PracticeAuditAlexon unit Bay Trading enters administration

Alexon unit Bay Trading enters administration

Uncertainty over Bay Trading sees auditors likely to issue an emphasis of matter statement, which contributes towards credit insurers pulling the plug on the group's suppliers. Alexon then takes the decision to place Bay Trading into administration.

Clothing retailer Alexon has placed its Bay Trading subsidiary into
administration, two days after warning that it might need to take some action
against the loss-making unit.

Administrators from Deloitte have been appointed to Bay Trading, the trading
name for Epcoscan. They intend to continue trading with a view to finding a
buyer.

In the group’s prelims earlier this week it had stated that there was
uncertainty surrounding the performance of Bay Trading going forward, and that
its auditors were likely to issue an emphasis of matter statement in their audit
report.

With this uncertainty surrounding the unit, the group’s provider of credit
insurance withdrew cover for the group’s suppliers.

The level of ‘potential drain’ on Alexon’s resources to prop up Bay trading
resulted in the administration.

‘Today’s decision, although incredibly difficult for us to make, does provide
certainty for the group. Our remaining core Alexon Brands have a strong heritage
and I firmly believe there is an exciting opportunity for them. A turnaround
plan is in place and is already delivering results,’ said Epcoscan chief
executive Jane McNally.

An emphsis of matter statement shows a warning on the health of the business
from auditors, but is considered less serious than auditors issuing a going
concern statement agaisnt a company.

Further reading:

Visit
Alexon’s website

Cattles suspend shares as annual
report in limbo

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