Bingo! Ownership Matters reveals accounting error

“During discussions, a representative from Bingo indicated that the guidelines had always included the AASB 16 advantage, but admitted that the company had not communicated this effectively until now,” the report said. report.

Meanwhile, in the first half of 2020, AASB 16 had the effect of increasing EBITDA by approximately $2.4 million, which it included in its underlying EBITDA of $82 million.

In that $82 million figure, Bingo also included gains on “ordinary course” asset sales, but excluded the $22.4 million gain on its sale of a facility to Banksmeadow. underlying measures.

Factoring in those gains and AASB 16, Bingo generated $76.4 million in EBITDA in the first half of 2020, according to the report.

During the period, Bingo recorded rental costs as amortization of $1.4 million and interest expense of $1.856 million on lease liabilities.

“Overrated”

Cash paid for principal reduction on leases for the first half of 2020 was $2.5 million, and interest paid through the cash flow statement was approximately $1.856 million.

“Following enquiries, representatives of Bingo advised, after consultation with the company’s auditors, that there was an error in the statement of cash flows, whereby outflows of interest for the purposes of AASB 16 were accounted for in both “interest paid” and “repayment of principal for lease debts”.’.”

“In subsequent discussions, Bingo confirmed that the offsetting error in Bingo’s statement of cash flows is an understatement of payments to vendors and employees. As a result, the net cash flows from the line of operating activities are overestimated.”

However, after speaking with its auditor, Bingo told Ownership Matters that the error was not significant enough to require restatement or correction.

It comes after Credit Suisse sales trader Sujit Dey issued a warning about Bingo in an email to customers last Thursday, which was headlined: “BIN – Closer review of accounts”.

Dey said Bingo’s advice implied a slowdown in business in the second half and “it’s either conservative and therefore there will be an upgrade or it could mean things aren’t going as well as we expect.” pensions”.

He concluded his missive with “given the accounting quality issues, I simply cannot buy the shares here.”