By Nigel Somerville, the Deputy Sheriff of AIM | Friday 6 January 2017
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.
ShareProphets AIM-China Filthy Forty purveyor of biblical plagues Asian Citrus Holdings (ACHL) has updated on the long saga of its audit investigation into allegations which suggest fraud. It seems there is little progress, if any, to report as the company hurtles towards the six month mark in suspension from trading, and execution under AIM Rules 41.
The company’s shares were suspended on 28 September 2016 pending the outcome of additional audit procedures – including visits to each bank branch where the company had dealings – in the light of allegations being made of discrepancies in the books, as announced on 29 September 2016.
This morning the company updated the market on how far things have got, including:
The key outstanding issues or matters for completing the audit remains as those set out in the Announcement.
That sounds like there has been no progress at all!
Since the last announcement on 22 December 2016, the Directors have continued to establish communications with Mr. Man and Mr. DQ Chen as well as other senior management at the subsidiaries in the PRC with a view to clarifying details in connection with the allegations made by them. As at the date of this announcement the Board continues with its efforts to clarify the nature of these allegations and taking legal advice from its PRC legal advisers in connection with the current circumstances.
Hmm, not much to write home about there either, then.
In light of the above and the ongoing work being performed, the Group is not in a position to confirm the date when the Group's audited consolidated financial statements for the year ended 30 June 2016 can be made available. The Company will make a further announcement as soon as there is material progress on this front.
Righty-ho, so there has been no “material progress” thus far?
One would have thought that after more than three months there would have been something to report, such as the outcome of at least one visit to the bank – but, of course, that would require whoever holds the “chops” to cooperate. One might wonder why this has not yet happened, if everybody is so keen to get to the bottom of the allegations and the auditor is being so fastidious as to require first-hand sight of bank statements etc.
And so here we are, well past the deadline for publishing full year accounts to 30 June 2016 and the company still has no idea when it will be able to release the numbers. As such, were the shares not already suspended from trading on AIM pending the outcome of the allegations, the shares would now be suspended pending publication of accounts.
Under AIM Rule 41 if a company’s shares are suspended for six months then it is automatically booted off the Casino, meaning that the clock is certainly ticking on a deadline of 28 March and execution the following day.
Yet the company chooses to tell us:
Trading in the shares of the Company on the Hong Kong Stock Exchange will remain suspended pending the release of the Group's annual results. Trading in the shares of the Company on AIM will also remain suspended pending an announcement clarifying the financial impact pertaining to the allegations, if any.
Given the apparent complete lack of progress after more than three months, and with less than three months to go, my money is on the company being delisted under AIM Rule 41 on 29 March.
Quite what the rules are with regard to the company’s Hong Kong listing (where the shares are also suspended pending clarification and accounts) I’m not sure, but one might expect that the authorities there offer a little less patience than the UKLA has shown with the now bust enterprise that was Worthington (WRN), yet which for some reason beyond my comprehension still retains its listing on the LSE (albeit suspended) even thought it is in liquidation.
The only question in my mind, regarding the company’s AIM listing, is whether the 6-month deadline comes first, or the Nomad – Cantor Fitzgerald, latterly of African Potash (AFPO) fame – throws in the towel ahead of that.
This looks like a zero.
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