Troubled Conviviality making progress on £30m tax bill
Conviviality said that the tax bill’s discovery ‘created a short-term funding requirement’.
Bargain Booze owner Conviviality has said that customers and suppliers remain “supportive” after the firm revealed that it owes the taxman £30 million, suspended its shares and issued a profit warning.
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Earlier this week, Conviviality said that the tax bill’s discovery “created a short-term funding requirement” and resulted in operational difficulties that could negatively impact profits.
In a brief stock market update on Friday, the troubled group insisted that it has been actively engaging with stakeholders while it continues to work through its funding requirements.
“Customers and suppliers remain supportive of the company and are working closely and constructively with the company at this time.
“We have had constructive discussions with our lenders which are on-going,” the firm said.
Conviviality is working with PwC as it undertakes a review of the business and its funding requirements, and it has “engaged” with HM Revenue & Customs (HMRC) regarding the £30 million payment, which is due on March 29.
HMRC has been “receptive to our needs”, Conviviality said, adding that it is also engaging with its advisers and broker regarding the possibility of an equity fundraising to recapitalise the business.
It comes after the Aim-listed firm said on Tuesday that it expected adjusted earnings to come in 20% below market expectations, at between £55.3 million and £56.4 million.
Conviviality said it had found a “material error” in the forecasts for its Conviviality Direct business, as well as suffering from softer margins in January and February, which it expects will continue throughout the rest of the financial year.