Analysis Annual figures
Accounting Ausnutria turns out to be Swiss cheese
The results of goat milk producer Ausnutria from Heerenveen are much less rosy than it seems. The China-listed company initially reported a record profit of € 143,9 million for 2021, but it now appears that they have miscalculated considerably. The Frisian-Chinese growth gem in goat dairy has booked sales incorrectly for years, but says that this error only came to light in 2022 when sales of milk powder fell sharply. It is not the first time that Ausnutria does not have its figures in order.
The figures deserve some context to be able to understand them properly. The end of March published Ausnutria the annual figures for 2022, in which the comparison was made with 2021, as is customary with financial key figures. The company reported a turnover of €1,054 billion in the past year, compared to €1,159 billion in 2021. The net profit for 2022 amounted to €29,3 million, a decrease of 72% compared to 2021 when a profit of €103,3 million was made. booked. Apart from the substantial loss, at first glance no details. They do emerge if you zoom in deeper on the matter, on which the editors of Boerenbusiness was alerted. A year ago communicated Ausnutria for 2021, namely a profit of € 143,9 million and a turnover of € 1,2 billion. In other words, an adjustment in profit of several tens of millions.
Errors in accounting
Inquiries at Ausnutria show that there are errors in the accounting that have been corrected with retroactive effect. There was no mention of this in the press release. Ausnutria says in a statement that the errors are due to the booking of deferred revenue. These are monetary receipts, but not actually income yet. The shoe pinches on the company's delivery conditions. According to Ausnutria, the formula for booking deferred sales did not match the terms of delivery. The fact that this did not come to light for years is due to the favorable market conditions in recent years. When revenues fell in mid-2022 due to declining sales, the problem spontaneously loomed.
Ausnutria says it immediately launched an investigation with former accountant Ernst & Young and current accountant Price Waterhouse Coopers. Subsequently, the internal and external control processes were tightened up to prevent such mistakes in the future. What makes things even more sour is that Ausnutria did not have its accounting in order in 2012. As a result, trading in shares was halted for an extended period of time.
Apart from the accounting problems, profit at Ausnutria is under considerable pressure. Due to declining birth rates in China, the sales opportunities for baby milk powder are shrinking. In doing so, the company points to the after-effects of the corona pandemic, rising inflation and an unfavorable exchange rate. Several profit warnings have been issued recently, but the company does not expect a recovery until 2025. This has a heavy impact on the stock market value. The price on the stock exchange in Hong Kong is quoted at around 3,70 Renminbi in early April. This means that the stock market value has halved in a year's time. Three years ago, the share peaked above 17 Renminbi.
Sell shares to Yili
What makes the problems in accounting striking is that in 2021 there will be a large pick of shares has been bought up by the Chinese dairy giant Yili. They paid just under €700 million for 34% of the shares, making them suddenly the largest shareholder in the goat milk company. The deal was announced in 2021 and completed last year. In takeover processes, profit figures are leading for the valuation of a company. This may have been a motivation to make things look better than they are, but is negated by Ausnutria's statement.
With Yili on board, the Chinese influences within Ausnutria seem to be increasing. At the beginning of this year is a minority shareholder Bart van der Meer quietly stepped down as CEO. His place has been taken by the Chinese Yan Weibin, because he is said to have 'more feeling' about the Chinese market. Van der Meer is still active as executive director, but no longer has final responsibility.
Wouter Job
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