When auditors are unable to get around your financial statements for four months, you know something is off big time. But the question on investors’ mind is: how bad is it? Natural beauty and wellness company BWX (ASX: BWX), known for its brands Sukin, Go-To and Mineral Fusion, is yet to disclose.
After releasing a particularly cheery FY23 outlook following its rather grim FY22 forecast, the Company announced on August 29 that “it is not in a position to issue its audited full year results for the Financial Year 2022 (FY22) due on Tuesday, 30 August 2022” and needed “additional time” to figure things out. Since then, this date has been pushed back to September, October, November and now, indefinitely.
As of November 28, BWX has confirmed that the key parts of the audit of the FY22 financial statements have been finalised, including the revenue recognition issues for FY21 and 1HFY22 as well as the impairment of intangible assets. It has gotten strategic advisors on board to assist with procuring additional debt funding, allowing the Company to undertake a restructure. Plus, it will help address its rundown of inventory and continue the sale of its non-core assets in a timely manner.
However, this process would entail a further delay in the release of its audited results. And so, it has decided to postpone its FY22 audited results yet again, and this time without a specific date in mind.
In its FY22 forecast released in May 2022, BWX expected its underlying revenue to be in the range of $240 – $250 million for FY22, versus $194.3 in FY21. This would represent the performance of Sukin and Mineral Fusion along with the underperformance of its digital businesses as the e-commerce boom subsides. Overall, it had predicted a loss of $10 to $14 million.
In August 2022, BWX found that its forecast was riddled with issues, highlighting revenue recognition problems and the likely impairment of its intangible assets to a level significantly below their carrying value. The discovery of these indicated that BWX would quite possibly not meet its full year guidance for FY22, and will need to restate its results for the FY21 and 1H FY22 financial years.
So, in August, it initiated a trading halt, suspending investor shareholdings in limbo for months.
Not only did the Company mess up its numbers, but it also tried to profit off them by attempting to raise capital. Led by stockbroker Bell Potter, BWX tried to reduce its balance sheet leverage by $23.2 million (before costs) via a fully underwritten capital raising.
The never-ending saga gave rise to a wave of resignations, from Group Chief Financial Officer (CFO), Ms. Efee Peell, to Non-Executive Director Denis Shelley and Non-Independent Non-Executive Director Ms. Michelle Hepworth, who resigned a month after being appointed.
And if that wasn’t enough, the Company, like many others, became a cyberattack target. Its Flora & Fauna website identified that a malicious code may have resulted in over 2,000 customers’ credit card numbers and expiry dates being leaked.
BWX had already expected things to go south, at least financially, for its FY22 results, raising more concerns among shareholders.
The only thing it can now forecast with certainty is that when BWX finally releases its results and restarts trading, investor reaction is not going to be positive.
Alinda is a Business Reporter for The Sentiment
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