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Of Nikos Chrysikopoulos
Eight months. MLS Informatics had so much time to “cure” the problem by capturing specific funds from the balance sheet, specifically their intangible assets, and presenting the market with a robust business plan that would address market concerns. the course of its financial figures and especially the sales of MAIC, the “flagship” of its products for which significant funds were spent without corresponding results.
The company either. Since the end of September 2019, when the results of the first half of 2019 were announced and then there was strong pressure on the three bonds of the company and an unprecedented massive sale that eliminated the shares by 90%, the administration considered many options , but has not implemented any. The business plan, which sometimes claimed to redefine its operating model and address all outstanding issues for the next day, is still being drafted, while proposals for a bold restart that could have envisioned a restructuring of the company’s loans that It is publicly traded, but it would give it a fresh start, left on paper.
But the main thing, according to experienced market executives, is that the company failed to address the problem by capturing intangible assets on its balance sheet. A problem that existed in previous financial years, such as 2018 controlled by ELTE, and which in combination with other balance sheet funds became more evident in the results of the first half of 2019, which among other things showed that the company continued to “burn” funds , to show a reduction in cash flows, an increase in loans and liabilities, while the average time to pay liabilities to suppliers increased to 797 days, from 441 at the end of 2018.
So what did the supervisory authorities “see”? As Capital.gr may know, the audit of the 2018 MLS annual financial statements by the Committee for Accounting Standardization and Audit (ELTE), the national supervisory authority responsible for establishing and supervising the correct and effective implementation of accounting and audit, focused on the issue of the intangible assets of the company that in this particular year reached 50% of the total assets of the listed company. The audit revealed that the intangible assets estimated at 10 million euros (25.5 million euros in total) are not properly recorded and in accordance with International Financial Reporting Standards.
In particular, the secure information establishes that the issue of accounting management and the recording of expenses by China, which is divided into 50% in intangible assets and the remaining 50% in inventories, has not been raised, without the model of Clear measurement used. In addition, the consolidation of hardware costs is characterized by being indefinite and continuous, since it seems to take place regardless of the order time. Therefore, with an amount of intangible assets of € 25.5 million in use, profitability before MLS taxes in fiscal year 2019 amounted to € 1.37 million, with sales of € 21 million.
The ELTE audit process, which also concerns MLS audit firm SOL SA, was reportedly completed two months ago, but was delayed due to restrictions caused by the coroner’s pandemic. In any case, it was sent to the Hellenic Capital Market Commission on Monday (5/12) and the mobilization of the capital market supervisory authority immediately took place. It should be noted, however, that the Hellenic Capital Market Authority had also carried out a parallel investigation into MLS stock and bond transactions in the period before and after the announcement of the results for the first half of 2019.
This time there was no delay in decision-making, as it is true that it happened in the case of Follie Follie and yesterday the negotiation of the title and bonds was suspended on the ATHEX. In addition, according to market sources, MLS has two elements: first, that in early April it used an extension period of one year, until July 2021, the repayment of its bond, at the end of July 2020, and second, that the date of the announcement remained unknown. of fiscal 2019 results, and the company appears to be using the relevant extension of the publication deadline due to the crowning.
Deadline
Sources familiar with the processes claim that the MLS has been given a deadline to proceed with the 2018 financial statement reform. The authorities’ announcement speaks of a suspension “as of today, May 13, 2020 and for a maximum period of ten (10) days, since there are valid reasons to suspect that the provisions of Law 3556/2007 have been violated by said company “(ss Transparency conditions for information on issuers whose securities have been imported to trade in an organized market and other provisions)
The administration said yesterday that it has not yet received a letter from the authorities. It is unclear whether this deadline refers to the deadline given to the company to proceed with the required reforms. But if it does, it means that MLS’s financial image is completely overhauled and the company is extremely likely to show losses and negative actions after the reform, which some market executives say raises the issue of technical default.
With the issue of company bonds in the limelight, as Capital.gr wrote, there are already exploratory contacts by MLS bondholders with law firms. Institutional investors currently seem reassuring about the outcome of the case, but it is common that despite massive liquidations since last September, a significant number of bonds are in the hands of specific banks and several equity companies.
How does Mr. Kamatakis comment?
It should be noted that yesterday the publicly listed company was content to comment that “in cooperation with the competent authorities, it will take the necessary measures to resume trading in the company’s shares and bonds.” He added that “payment of the MLSO2 bond coupon will normally take place on the scheduled date,” which was more worrisome than reassuring to many investors who wondered why they pressured the company to confirm that the coupon would be paid, from now on. . which considers that the whole problem refers to a misinterpretation of the balance sheet data in accounting.
In any case, it remains to be seen whether the company will react with action if the main shareholder is likely to contribute new capital, if the strategic investor that management has sometimes implicated is expected to emerge, or if the course of events will take a turn. unfavorable.
In a communication, however, from Capital.gr, with Mr. Kamatakis, the first comment of the head of the company was that he did not expect the decision of the Authorities to suspend the negotiation of the bonds and the stock. He assured that the company will continue to strive to overcome the negative situation that has formed, said that the company’s products show a positive trend, spoke of the continuity in the “consolidation” of the company in the near future and that management is working in the new business. plan…
Read more:
MLS considers restarting and new business plan
