Following the announcements on 8 and 26 March 2019, the Company has continued to work with its auditors to complete the audit for the financial year ended December 2018 and to also assess historical accounting errors and policies adopted by the Company. This work is continuing, but the Board confirms that it expects the 2018 full year results to be materially below expectations and historically reported financial performance.
The Board can now also confirm that following extensive forecasting work on the financial year ending 31 December 2019, in which a number of new accounting policies, corrected accounting treatments and revised VAT assumptions have been adopted, it expects the financial year ending 31 December 2019 also to be materially below prior expectations and historically reported financial performance.
Due to the nature of the historical accounting errors uncovered, the Board has appointed forensic accountants, alongside its auditors, to investigate and report on historic accounting policies and practices used by the Company in the recognition of revenue and the preparation of financial statements.
On 26 March 2019 the Company announced it had entered into discussions with HMRC regarding a potential misdeclaration of VAT. The Company confirms it remains in active dialogue with HMRC in establishing a timetable for resolving any misdeclaration and also to establish a final value.
As a result of the investigation into historic accounting treatments, the Board is mindful that it may not be in a position to complete its full year 2018 audit by the 30 June 2019 deadline as set out in the AIM Rules and Companies Act 2006, but it is endeavouring to complete this process as soon as possible and will make a further announcement as soon as it is in a position to do so.
Trading in the shares of the Company remains suspended, and the Board does not expect trading to resume until it has clarity on the financial position of the Company, specifically any potential liability associated with the Company’s misdeclaration of VAT, and the audit of the 2018 financial results is completed and published.
Discussions with our lenders are continuing, and remain positive as we seek to ensure that the Company is appropriately funded going forward.
The Board would also like to confirm that trading since 26 March 2019 has continued to be strong in both the UK and US, over the comparable period in 2018.
The Company will make further announcements in due course as the results of the investigation become known.