The $45 million public float of Automotive Holdings Group has been delayed by four weeks after the company’s auditors raised issues in relation to a complex restructuring that occurred in March 2005.
The $45 million public float of Automotive Holdings Group has been delayed by four weeks after the company’s auditors raised issues in relation to a complex restructuring that occurred in March 2005.
The float was due to close last Friday, but instead the company released a statement saying it would have to issue a supplementary prospectus, which would include its audited results for the year to June 2005.
AHG said its auditor, Subiaco firm Horwath, had “determined that some of the external advice received by the company in relation to the accounting treatment of the restructure was incorrect and needs to be restated”.
The supplementary prospectus will focus attention on the restructure and the profit forecasts in the original prospectus.
The operating businesses owned by AHG, which include 19 automotive dealerships and a logistics division, have a long history but the company itself is a new creation.
AHG was incorporated on October 21 2004 and in March 2005 was involved in a restruc-turing to separate the operating businesses from other assets.
The operating businesses were acquired from Automotive Properties Pty Ltd, as trustee for the Automotive Unit Trust.
The beneficiaries of the trust included members of the Wheatley family, particularly director Vern Wheatley, as well as AHG chairman Robert Branchi and its chief executive Bronte Howson.
Another key transaction, on June 10 2005, was the acquisition of a 60.3 per cent interest in Perth Auto Alliance, which operates six Ford dealerships in Perth.
Even though the transactions occurred late in the 2005 financial year, the AHG prospectus highlighted a ‘pro forma’ profit forecast prepared on the basis that the underlying businesses were owned for 12 months to June 30.
The ‘pro forma’ net profit forecast was $15.5 million.
Further back in the prospectus, the company also had a ‘statutory’ net profit forecast covering the period AHG actually owned the operating businesses: it was $7.1 million.
The supplementary prospectus will contain a third profit figure – an audited net profit for the 2005 financial year.
Investors will be able to form their own view as to whether the different profit figures are a help or a hindrance in judging the quality of the share offer.
Demand to date indicates the float has been well supported.
The company said “interest in the offer has been well in excess of the offer amount”.
It added that the restatement of the 2005 result would not affect the forecast 2006 profit of $16.9 million or the anticipated 8.5 cents per share dividend.
