One of the largest wine distributors in the UK, Conviviality, has been forced to suspend trading on the London stock exchange after discovering an unexpected £30 million tax bill less than a week after it cut profits forecasts.
- Conviviality suspends trading on AIM exchange
- Un-planned £30 million charge creates ‘short term funding’ issue
- Board believes situation can be ‘satisfactorily resolved’
Trading in Conviviality shares was temporarily suspended on London’s AIM stock exchange on Wednesday (14 March).
The group, which owns the Bibendum wine and drinks wholesaler, as well as retail stores Wine Rack and Bargain Booze, said that it had been hit with an unexpected £30 million tax charge that falls due on 29 March.
‘This has created a short term funding requirement,’ said the firm, which is one of the largest wine trade suppliers in the country.
Although the news will ring alarm bells in a UK wine trade where finances are often tight, Conviviality said, ‘Following preliminary advice received from [consultancy group] PwC, whilst there can be no guarantee, the board believes this short term funding requirement will be satisfactorily resolved.’
Its announcement comes a week after the firm said operating profits for the year to 29 April 2018 would likely be 20% lower than market expectations, to between £55.3 million and £56.4 million.
The unpaid tax bill, discovered on 13 March, could send profits lower than this, it added this week.
The firm’s share price plunged after last week’s profits warning, although had begun to stabilise.
Conviviality has recruited consultancy group PwC to assist in talks with HM Revenue & Customs, as well as with lenders and suppliers.