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From bad to worse at TLA as CFO resigns after “accounting errors” uncovered

EBITDA is to take a US$6.8mln hit because of higher-than-expected one offs as well as corrections arising from “incorrect and inappropriate application of accounting policies and accounting errors”
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TLA is looking to overhaul its finance team in the wake of the adjustments

The chief bean counter at TLA Worldwide plc (LON:TLA) has resigned with immediate effect after the sports marketing business uncovered various “accounting errors” in its soon-to-be published full-year results.

The AIM-listed group revealed back in April that results for the year to 31 December 2016 would miss expectations as a result of various unexpected one-off charges in its US business.

TLA originally thought these costs would total between US$1.5mln and US$2.5mln, but a deeper look has found that the actual one-off charge will be nearer to US$3.2mln.

On top of the higher one-offs, the company has also had to make a couple of other tweaks to its full-year results following the “incorrect and inappropriate application of accounting policies and accounting errors”.

US$6.8mln hit to 2016 earnings

The corrections add up to US$3.6mln which, when coupled with the US$3.2mln in one-off costs, means TLA’s headline EBITDA (underlying earnings) will take a US$6.8mln hit for last year.

For the 12 months ended 31 December 2016, the firm now expects to report EBITDA of US$4.8mln, way down on the US$13.4mln posted the year before.

Issues weren’t confined to just 2016 though, and TLA said it will also need to restate its profits for 2015, with a downward adjustment of US$1.9mln.

Overhaul of finance team

Perhaps unsurprisingly, chief financial officer Donald Malter has opted to walk the plank in light of the saga.

TLA has drafted in Bill Armstrong as interim CFO while it looks for Malter's successor, adding that it would also look to add a US head of finance who will report directly to the executive management.

The company were keen to stress that the “various accounting adjustments” don’t have a cash impact and that its net debt position remains unchanged at US$21.8mln.

The results for the year ended 31 December 2016 are due to be published on 30 June.

In late afternoon trading, TLA had dropped by over 21%, or 5p to 18.5p.

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