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It looks like a big slice of the £10.6m comes from an acquisition and some from inventory valuations - possibly old bikes. LFLs look to be at about the level of inflation in their sector, so sales are broadly flat. They have been working hard to lower debt levels which makes sense. Minimum wages increases will add pressure to their wage bills.
How on earth such a massive error of £10.6 M occurred ? Heads should be rolling otherwise many interpretations could come out with trust vanished for ever. Very amateurish and unprofessional accountants.
Seems to be running out of steam now
Always buy the dip. Bought in for the first time @179.5 this morning. Love to see it going back to over £2 by Xmas. Good luck to all holders and enjoy your day.
I think some rubbish people in accounts will be replaced but given cash is unaffected the sp should recover to at leaset £2 imv.
Prior Period Adjustment = Prior Period Balls-up. Unforgiveable.
Nonetheless, if you still believe in the company, it's a buying opportunity.
Wow, the market is so fickle. I thought the TU was mostly positive, with a couple of negatives. It seems the market has over reacted and focussed entirely on those negatives.
Institutions really don't like restatements. £10.6m revision is not insignificant. Also note the delay in releasing accounts which suggests some tooing and frooing with auditors. If you go into a Halfords store and look at what they are doing with bikes and then compare with a good bike retailer (Evans et al) it is very obvious why they are failing in this sector. They are dire. Their retail footprint dedicates so much space to an area where they are performing badly. I'm a big fan and customer of their auto centers. They haven't updated their advice on labour recruitment challenges so assume this is still a problem. Investors will look at this and wonder where they can increase margins. They can't rely on investors stumping up cash to buy market share when margins are looking so thin.
Prior Period Adjustments to PBT in H1 FY23
The results for the 26 weeks to 30 September 2022 have been restated to reflect adjustments which decrease the stated profit before tax by £10.6m and result in certain reclassifications within the statement of financial position and statement of cash flows. The adjustments have no cash impact.
A £5.4m charge has been reflected relating to the correction of the accounting treatment of cash flow hedges under IFRS 9 and the valuation of inventory under IAS 21 at the HY23 Balance sheet date. As this adjustment fully reverses in the second half of FY23, there is no impact on FY23 reported results.
A further £5.2m increase to cost of sales and the correction to balances on the balance sheet has arisen from a) the correction of accounting for a new tyre wholesale and distribution arrangement and (b) the correction of errors identified in the goods received not invoiced (“GRNI”) reconciliation process at 30 September 2022. This adjustment has no cash effect but impacts Inventories, Trade and other receivables, and Trade and other payables within the Statement of Financial Position. There was a smaller charge in relation to this of £2.1m in the second half of FY23, and therefore the impact on FY23 results was a reduction to profit before tax of £7.3m.
We are confident these adjustments fully correct the results for the 26 weeks to 30 September 2022 and that the appropriate process and controls remediations have been put in place such that we do not expect any further adjustments going forward. We also note that these movements have no impact on our FY24 guidance or the mid-term targeted growth projections, as set out at our Capital Markets Day in April 2023.
Another thought, is HFD's interest in Wiggle a factor in todays drop?
Was surprised by the drop here, I skimmed the RNS and thought it looked ok. Obviously something in it bothers the market. I trade HFDs from time to time so have become interested again after this drop. It's not that liquid and the spread is not great so it's less than ideal for trading.
I think that 177 is very likely (current SP 183.3) here. It's not at all unlikely that the SP will fall below that (this is simply based on TA not this mornings figures). The big question is how low it will actually go. Over time I'd say there's a good chance of seeing the 160 area (rising tl support), but it's not out of the question that we will see 137.5 or lower. One to watch carefully and one to be careful about risking too much on. I'll be watching it from here, but am not convinced there is a rush to buy yet.
Shorter in play when they see soft in the statement. They don't. Read. They will close later today if it heading north. Or in about two days when they need capital to short next.
Overall I was positive on reading the results. Revenues up ahead of inflation, and it does flow through to the bottom line (TO ^ 13.9% EPS ^ 13.4% - I prefer seeing profits growing more than sales, but they are of a similar order.)
Slightly surprised by such a negative reaction, though in the current atmosphere any negatives drive things lower - and a reduction in FY outlook & a softening of B2B demand is enough I guess.
Overall though, happy to hold.
Revenues up, but no flow through to bottom line. More importantly cash flow is somewhat ugly. Confiture demain peut etre.
Bought some more = sp hit too hard imv - recovery later today.
Interims good but the trading update has essentially knocked around 5% off profit predictions for full year, Will sp follow suit or was it priced in?
Joining two companies with very low PEs = a bigger company with a low PE. I don't see any synergies.
Topped up with another £2k in anticipation of good news one way or another!
No rns tells me something is still being discussed with suitors and they don't know what to tell the market!
Where is the RNS? Poor form if one is not released before 8am indeed likely a rule breech.
Opportunistic approach imv driven by ambitious management that want a larger business to control [ and hence larger personal rewards] but cant see a way of growing their own. They should be told to push off.
I thought that too, ref small dip, on nil premium but as the share in play, don't think it'll drop much, if that merger did go ahead at nil premium I'd sell, no longer for me
Share price could even dip a little due to nil-premium disapointment.
After the Bridgestone investment and now this, to me it reaffirms undervaluation still.