Hall of Shame
Flyke International (1998 HK)
Trouble started when the company issued a profit warning in March 2013 relating to financial performance in 2H12, and a further warning in July which saw the company report a loss in 1H13. In March 2014, the company ordered the suspension of its shares following Shinewing’s inability to complete its audit given inconsistent information provided by the company regarding its suppliers. Shinewing went on to resign in January 2015 following a disagreement over fees. A limited forensic report was issued in January 2015 although there had been difficulty in getting hold of the relevant documents owing to a high turnover of staff.
Flyke triggered a full four points under our Fake Cash Flow model in FY11, owing to high operating margins (around 18%), large quantities of non-production assets (receivables and cash), low dividends (<20%) and a reliance on short-term debt.
Flyke International:Annual Report , 14 Apr 2011
Forensic Investigation, 28 Jan 2015
Resignation of Auditor, 12 Jan 2015
Profit Warning, 08 Feb 2013