RE: RNS’s for newbies all else ignore20 Sep 2020 11:30
Hi apunter2,
‘oh sorry all we forget or missed a regulation, the games off’ .
Unfortunate example, I fear : that , or something fairly similar is pretty much what happened in the change of accounting treatment of the Consideration Shares, between Prospectus and the 30/6 RNS Interim Statement , wouldn't you agree ?
To recap :
..."PRIOR TO THE COMPLETION of the reverse acquisition, the current directors considered Supply@Me Capital plc did not meet the definition of a business in accordance with IFRS 3. Consequently, the reverse acquisition has not been accounted for as a business combination, but as a share based payment.
On 23 March 2020, Supply@Me Capital plc [NEVERTHELESS] completed the following transactions, details of which are disclosed in the prospectus dated 4 March 2020 (the Prospectus):
-- reverse acquisition of Supply@Me S.r.l., a company registered in Italy;
-- placing of 331,604,094 shares; and
-- admission to the Official List and trading on the London Stock Exchange's Main Market.
The transaction was effected by way of the issue of consideration shares. Due to Supply@Me Capital plc effectively having no substance, and that Supply@Me S.r.l. was acting as the parent company, the consolidated Group is accounted for as a capital reorganisation rather than a business combination. These interim financial statements have been prepared, in consultation with our accountants, on the basis that Supply@Me S.r.l. is the accounting acquirer and Supply@Me Capital plc the accounting acquiree....
As such, from an accounting perspective, the previous comparatives, and any results prior to 23 March 2020 of Supply@Me Capital plc have not been presented and the assets and liabilities of Supply@Me S.r.l. have been recorded in the consolidated financial statements at their pre-combination amounts..."
So in the Prospectus, the Consideration Shares have an ASCRIBED value of £ 228M, of which approx £225M is classified as 'intangible ie goodwill", barely a week later, under the new presentation, that amount is WRITTEN OFF.
Apologists will no doubt rush to say that this is all legal - and it may well be - but it looks awfully like sharp practice to me. I think you're right that investors, funders and borrowers will all scrutinise every detail before signing up...or maybe let someone else go first and see how it plays out in practice.
ATB
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