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Saturday 18 August 2018

Conviviality reveals shock £30 million tax bill

Shares in the firm were suspended ahead of the announcement.

Joanna Yeates murder
Joanna Yeates murder

By Ravender Sembhy, Press Association City Editor

Bargain Booze owner Conviviality has revealed that it owes the taxman £30 million, a bill that could further dent profits.

The troubled group, which saw its shares collapse last week following a profit warning, said on Wednesday that it has “identified a payment due to HM Revenue & Customs” falling due on March 29 and which has not been accounted for within its short-term projections.

Conviviality added that the discovery has “created a short-term funding requirement” and resulted in operational difficulties that could negatively impact profits.

Shares in the firm were suspended ahead of the announcement.

The alcohol wholesaler and distributor has asked PwC to help with determining how the tax bill will impact its banking covenants.

“The company has engaged PwC to assist it in its forthcoming discussions with HM Revenue & Customs and its key stakeholders including its lending banks, credit insurers, suppliers and other creditors, as well as to determine the potential impact of any resulting funding requirement on the company’s adjusted EBITDA expectation and compliance with its banking covenants.

“Following preliminary advice received from PwC, whilst there can be no guarantee, the board believes this short-term funding requirement will be satisfactorily resolved.”

It comes after the Aim-listed firm said on Tuesday that it expected adjusted earnings to come in 20% below market expectations, between £55.3 million and £56.4 million.

Conviviality said it had found a “material error” in the forecasts for its Conviviality Direct business, as well as suffering from softer margins in January and February, which it expects will continue throughout the rest of the financial year.

Press Association

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