Financial Case Studies

Type of business: Construction

GSI Services

• Accounts department outsourcing
  
• Provision of Chief Financial Officer (CFO)
  
• Provision of Financial Controller (FC)
  
• Group restructure
  
• Preparation of key financial reports for third parties
  
• Treasury management

Our client: Construction company

The case

The financial controller of a £35m turnover company was leaving and other staff had already left the accounts department. We provide an outsourced accounts department comprising a CFO, Financial Controller and six additional staff in different locations

Key facts

• The company was in the process of creating a new group to further develop the different sectors of the business. New accounting systems and consolidations of monthly accounts were required.
• Day to day operations had fallen behind.
• Systems and procedures needed reviewing and strengthening as well as introducing cloud-based software to reduce time and increase accuracy of accounting records.
• Immediate updating of financial reports was needed to ensure continuity of creditor support in relation to major trade and credit insurers, who provide performance bonds and invoice finance to suppliers.

GSI solution

The company was already known to us and we had previously installed the ERP software. Only a very short handover wasavailable and we immediately prepared a full set of accounts and detailed financial report for the recently ended financial year comprising commentary, profit and loss account, balance sheet, notes, pipeline, aged receivables and payables and
detailed forecasts.
Relationships were improved with bankers and third party financial stakeholders. We prepared and issued a six month management accounts report and subsequently worked with the auditors to finalise the year end audit, resulting in a significant increase in credit rating and much improved cash flow.

Type of business: Insolvency Practitioner

GSI Services

• Cyber security services:
•  Establishing source of data breach.
•  Establishing whether a theft of data had taken place.
•  GDPR review and report:
•  Risk of data loss.
•  Advisory and reporting to ICO

Our client: Insolvency Practitioner

The case

GSI was approached by an insolvency practitioner who had been the victim of a ransomware attack. All files on their server had been encrypted and were no longer accessible.

Key facts

• Data held on the server covered a period of 10 years.
• A significant amount of personal and confidential data was at risk.
• It was possible that their IT support company had been compromised.

GSI solution

Ransomware is usually about obtaining a payment to unencrypt files. Data theft is less common in this situation but where there is data loss, it must be reported to the ICO. We were able to establish where the attack came from and the approximate time of the attack. By examining the company’s routers and through other means, we proved that subsequent to the ransomware attack, very little data had been transmitted by the server, so it could not have been stolen.

We also examined access points and established that the ransomware had used a gateway through the company’s IT support contractor. We raised the alarm to increase security of their servers and avoid replication with other clients.

Our in house lawyer and GDPR expert prepared a report to fully comply with GDPR and we ensured protection of all sensitive data. The ransomware issue was resolved without the need to pay a ransom and the company was operational again a couple of days later.

Type of business: Insurance agent – £15m turnover

GSI Services

• Data recovery of deleted data
• Accounts data correction
• Data entry
• Accounts production
• Forensic analysis
• Report of conclusions for court

Our client: Insolvency Practitioner

The case

The company was an insurance agent selling insurance policies of major insurers such as Aviva. It went into liquidation after substantial clawbacks of commission. GSI was approached by the liquidator to carry out a forensic analysis of the accounts, which were not up to date.

Key facts

• Accounts prepared to six months prior to insolvency on Xero.
• Large sums paid out of company to holding company through complex inter-company transactions prior to insolvency.
• Erratic trends in commissions received and clawed back during final months of trading.
• Missing records such as emails and commission statements.

GSI solution

The liquidator had possession of the server. Our in house cryptologist analysed the hard drive and recovered 89,000 deleted emails along with attachments which included hundreds of commission statements. We completed the accounts to the date of liquidation and examined commission statements to establish dates of clawback notifications. Our final report showed that the directors had at least 2.4 months notice of clawbacks which meant that they should have been aware of the potential losses before they paid out substantial sums in dividends and other payments to related parties. The directors agreed an out of court settlement to pay substantial sums back into the liquidation, to the benefit of the creditors.

Type of business: Construction contractor

GSI Services

• Due diligence
• Accounting forensics
• Valuation
• Debt restructuring

Our client: Property group

The case

GSI was approached by a company wishing to purchase a family owned business with £12m turnover, for around £4m. We were asked to carry out due diligence and establish a fair valuation.

Key facts

• The company had been established a number of years and the owners were seeking retirement but were happy to stay on as consultants.
• The owners were of the opinion that the company was doing well and was worth at least £4m.
• The work mix was of supply, maintenance and contracting.

GSI solution

We researched the company using the web and credit agencies to establish as much information as possible. A detailed due diligence questionnaire was tailored to the company and a secure cloud based data room established.

Information was supplied slowly by the company, which is not unusual in family owned businesses. We decided to visit in order to assist progress and met with the managing director/owner and his accounts team. The Finance Director was on leave.

A conversation with accounts staff indicated that cash flow was an issue and we established that there was a whole folder of county court claims and other legal actions. A more detailed review of work in progress, costs to completion contract values indicated that the company was operating at a loss. Legal terms in ongoing contracts meant that novating those contracts was uncertain. The non-recurring nature of work meant that the company was worth little more than break-up value and we reported accordingly with significant saving for our client.

