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Conviviality shares suspended

Published:  14 March, 2018

Shares in Conviviality have been temporarily suspended from trading on the Alternative Investment Market (AIM) as it faces £30 million tax bill.

In a statement issued today (14 March), Conviviality said it had “identified a payment due to HMRC of approximately £30 million which falls due for payment on 29 March 2018”.    

This, it said, had not been accrued for within its short-term cash flow projections and had created a “short term funding requirement”.

Yesterday, Conviviality announced it expected adjusted earnings before interest, taxes, depreciation and amortisation to come in 20% below market expectations, in a range of £55.3 million and £56.4 million.

Conviviality, which owns Bargain Booze, Wine Rack and Select Convenience retail chains as well as distributors Matthew Clark and Bibendum Wine, said the guidance reflected trading so far this year, combined with the current expectation for the likely trading performance of the business for the remainder of the current financial year.

“This includes 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,” it said.

Following a trading update last week, more than £300 million was wiped off Conviviality’s value.

At the time, the company said its guidance for net debt of about £150 million for the 52-week period ending 29 April 2018 remained unchanged.

Conviviality, which has been transformed during the past three years from an off-licence chain into the UK's biggest alcohol wholesaler following its takeover of wholesaler Matthew Clark and wine specialist Bibendum, is expected to make a further announcement later today.

In January this year Conviviality reported a 13% drop in pre-tax half-year profits. At the time chief executive, Diana Hunter, said the drop was due to the later-than-expected "phasing" of its cost-cutting efforts following a series of acquisitions.