Goals Soccer Centres, the Scottish five-a-side football operator, saw its troubles mount today after admitting it had uncovered “substantial” VAT accounting errors estimated so far at some £12 million.
The East Kilbride-based company, which operates 50 five-a-side sites in the UK and US, has requested trading of its shares are suspended on London’s junior Alternative Investment Market.
Goals said its board had concluded that the VAT misdeclaration issues date back several years, although the final value of the error is still being established.
It also warned that new VAT accounting policies it plans to adopt are likely to have an impact on its future earnings.
The group, which flagged the accounting issues earlier this month, said the accounting troubles may lead to a “material change in its overall financial position”.
It added that it plans to enter into discussions with HMRC immediately and remains in talks with its lenders to agree new financing facilities.
Goals said in a brief trading statement that it would make “further announcements in due course as the results of the investigation become known”.
Earlier this month, the firm warned that its profits would be “materially below expectations” following the discovery of the accounting errors.
The group, in which Mike Ashley’s Sports Direct business empire owns a significant stake, noted that while the “accounting adjustments” were of a non-cash nature, it means Goals is in breach of one of its banking covenants with Bank of Scotland.
“We are in discussions with the bank with a view to agreeing re-negotiated facilities, ” it added at the time.
KPMG was the group’s auditor until June 2018, when the firm was replaced with BDO.
In January, Goals said that steps to improve food and drink sales in centres and its children’s birthday party offering had led to “materially higher” costs in 2018.
That resulted in a £300,000 fall in group profits in the second half. Labour costs also increased by £300,000 and other costs increased by £200,000.
The firm said that it expected investments to improve its arenas to continue to deliver increased sales but it also reduced its profit guidance in the current year by £600,000 in light of the current economic and political uncertainty in the UK.