The new owners of local software company 6PM, have revised its financial statements for 2014 and 2015 after it emerged that revenues had been inflated.
Idox Health restated profits of £0.8 million and £1.7 million for the two years to losses of £0.2 million and £4.8 million, respectively.
The results, which were approved at the annual general meeting in London on Thursday, said there were flaws in internal controls, as a result of which the revenues were inflated from the actual £8.8 million in 2014 to £9.7 million, and from £8.4 million in 2015 to £11.3 million.
The announcement said that the results were “materially misstated”, mostly due to a failure of internal controls and management in the operations. It said that accounting standards had been applied in an “erroneous and inconsistent” way.
The results were materially misstated, mostly due to a failure of internal controls and management
Contacted yesterday, Idox Health chief executive Andrew Riley said it was simply “an alignment to match the group's accounting policies” and that, in his opinion, there was nothing sinister about it.
“It's an interpretation of financial regulations. The advice given to us by Idox advisers is different to that given by the ex-6PM advisers. We did find accounting errors but nothing of concern.
“The underlying business and forecast show both profit and growth, and we remain confident about the acquisition.
“Having spent the money we did on the acquisition, had we found something we were not expecting at the time of acquisition, I can assure you we’ll be doing something about it, but we’re not, and I hope this puts everyone’s minds at rest.”
The firm, which was at the time being run by PN candidate Ivan Bartolo, was sold to Idox Health last February. When contacted yesterday evening, Mr Bartolo said he could not comment, because he was not authorised to do so by the company.
The announcement that the British firm was interested in buying 6PM was made public in December 2016. The 2014 and 2015 accounts were audited by Nexia BT.
Idox Health said that additional safeguards were required to ensure that a similar situation did not arise in the future and noted that the 6PM board had since been strengthened with “additional financial expertise and experience”.