Goals Soccer Centres faces being delisted from the London stock market within weeks after discovering that the accounting crisis which caused its shares to be suspended in March dates back a decade.
Sky News can exclusively reveal that the 5-a-side football operator will announce on Friday that a probe into allegedly improper behaviour at the company has uncovered a far deeper scandal than previously thought.
The disclosure will make it almost impossible for Goals to prepare audited accounts by the end of September, which means it will miss the AIM market’s six-month deadline for its shares to resume trading.
City sources said on Thursday evening that it was “almost inevitable” that Goals would have to restate its accounts going back to 2009 and that it would therefore face being removed from the stock market next month.
The bombshell is certain to infuriate Mike Ashley, the Sports Direct International tycoon who presides over an 18% stake in Goals.
Mr Ashley, who is facing accounting-related problems of his own as he scrambles to appoint a new auditor at Sports Direct, has fought a running battle with Goals’ board in recent months over its accounting problems.
Goals has said relatively little about the details of its financial crisis, other than that the company had “substantially misdeclared” VAT going back over a period of several years and that it was examining historic accounting practices.
A VAT liability of roughly £12m has been under discussion with HM Revenue and Customs for the last four months.
Sources said that an investigation by the accountancy firm BDO is said to have uncovered evidence of apparently false profit and capital expenditure entries in its accounts.
The episode will spark comparisons with the crisis that led to the collapse of cafe chain Patisserie Valerie’s parent company earlier this year.
It will also raise questions about the tenure of Keith Rogers, who founded Goals, took it public and then stepped down as chief executive in 2017.
The Times reported in June that Goals had put former finance chief Bill Gow and former auditor KPMG on notice that they may face a legal challenge.
Goals, which trades from more than 45 venues in the UK, also has a joint venture in California with City Football Group, the owner of Premier League champions Manchester City.
Throughout the period in which its shares have been suspended, it has insisted that trading has been robust, meaning that the company is not in danger of collapsing if it retains its lender’s support.
Insiders said that Deloitte, which has been advising Bank of Scotland on its exposure to Goals, was likely to press for an auction of the business in the coming months.
Mr Ashley is an unlikely buyer for it because of the challenges he faces at Sports Direct.
He has lambasted Goals’ directors for failing to appoint Kroll, the corporate investigator, to probe the apparent wrongdoing at the company.
The Newcastle United owner has accused BDO of being conflicted because it is also Goals’ auditor, although it only replaced KPMG last year.
“Based on this view we want a root and branch independent investigation into every single aspect of Goals including its officers, shareholder interactions and wider corporate governance,” Sports Direct told Goals before the latter’s annual general meeting last month.
Sports Direct said in its letter that the former chief financial officer of Goals had “changed VAT codes on various service lines…[resulting] in Goals being required to approach its investors to seek and secure further funding to cover this liability”.
“It is very difficult to understand how this could be allowed to happen and how it could have taken place without assistance, negligence or incompetence from Goals’ officers, auditors or advisers which would otherwise have prevented or promptly discovered these matters.”
Goals had a market value of £20m when its shares were suspended, although it is unclear what the company might trade for in any eventual sale process.
A source pointed out that Goals, which employs about 700 people, remained cash-generative.
The company’s future was further clouded several months ago by the decision of chief executive Andy Anson, who had only been in the job for just over a year, to quit to run the British Olympic Association (BOA).
Mr Anson had said that he would remain with Goals until November to assist with resolving the accounting crisis.
Goals declined to comment on Thursday evening.