12 March 2019: A day for dishonest reporting
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…