The share price of Victoria PLC (GB:VCP) fell yesterday after the company’s auditors cautioned against potential material fraud in the annual reports. The auditor’s warning triggered a sharp fall of more than 20% in the stock on Monday morning, touching a low point in the last three months. The stock ended the day at a loss of 3.5%.
Pick the best stocks and maximize your portfolio:
- Discover top-rated stocks from highly ranked analysts with Analyst Top Stocks!
- Easily identify outperforming stocks and invest smarter with Top Smart Score Stocks
The auditor, Grant Thornton, warned about these risks for the company’s subsidiary, Hanover Flooring, which was acquired in 2021. The potential risks include violations of money laundering regulations and potential irregularities regarding certain transactions within this subsidiary. According to the auditors, the amount involved in further investigation is £2.4 million.
The company responded to the warnings and said, “There is no wrongdoing at Hanover, and nor are the auditors alleging this.” The company also imposed a limitation of scope, which restricts any further investigation by the auditor. The company also highlighted that the amount involved is insignificant in the context of the entire company, as it represents less than 0.08% of its revenues.
Victoria PLC is a prominent manufacturing company specializing in innovative flooring products, including carpets, tiles, artificial grass, and accessories. The company operates in the UK, Europe, North America, and Australia.
Warning Followed by Positive Results
The company’s stock price has been swinging for the last three months amid delayed results, positive numbers, and now audit warnings. Victoria published its annual results for FY23 in early September after delaying them for a month. The company posted an increase of 43% in its revenues of £1.46 billion, driven by acquisitions and higher sales volumes of its products. The EBITDA also grew by 20% to £196 million. The company also stated that the upcoming results will see more benefits in terms of cash flow, earnings, and margins from the full integration of its acquisitions.
The positive results did cheer the investors and analysts, sending the shares higher. However, this enthusiasm proved short-lived for shareholders. This recent turn of events has raised doubts about the company’s internal controls, governance, and financial transparency.
In the last 12 months, the company’s stock has been volatile but has managed to remain in the green zone at a gain of 24.4% in trading.
