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Effective Implementation of Continuous Disclosure Policies

   

Added on  2019-11-26

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By student name ProfessorUniversityDate: 10 September , 2017.
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1ContentsQuestion no 1..............................................................................2Question no 2..............................................................................6Refrences....................................................................................91 | P a g e
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2Question No. 1Surfswitch group is one the major online sports action pack centre and has evolved has as anonline action sports retailer in the past. Today it has a customer base of 6 Million customers. The onlinefashion retailer giant is is facing a class action on behalf of the shareholders amidst the falling shareprices of the company and in the process the total investments have been wiped out[ CITATION Chi17 \l1033 ]. One of the law firm filed an open suit against anyone who held or bought shares between Aug’15to Jun’16. It shares have fallen drastically by around 90% in Jun 2016 on 3 profit warnings in 2016 and isaccused of misleading the markets and breaching the disclosure requirements and claiming falsely thatit is the market leader. The market also claims that the company failed tio dsclose that the EBITDAwould be less than the forecast and continued to make false claims without reasonablegrounds[ CITATION Abb17 \l 1033 ].The goodwill of the company has gone major changes in 2015 on account of the wide changes inacquisition of the different entities. Moreover, the opening balance was $ 36 Mn, new acquisition of $25 Mn and then the impairment amounted to $ 54.6 Mn which resulted in $ 6 Mn at the year end. Itmajorly included impairment on account of goodwill recognised within books for acquisition of 100% insubsidiaries like Surfdome Shop Limited ($ 10.9 Mn in goodwill), Megicseaweed Limited ($ 3.07 Mnimpairment in goodwill), acquisition of Rollingyouth private limited ($ 0.9 Mn impairment in goodwill),100% acquisition of Garage entertainment Aus Pty Limited amounting to adjustment of $ 1.2 Mn ingoodwill and final acquisition of SHI Holdings Pvt Ltd. amounting to adjustment of $ 11.1 Mn in the valueof the goodwill[ CITATION Cha171 \l 1033 ]. Th cash position of the company has declined from $ 39.7Mn in 2015 to $ 21.3 Mn in 2016. The major change whih was shown in the financials is thereclassification of amount from payment providers from cash and cash equivalents to the otherreceivables as on 30the June 2015 towards the year end reporting[ CITATION Cro17 \l 1033 ]. There has been a major changes in the profit and loss account in 2016 as when compared to the2015 financials. The selling and distribution expenses have increased from $ 44 Mn to $ 101Mn withoutsubstantive changes in the business opeartions, the impairment cost has moved from 0 to $ 89 Mn in2016 which shows that there is something which was being misstated in the books in 2015 and now thesame has been impaired all of a sudden. The administrative expenses have risen more than 7 times in aspan of 1 year from $ 7 Mn to $ 49 Mn without substantial increase in the business base. This also pointsto the material misstatement being there in the financial statements[ CITATION Min17 \l 16393 ].2 | P a g e
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