Shares crash as Goals warns over profits following accounting blunder

Goals Soccer Centres has warned that annual profits will come in “materially below expectations” after the firm uncovered accounting errors as part of a business review.

The operator of five-a-side football pitches said the board and its auditors were working to resolve certain accounting errors for the financial year ending December 31 2018.

In addition, they are reviewing some “accounting practices and policies”.

As a result, Goals expects 2018 full-year results will be materially below expectations and its reporting date of March 12 will be delayed.

The news sent shares crashing 46% to 30p.

KPMG was the group’s auditor until June 2018, when it was replaced with BDO.

The firm also said that while the “accounting adjustments” are of a non-cash nature, it means Goals is in breach of one of its banking covenants with Bank of Scotland.

“We are in discussions with the bank with a view to agreeing re-negotiated facilities,” Goals said.

It represents the second blow in quick succession for the company, in which Sports Direct boss Mike Ashley holds a significant stake.

Only in January did Goals warn that profits would be lower after a revamp of its offering resulted in higher costs.

It also bemoaned slower than anticipated growth in the US, where the company has four sites, as well as economic and political uncertainty.

However, Goals said its performance has been strong in the first two months of the year, with an increase in like-for-like sales, in both the UK and US.

Paul Hickman, analyst at Edison Investment Research, said: “Importantly, the company says that ‘the majority’ of the accounting adjustments are non-cash, although that implies that a minority of them do affect cash.

“However, the wording implies that this is not a fraud issue on the lines of Patisserie Valerie.

“The restatement of accounts on other measures (such as profitability) puts Goals in breach of bank covenants, an issue that shareholders thought it had put behind it. Forced negotiations with banks in this situation invariably result in punitive terms.”