Share Focus
Our Share Focus reports take a look at the performance and prospects of listed companies following the publication of their financial updates.
Phoenix slumps after accounting black holes discovered
Shares in IT firm Phoenix dived 35% on Monday morning (2 September) after it was forced to own up to holes in its financial statements.
Investigation by the company showed that control processes in its Servo division had been repeatedly circumvented, with the result being an adjustment of around £14 million to post-tax assets. The adjustment will be made in the full-year results, due in March next year. The discovery is particularly embarrassing since half-year results were published less than two weeks ago. EBITDA is now forecast to be in the range of £38-44 million.
Accounting issues are, understandably, never popular with investors, who have shown their displeasure by abandoning the shares in droves this morning. Today’s move takes the share price back to early 2009 levels, having endured something of a choppy year so far in 2012, faltering first at 235p and then 220p. On a PE of 41 and a fairly high dividend yield of 8%, there is likely to be a heightened atmosphere of caution around the shares for some time.
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