A few days before it fell overdue with its annual accounts, Blackmore Bonds plc has used a loophole in the Companies Act to delay filing.
Blackmore Bond plc’s accounts for the year ending December 2018 would normally have become overdue on 30 June 2019. On 27 June Blackmore shortened its accounting period by a single day, giving it another three months before it legally becomes overdue.
Scrutiny has fallen on Blackmore Bond plc as a result of the collapse of London Capital and Finance. Like LCF, Blackmore used Surge Financial as a marketing agent. Immediately after LCF collapsed, Blackmore bonds were promoted in LCF’s place on Surge’s top-isa-rates and best-interest-rates websites. Blackmore recently disclosed that it pays up to 20% of investors’ money as commission. Unlike LCF, Blackmore continues to trade and make all due payments in full, to the best of our knowledge.
Blackmore Bond plc’s last accounts for December 2017 (now a year and a half old) disclosed that it had raised £25 million from investors. At that time it had net assets of minus £7.6 million.
The accounts said that the company “fully intends to reach the £100m fund raising mark”.
Blackmore closed to new business in April 2019. In May 2019 it opened an office in Dubai to promote its bonds abroad. At time of writing its website still says that it is not currently taking new investment.
Why it is unable to file its annual accounts in a timely fashion is not known.
Update
Blackmore has told IFA trade paper Money Marketing that the accounts will be filed in September 2019, following a change of auditor. Blackmore’s last accounts were audited by Grant Thornton.
Blackmore states that it expects revenue of £20 million this year. As to whether it is generating sufficient profit to pay all investors back, we will have to wait and see.
While it was still open to new business, Blackmore paid commissions of 20% to Surge Financial (disclosed via its website and its last accounts). In slightly simplified terms, Blackmore needs to generate returns of 15.6% per year after costs and overheads to repay investors who invested in 3 year loan notes paying 7.9% per year, due to the 20% commission that comes out at the start.
They used the same loophole to delay their accounts last time.
The auditors, last time, also noted that Blackmore Bond needed £1.5m new subscriptions per month to fulfill its commitments and questioned whether it could continue as a going concern. A healthy company does not need to keep using the loophole – only those with something to hide!
Paying 20% commission on every pound invested and promising unrealistic returns is a tall ask of any company but one run by tweedledum[b] and tweedledum[ber] has got to be nigh on impossible.
It will no doubt end in tears like all the other unregulated mini bonds seem to do …. LCF 2.0? we’ll see. Will the authorities care? I doubt it unless they get political pressure – like with LCF. Will tweedledumb and tweedledumber be prosecuted? I doubt that too. They’ll just close up shop having hived off huge sums of money offshore and start another company.
This type of business seems to be a no brainer – low risk-high reward for everyone except the investors, many of who cannot afford to lose the money!
This game of avoiding having to prepare financial statements by changing the accounting reference date by one day at a time is a scam which must be stopped. However, having changed (in March 2018) their financial year end from 31 December to 30 December, they then in June 2018 lodged at Companies House a set of audited accounts made up to 31 December 2017! Hence they have failed to meet their Companies Act requirement to make up accounts as at 30/12/17, and they are also overdue in lodging at the companies registry their 2017 accounts at the required accounting reference date . How come the auditors didn’t spot this, neither Companies House for that matter (who seem to have accepted the 31/12/17 accounts as submitted as valid).
Spotter’s badge for Mr Bancroft.
Companies House don’t verify anything submitted to them. Blackmore could have submitted the Principia Discordia in medieval Mongolian upside down as their accounts and they’d’ve accepted it, at least until a third party queried it.
As for Grant Thornton, I suppose they’ll have to answer that one right after they’re done explaining why they signed off Patisserie Valerie.
Bearing in mind that criminal prosecutions for non-filing are non-existent (even if you don’t use the accounting date loophole and simply flout the law), I don’t think directors McCreesh and Nunn have much to worry about over forgetting to do a find-replace for 31-30 before they submitted the 2017 accounts.
Let me be the first to point out section 390(2)(b) of the Companies Act 2006:
“[A company’s] first financial year … ends with the last day of that [accounting] period or such other date, not more than seven days before or after the end of that period, as the directors may determine.
http://www.legislation.gov.uk/ukpga/2006/46/part/15/chapter/3
So you can actually shorten your accounting period seven times (racking up a 21 month filing extension!) before you actually need to draw up your accounts to a different date.
No doubt my nerd-of-the-week badge is in the post by return…