Written by: Keith Tully
Published: 15th March 2018
Conviviality, the owner of the two major drinks retail operations Bargain Booze and Wine Rack, has revealed that it recently identified an unexpected £30 million tax bill for liabilities owed to HMRC.
The situation led the business to suspend trading of its shares on the Alternative Investment Market (AIM) as investors urgently reassessed its market value.
Conviviality has said the situation “may negatively impact” its earnings performance in the current financial year, after having already downgraded its expectations on that front in recent days.
Third party advisors have now been engaged by the company to assist its management team during their discussions with HMRC about the £30 million tax bill that is due for payment before the end of March.
Conversations are also set to be had with stakeholders, including banks and creditors of Conviviality, which now finds itself firmly in the midst of what it is calling a “short term funding requirement”.
Statements given on behalf of the business suggest that they believe the situation “will be satisfactorily resolved” but also that “there can be no guarantee”.
Recent earnings statements revealed that Conviviality is expecting to generate between £55.3 million and £56.4 million during the current financial year, rather than between £69.1 million and £70.5 million, as had previously been forecast.
However, it is understood that those estimates may soon need to be scaled back still further.
The company said that its recent estimates were based on “the impact of the error in the financial forecasts of the Conviviality Direct business and the assumption that the margin weakness seen in January and February continues for the remainder of the current financial year”.
Conviviality sells thousands of alcohol and tobacco products around the UK, primarily through its franchisees via outlets of Bargain Booze, Bargain Booze Select Convenience and Wine Rack.
Conviviality Direct is its wholesaling operation, which operates via the brands Matthew Clark and Bibendum, which supply major hotel chains, as well as thousands of pubs and restaurants nationwide.