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12 March 2019: A day for dishonest reporting

12/03/2019 · Staffline Group PLC (STAF)  · Water Intelligence (WATR) 

AIM UK

AIM balloon flying through the city of London

In a big day of announcements from AIM, two companies have stood out as the worst offenders of a lack of honesty in reporting. We’re fed up of companies using complicated accounting and a range of adjustments to hide terrible figures.


Water Intelligence (LON: WATR) the provider of leak detection and remediation solutions, whose primary business operates in the United States, boldly announced year-on-year revenue growth of 44%. However, a closer look through the results reveals that this highly impressive growth largely arose simply because the company acquired several franchisees, thereby bringing the franchised results onto its own income statement.

In this instance, sales growth is hardly an honest measure to quote given the dramatic shift in the company’s business model from a franchised model, where the company simply earns royalty income from franchisees, to assuming all the revenue from what become company owned operations.

It will be interesting to see how the performance of the company owned operations improves over time and indeed the return on capital from the enlarged group.

Our earlier blog: Water Intelligence looks very murky, questioned how this US centric business ended up on AIM and drew attention to a number of red flags to worry…

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