Goals uncovers at least £12m of VAT accounting errors
Five-a-side football pitch firm Goals Soccer Centres has said it has uncovered “substantial” VAT accounting errors estimated so far at around £12 million.
The group said the board had concluded the VAT misdeclaration issues date back several years, although the final value of the error is still being established.
It also warned that new VAT accounting policies it plans to adopt are likely to impact on its future profits.
The group, which first revealed the accounting issues earlier this month, said the accounting blunder may lead to a “material change in its overall financial position”.
Goals said that as a result, it has requested trading of its shares are suspended on London’s junior Aim market.
It said it plans to enter into discussions with HMRC immediately and remains in discussions with its lenders to agree new financing facilities.
The group added it will make “further announcements in due course as the results of the investigation become known”.
Details of the extent of the accounting mistake come after it warned in early March over a material hit to 2018 profits after uncovering the accounting errors as part of a business review.
It delayed the publication of its full-year results, which had been due on March 12.
The news sent shares crashing on the day.
KPMG was the group’s auditor until June 2018, when it was replaced with BDO.
The firm also said in is earlier statement that while the “accounting adjustments” are of a non-cash nature, it meant Goals was in breach of one of its banking covenants with Bank of Scotland.
It represents the second blow in quick succession for the company, in which Sports Direct boss Mike Ashley holds a significant stake.
In January, Goals warned that profits would be lower after a revamp of its offering resulted in higher costs.
It also bemoaned slower than anticipated growth in the US, where the company has four sites, as well as economic and political uncertainty.
But in its latest update on the accounting issue, Goals sought to assure that recent trading had continued to be strong in the UK and US.