Overview of Victor Group Holdings' financial adjustments

Victor Group Holdings Limited (ASX:VIG) has disclosed changes to its audited financial statements for the year ended 30 June 2024. The adjustments involve non-cash changes related to the accounting treatment of prepayments for intangibles, receivables, contract assets, plant and equipment, and software on the balance sheet. These changes resulted in an increase to the loss after tax of $2,445,249, a reduction in current assets by $2,268,982, and a corresponding increase to non-current assets of $946,098. The net assets experienced a reduction of $2,417,939 due to a significant decrease in trade receivables after audit adjustments.

Executive commentary on financial adjustments

The consolidated statement of profit or loss and other comprehensive income has shown an increase in the Loss before income tax of $2,445,249 due to an increase in the Pre-customer preparation expenses. These expenses represent costs incurred by the consolidated entity as part of planned customized software in advance of customer contracts being agreed. The company has clarified that as they have only purchased the right to use the underlying code of pre-existing software and do not own the copyright, these costs have been expensed to the statement of profit or loss rather than being recognized as assets on the balance sheet. Additionally, the prepayments for the right-of-use assets, and prepayments for plant and equipment and software have been reclassified to non-current assets from the previously reported current assets.

Summary of Victor Group Holdings' financial adjustments

Victor Group Holdings (ASX:VIG) has made non-cash adjustments to its audited financial statements, resulting in changes to the loss after tax, current assets, and non-current assets. The company clarified that the increase in Loss before income tax is attributed to the Pre-customer preparation expenses, which represent costs incurred for planned customized software in advance of customer contracts being agreed. These costs have been expensed to the statement of profit or loss rather than being recognized as assets on the balance sheet. The reclassification of prepayments for assets has also been highlighted in the financial adjustments. The company's proactive approach to addressing these adjustments demonstrates its commitment to transparent financial reporting and compliance with accounting standards.