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It has everything to do with p&l. It's likely we have a debt to put on balance sheet and a cost to put in p&l to balance it. Also you conveniently forgot in an earlier post to mention that cash is screwed and the treasury idiots have been deliberately misposting the bank balance.
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There is no double entry for contingent liabilities, genius. There is simply a missing disclosure note in the notes to the accounts normally giving the users an estimate of the potential financial effect. Not enough info regarding any associated cost to P&L(if any) either. You have no clue about the nature and level of materiality of the discrepancies between the ledger and cash balances, you are speculating.
KOH
Great to have any accountant on board here.
Thanks KOH
No probs, pione3r
KOH
@KOH
So according to you how the SP may be tomorrow? Just for an idea?
my guess will be a new low... ;-)
Mrahman20
Nope, no clue. Nobody knows. All I know is that If it drops I will consider it temporary overreaction. No real reason to panic based on content of the RNS alone and all the bad news are already included in the price IMO. All large and complex accounts have some discrepancies, nobody accounts for every penny where there are billions involved. Time consuming and pointless. That's why you have the concept of materiality. Unfortunately during the detailed reviews things like that emerge and can contribute to panic but until we know the nature and level of materiality there is really nothing to worry about. The deck is being cleared and heads are rolling which I consider a very good sign. Had to be done and there is no nice way to do it. The sooner the better. IMO.
KOH
A new low?
I'll be looking to add then.
PIs don't have the strength to knock this down by more than 15%. Just pray that no institution offloads tomorrow.
KOH
Exactly current SP already factored in the allegations. Hence the SP from 25 to 9.5 today.. may fluctuate mainly for PIs attitude to this news but I don't think Institutions will sell any. In fact, they may take this opportunity to load more.
Agree totally but Sfo haven't got the manpower to do it
How many companies like Petrofac are under investigation and years later still nothing
Tinatots
"suppliers to companies owned by the Related Parties were paid by certain credit facility providers and, while those companies are responsible for settling the amounts payable to the credit facility providers, the contractual obligation rests with NMC, which has also provided a guarantee in the event of non-payment or default."
The NMC simply provided a contractual guarantee in case of non-payment or default in case companies owed by related parties weren't able to meet their contractual obligations to credit providers. These balances were approx $335m at the end of the year. Nothing unusual if you think about it, companies do it all the time. The only problem is that this hasn't been approved by the board and contingent liability as they call it disclosed in the notes to the accounts. Normally those disclosures give the users of the accounts an estimate of the potential financial effect and better understanding of any associated risks. This doesn't, by any means, mean that the company owes $335m. As long as the entities owed by the related parties pay their debts there is basically no financial impact. The facilities will also "no longer be made available for further supplier financing" so no future impact possible.
It could be as simple as a guarantee and support for the smaller entities with no sufficient credit rating & cash flow available in order to enable them to grow quicker & operate on the higher level. There is no mention of any defaults & inability to pay obligations by those businesses. They may as well be operating successfully and running at a profit. Obviously the guarantees should have been approved by the board & disclosed in accordance with the Listing Rules.
KOH
"with the aim that the relevant balances should be unwound in line with existing terms."
Unsure what the settlement will cost NMC. Half? Quarter? Will take time to process.
Well over 40% shares are held by iis. Their reaction in the morning will determine the SP.
Well...what can I say. ?? Spent a day and night out with the family and come back to all of this. ..
I have only just read the RNS which I must say did come as a shock...not so much the supply chain financing...this isn't in itself an unusual arrangement, and I have used it in some of the companies I have worked for , where income receipts are lumpy , so I have used supplier facilities as a way of funding working capital requirements
...I commented on the NMC accounts that 90 days for debtors was high, but from my experience working the the middle East , it isn't unusual and back then was a cultural feature of late payments all round... it this was matched in the related companies , then I can see the need for supply chain financing facilities.
Yes it should have been stated as a contingent liability and it's suspicious that it wasn't . but unless and until it is called upon , it won't affect the bottom line and the good news is that these are now being wound down.
I was wondering if , given that the Board didn't know of and therefore hadn't approved of these facilities , whether the guarantee was in fact 'ultra vires' and therefore null and void ?? Any thoughts KOH ?
The aspect which does bother me, is the failure to reconcile the bank balances back to the ledger accounts , 2 months after the year end ?? Until this has been done, we don't know if something more serious is lurking ..
I went on record here and stated that I didn't think the financial accounts would have been mis-stated, well apart from the omission of the supplier arrangements contingent liability , they haven't as yet been misreported , but until cash balances are reconciled then doubts must now exist...
335m is a lot but at least now we have a number!
KOH nobody accounts for every penny when billions are involved - wrong they do.
If you have to suspend someone in Treasury department that doesn’t involve pennies as they deal in multiples of millions and not petty cash.
Lets see what the billionaires do. Coz we will act after they do.
I messaged and got a reply from Sudhir Shetty on LinkedIn before he disabled his LinkedIn. How do I post pictures of the conversation?
In short he confirmed he was the suspended treasury employee and gave me a number “ 0554352412“ to contact.
Another great find from MW.