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From a closing price of P23.30 each on Friday last week, 2GO stocks on Wednesday, July
12, dropped as much as 27% to P17 apiece before significantly paring losses to close
just 2.15% weaker at P22.80 per share.
In a statement sent to reporters via mobile phone message on
Wednesday, the corporate regulator said its Markets and Securities
Regulation Department sent a July 11 letter ordering the listed logistics
firm “to provide clarification and additional information on the
restatement,” including circumstances requiring the restatement; basis
of the restatement and reclassification of accounts, “discussing the
impact of the newly adopted accounting policy” and overall impact of
the revisions on the company’s operations and financial condition,
among others.
The revisions had resulted in about a billion pesos slashed from 2015
and 2016 profits, as well as a net loss for the first quarter of this year
from a previously reported net income.
“I don’t think they are normal,” Ms. Herbosa said of the changes,
adding that if the discrepancies are “really that big, that calls for a
really big investigation.”
The firm that conducted the audit may also be sanctioned, she added,
in this case R.G. Manabat & Co., the local partner of international
accounting firm KPMG that has since stood by the results of its work.
“And then there is probably a daily fine of P10,000 at least since the
time it was discovered and... attention has been called that there has
been really wrong accounting,” she added. “So the penalties will run
from that time.”
The new management of 2GO, led by businessman Dennis A. Uy’s
Udenna Corp. and Henry Sy, Sr.’s SM group hired SyCip Gorres Velayo
& Co. (SGV) to conduct a special audit after they took over the logistics
company in April.
It also reduced consolidated revenue “by the amounts that did not meet
the revenue recognition criteria” amounting to P53.7 million and P19.1
million for the three months ending March 31, 2017 and 2016, as well
as P222 million and P34.7 million for the years ended Dec. 31, 2016
and 2015, respectively.
Neither did 2GO meet in some cases the minimum current ratio and the
maximum debt-to-equity ratio required by the company’s long-term
loan agreements, resulting in reclassification of some noncurrent
liabilities to current liabilities -- or those falling due within a year. That
resulted, for instance, in current liabilities ballooning 39% to P12.119
billion in the first quarter from the original P8.718 billion.
“However, the group has not received a notice of default from its
creditors and the group continues to pay the long-term loans based on
original credit terms,” the revised report read.
SGV’s review also significantly altered bottom lines, with net income for
2015 cut by 90% to P105.13 million from the P1.08 billion previously
reported, 2016 profit slashed by 74% to P344.03 million from P1.35
billion, and this year’s first quarter recording a P264.863-million net
loss from a P267.562-million net income originally.
Ms. Herbosa told reporters: “This time, we are going to prioritize this
because of the reports regarding the over-inflated figures,” adding that
the corporate regulator wants “the parties to explain why that
happened.”
“It will probably entail a special audit,” she said, separate from the
SEC’s evaluation of companies’ regular reports.