As expected, Energy Resources of Australia turned in a solid interim profit on Friday, as it had forecast a week earlier, GPT got rid of its Babcock & Brown exposure, but at a cost of $1.1 billion, Elders got a timely cash infusion from QBE after selling out off its insurance business, and the shocker announcement came from small electricals retailer, Clive Peeters of Melbourne.
In fact it was a bit more than a shocker: a horror announcement a $7 million discrepancy had been found in the company’s accounts, meaning an already yawning loss had now become a black hole, casting doubt on the company’s already stretched financial position.
The loss-making retailer was forced to ask for a trading halt Friday ‘‘as a result of having discovered accounting discrepancies".
These, it said, would increase its forecast pre-tax operating losses to June 30 to a range of "$11 million-$12 million".
It had previously forecast an operating loss of up to $5 million.
The company’s managing director, Greg Smith did not provide any further details of the accounting anomalies.
‘‘CPR is in the process of fully investigating these accounting discrepancies,’’ the company said in a statement.
However, it said the discrepancy would not affect its 2009-10 accounts.
Just the 2009 accounts which will be terrible.
Shares in the company traded at 17c before the halt.
Clive Peeters accounting problems echo one several years ago from Australian Pharmaceutical Industries which revealed losses of more than $17 million after changing accounting systems. It was never recovered.
The stimulus spending upturns that Harvey Norman, David Jones, JB Hi-Fi and Woolies Dick Smith chains have reported, completely missed Clive Peeters.
It abandoned attempts to raise new capital early last month saying in the ASX statement how it had ‘‘been very difficult in this economic environment for small to medium listed companies to raise capital’’.
"For Clive Peeters FY’09 has been a valuable period of consolidation after two years of rapid expansion in FY’07 and FY’08, which resulted in 33% and 40% growth in store numbers. FY’10 will see a continuation of the consolidation phase, with expansion on hold until the retail cycle improves," CEO, Greg Smith said at the time.
The statement forecast the loss of $4.5 million to $5 million.
But trying to put a positive spin on it Mr Smith said:
"But this includes non-recurring costs associated with the strategic review; losses on stores now closed and store closure costs; one off costs of re-engineering the business’ overhead cost structure, and the costs of recent refinancing. Collectively these nonrecurring costs approximate $2.1m."
But no word on the size of write-downs. Now they could be $7 million larger.
The only good news it has had recently was the news in the July 1 update that it had renewed its short-term debt facilities by NAB for another 12 months.
The company cut debt, operating costs, including working capital in the year to June, but it still has more than $46 million of borrowings.
But now there’s new doubts banks don’t like news of unexplained $7 million black holes and usually demand quick answers.
Energy Resources of Australia earned a record interim net profit for 2009, thanks to the higher production and sales of uranium oxide revealed in the June quarter and half production report.
ERA reported a net profit of $127.6 million for the six months to June 30, up from $38.9 million in the prior corresponding half.
Eleven days earlier, the company had forecast earnings in the range of $120 million to $130 million for the half after the strong rise in sales and production.
ERA said uranium oxide production for the first half rose 14% to 2,695 tonnes and sales jumped 31% in the half to 2,280 tonnes.
Revenue more than doubled to a record $336.1 million from $143.5 million in the corresponding period last year.
ERA reaffirmed that full year production was expected to be in line with normal levels, while total sales tonnes in 2009 are still expected to be slightly higher than in 2008, with sales volumes higher in the second half.
ERA declared an interim dividend of 14 cents per share, up from eight cents in the previous corresponding half.
ERA (which is majority-owned by Rio Tinto) said the average realised sales price of uranium oxide for the June 2009 half was $US48.02 per pound, compared to $US35.69 per pound in the prior corresponding period.
The company said the average realised sales price during the second half of 2009 was expected to remain at levels similar to the first half.
It said contracts were generally denominated in US dollars and therefore the Australian dollar to US dollar exchange rate would affect sales revenue in the second half of 2009.
"While revenues rose during the period, this was partially offset by a rise in raw materials and consumables costs, employee and contractor expenses, government royalties and depreciation expense," ERA said in the earnings press release.
"Raw materials and consumables costs increased as a result of the increased production together with the impact of exchange rates on USD denominated purchases, partially offset by usage efficiencies.
"Employee and contractor costs remain up primarily due to the continued
