Royal Mail failed to publish their financial results in time due to audit delays. It is preparing for a £3.5bn acquisition by a Czech billionaire.
International Distributions Services, the parent company of IDS, was supposed to release figures for its last financial year at 7am Thursday morning. However, this did not happen.
Just before 2pm the company released a statement saying it had postponed publication because KPMG asked for more time to complete its audit.
IDS stated that this was “standard operating procedures”, but did not specify when the results would be published. The delay is not believed to be related to financial matters.
Following the announcement, shares fell by 2pc.
The timing is unfortunate, as Royal Mail is about to sign a controversial agreement that will hand over control of its 500-year-old service for the first ever to a foreign investor.
The company said that it was willing to accept Daniel Kretinsky’s £3.5bn (also known as “the Czech sphinx”) offer, subject to certain undertakings regarding public interest issues.
The EP Group of Mr Kretinsky, already the largest shareholder at IDS, will have until May 29th, 5pm, to make a bid.
Royal Mail’s financial situation has been at the forefront of the takeover talks , as the company struggles with a drop in letter volume.
The company lost £319m during the first six months of this year, after losing £1bn in the previous year due to crippling strikes.
The postal service has proposed to change its so-called Universal Service Obligation (USO), in which it is required to deliver letters on six days of the week. They have warned that outdated regulations are leaving it in an unsustainable financial position.
According to plans submitted by the company to Ofcom it would only deliver second class post three times per week. However, first class delivery would continue on a six-day basis.
Royal Mail also implemented a number reforms under the leadership of chief executive Martin Seidenberg to improve its efficiency.
The board of IDS confirmed on Thursday that it expects the company to break even in the current financial year excluding costs for voluntary redundancies.
Audit issues are often the cause of financial result delays. Last year, fashion giant Asos pushed its full-year results back by a week in order to give PwC auditors more time to complete their review.
S4 Capital, a digital advertising company run by Sir Martin Sorrell was forced to postpone its results in 2022 twice due to audit problems. This blunder knocked S4’s value down by more than a quarter.
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