Embattled five-a-side-soccer operator Goals Soccer Centres has revealed the profits of the business “may have been overstated by as much as £40m since 2009”.
Goals revealed the figure in an announcement to the London Stock Exchange confirming the business had been acquired by Northwind 5s Ltd, a company backed by investment firm Inflexion and its rival Soccerworld.
The company was placed into administration and its assets immediately taken over, protecting the jobs of 750 staff in a deal believed to be valued at around £27m.
However, in addition to the VAT issues a separate team of forensic auditors, hired by the board, identified “very serious issues” dating back to 2009, including the apparent creation of false fixed assets, false revenues and fake invoices. They also identified the wrongful payment of cheques to individuals associated with the company, in 2014.
As a result, the board now believes that the profits of the business may have been overstated by as much as £40m since 2009.
Goals said as a result of these findings, its expected EBITDA for 2019 is now around £3.8m excluding “significant advisor fees” associated with managing the current issues. This takes into account the required changes in accounting methodologies.
Goals added that the “combination of all of these issues” means that closing the 2018 books has been “complicated by the fact that no historic profit and loss account and balance sheet numbers can be trusted”. It said the board therefore had no choice but to delist the shares, as the current year accounts could not be presented in the allotted timescale.
In the statement Goals said: “It is with regret that the funds generated through the sale do not fully compensate even the lenders to the company.
“The board has already taken steps to preserve the company’s legal rights to compensation from parties who might be liable through negligence or more direct involvement, and entered into standstill agreements with former directors and also with its auditors of 15 years, KPMG.”
It continued: “The board is hopeful that action will be taken to hold those responsible to account, where appropriate. The board members would be supportive of any such action.It is very unlikely that shareholders of Goals will receive any value for their shares. This outcome is a matter of deep regret for the board, but as previously outlined the nature of the inappropriate accounting and the VAT-related issues means the business has been significantly less profitable than previously believed.
“At each and every step of the way the board has done everything in its power in combination with its advisers to ensure that it took steps to deliver the best outcome for the company and its stakeholders.”