see the outcome of Brexit politics. In my portfolio, small cap companies are drifting down and even large funds and trusts have been declining. Is this due to currency effects or the realisation that “star” fund managers such as Neil Woodford cannot be relied upon? Others are just bouncing around. However there was one exception yesterday when GB Group (GBG) jumped 14% after a positive trading statement. That company ...

Speedy Hire Presentation, Burford Analysis and Treatt Trading Statement

On Tuesday the 1st October I attended a company seminar organised by ShareSoc in Birmingham, mainly to present my new book. But there was an interesting presentation given there by Speedy Hire (SDY). This is not a company I have looked at before because it seemed to be in a sector driven by construction activity which tends to be cyclical and in a fragmented market with few barriers to entry. This is probably why other listed companies in the sector such ...

Ventus VCT AGMs – A Disappointing Result, National Grid and Sports Direct

I have mentioned previously the attempt by a shareholder in the Ventus VCTs (VEN and VEN2) to start a revolution, i.e. replace all the directors and appoint new ones. See https://tinyurl.com/y6e5fafo . Nick Curtis was the leader of the revolt but at the AGMs on the 8th August the required resolutions were narrowly defeated with one exception. This was after the boards of these companies paid a proxy advisory service £38,000 to canvas shareholders, which of course shareholders will be paying ...

Burford – Illegal Market Manipulation?

Burford Capital (BUR) have issued an announcement that makes a number of allegations about the events surrounding the recent shorting attack on the company involving Muddy Waters. It includes: Spoofing and layering to move the share price, e.g. putting in numerous share sales on the order book and cancelling them before they can be filled. That includes numerous such transactions just before Muddy Waters issued a tweet giving Burford as the target, and as that tweet was delayed only Muddy Waters ...