Time's Up For Abc Accounts

Sydney Morning Herald

Tuesday September 30, 2008

Colin Kruger

THE release of ABC Learning's audited accounts could go down to the wire. The child-care provider is offering no guarantees it will release the information to meet today's filing deadline.

A spokeswoman would not comment yesterday on the release of the much-delayed accounts, which could provide much fodder for a potential class action by the litigation funder IMF as well as possible legal action by the Australian Securities and Investments Commission (ASIC).

ABC shares have been in a trading halt for more than a month. Trading was initially suspended over its latest earnings downgrade and further restatements to its prior year accounts. It was due to be reinstated but the suspension was extended when it failed to release its unaudited accounts by the end of August.

The reluctance to release unaudited accounts indicates the extent of changes being sought by ABC's auditor, Ernst & Young, which was appointed last year to clean up the company's accounting practices.

Ever since, ABC directors and the auditors have been scrambling to produce the audited accounts by today's deadline.

ABC will face a new set of challenges when the figures - which are expected to show losses exceeding $437 million for 2007-08 - are finally lodged.

The accounts will be closely scrutinised by IMF for the class action it is preparing against ABC, based on misstated earnings in previous years and bullish forecasts that IMF says "had no reasonable basis".

ASIC is also understood to be investigating ABC over the same issue, given the huge discrepancy between forecasts earlier this year for 15 per cent profit growth and the likely large loss that is now expected.

ABC has appointed a new chief financial officer, Peter Trimble, who was due to start last week.

Frank Ford, one of five directors appointed last month, later advised ABC "he no longer wishes to proceed with the appointment".

The other four new directors - three of whom represent major shareholders - are expected to join the board after the full-year results have been released.

Disclosure has been an issue for ABC for years, but the problems came home to roost with the release of its half-year results in February, when Ernst & Young forced the disclosure of its reliance on payments from developers of its child-care centres.

© 2008 Sydney Morning Herald

Back to News Index | Back to Home