Stanford causes Vantis going concern threat

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.

Further reading:

Vantis
seeks CFO in board reshuffle