Source - Accountancy Age.
Cashflow concerns from Vantis' work as liquidators of Stanford International Bank sees the firm's auditors issue warning
Cashflow problems from acting as joint-liquidator for Allen Stanford's bank has put the future of Vantis under threat.
The firm's interim results, out this morning, reveal auditors Ernst & Young has issued an emphasis of matter - going concern statement, warning that uncertainties from receiving funds from its work at Stanford, plus cash flow and cost reduction initiatives, put doubt on its ability to continue as a going concern.
Vantis said that it had put "significant resource" to its work recovering assets from Stanford International Bank. A freezing order on assets in the US, plus a delay in the realisation of property assets meant that Vantis was unable to receive fees for its work during the half year period ending 31 October 2009.
"The validity of the going concern basis depends on the group being able to operate within its current banking facilities and covenants which requires the successful outcome of the above," the auditors added in the statement.
Vantis said: "The group is confident that outstanding time costs will be recovered in due course but the various legal actions mean that timing is uncertain."
Emphasis of matter paragraphs are used by auditors to flag up material uncertainties affecting a business.
The group's turnover for the period before exceptional items fell by 2% to £47m, compared to a year earlier.
After exceptional costs relating to restructuring its balance sheet, Vantis posted a £10.7m loss compared to a £4.6m profit 12 months ago.
Vantis' share price on AIM reached 91p last May, but closed on Friday at 29p. It is trading at 30p at the time of publishing.
The group has started a cost reduction programme to improve its future performance, said chairman Mike Wheeler.
"We expect further growth in business recovery services but the performance of business advisory and tax division will be constrained until the UK economy improves," said Wheeler in the statement.
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