Type of business: Multi surgery veterinary practice – £2m turnover

GSI Services

• Recreation of data from paper records
• data entry and accounts production
• investigating payments to related parties
• forensic analysis with specific regard to director conduct
• Report of conclusions for court

Our client: Insolvency Practitioner

The case

The company was a multi surgery veterinary practice. It went into liquidation with Crown debt of £750,000 as well as other unsecured creditors. GSI was approached by the liquidator to create an accounts data file from prime paper records, contained in 28 archive storage boxes.

Key facts

• Accounts data file had gone missing for last 18 months of trade.
• Large company expenditure for non-business related purchases luxury assets.
• Missing records such as emails and electronic data.

GSI solution

Examination of the contents of 28 archive storage boxes of paper records, extracting all relevant accounting records.

Creation of an accounts data file with analysis of individual transactions and tracing of expenditure involving non company related third parties. Establishing whether those third parties were actually connected to the stakeholders. Covert surveillance of premises purchased with company funds.

We completed the compilation and subsequent forensic review of the financial information and reported to our client accordingly. The insolvency practitioner instructed solicitors to place charges on assets held personally by the company’s stakeholders and the directors agreed an out of court settlement to pay substantial sums back into the liquidation, to the benefit mainly of HMRC

Type of business: Investment in a business in Africa

GSI Services

• Documents investigation
• Tracing main characters involved in business
• Asset tracing

Our client: Private Investor

The case

Our client invested in a business in Africa and acquired a substantial amount of stock for export, which could not be released through Customs. There was some uncertainty relating to title to the assets. The situation had stalled with no way of proceeding with recovery of assets and export abroad but ongoing costs continued to be incurred.

Key facts

• Investor had an employee on site in South Africa who was not making progress.
• Key contacts and facilitators not appearing to act in client’s interests.
• Title to assets uncertain and whereabouts unknown.

GSI solution

GSI deployed two personnel from our intelligence team to South Africa. They met with the key contacts and investigated their activities. They found those activities to be suspicious and replicated across many of their “clients”.

Tracing the assets involved travel to locations considered hostile. An armed, covert operation was expedited, which resulted in evidence of fraud, theft and money laundering being presented to the Serious Organised Crime police
department, with possible prosecutions cross border back to Europe. Potential recovery of stolen assets is possible but probability is low.

Type of business: Waste management

GSI Services

• Business acquisition and due diligence
• Software integration
• Setting up a new accounting system
• Provision of Financial Controller (FC)
• HR and payroll services
• Treasury management

Our client: Skip hire and waste disposal company

The case

Our client was seeking to acquire a well established skip hire and waste disposal company. Logistics relating to skip locations, delivery and collection were managed using a manual, paper based system. Post acquisition, the new owner needed to streamline and automate operations to deal with expansion of the business.

Key facts

• The deal structure was negotiated largely on an earn-out basis, with vendor security, so that the retiring owners could participate more in the future growth of the company as compensation for not receiving full consideration on acquisition.
• There was much scope for expansion of the company’s operations.
• Credit control, cash management and capital expenditure on new plant and trucks required strong treasury management.
• The existing Sage accounting system was not structured to provide meaningful management reports.
• There was no logistics management software.

GSI solution

We carried out due diligence on the company and structured a buyout deal. We have worked many times with an excellent firm of lawyers, BDB Pitmans www.bdbpitmans.com who were engaged to advise on legal matters including the drafting of the Share Purchase Agreement, the Charge agreement and registration of charges.
Following completion, software was acquired to manage logistics called Skiptrak skiphiresoftware and the Sage accounts were replaced with Xero xero.com which integrates with Skiptrak.

Our involvement extends to managing all accounting functions on a day to day basis, preparing regular reports for the Board and advising on expansion plans with close monitoring of finances and Capital Expenditure.

Type of business: International retail

GSI Services

• Structuring accounts
• Provision of Financial Controller (FC)
• Provision of a Finance Director (FD)
• HR and payroll services
• Implementing global credit card merchant services
• Software integration
• Treasury management
• Reporting to investors

Our client: Web based retailer

The case

A company with a web based business retailing online globally, with workshop and shop sales in three countries and a requirement for online payments, along with accounting and stock control across the group

Key facts

• Retail operations with stock held in three countries, two in Asia.
• Integrated accounting, stock control and card merchant services were needed for smooth operation of business activities.
• Integrated accounting, stock control and card merchant services were needed for smooth operation of business activities.
• Day to day financial management was needed with financial and business development progress reporting to investors.
• The website was already hosted on a Magento e-commerce platform magento . This was linked to Brightpearl brightpearl which is an excellent multi-channel stock control, CRM and accounting package. With separate companies in three countries, three accounting data sets were needed so whilst Brightpearl managed multi-location stock, it could only deliver one set of accounts.

GSI solution

Magento is a global and industry leading e-commerce platform and integrates with many existing software solutions. We established a company in each of the three countries, with their own accounting systems and data files using cloud based Xero   , which integrates with Magento.
Xero does not have sufficiently sophisticated multi-location stock control but this was solved with a double integration of Veeqo. Working with the client’s in house team, a successful integration of Veeqo and Xero was achieved with the Magento e-commerce platform, providing multi company accounting, a full retail online platform and multi-location stock control. The system also provided for stock transfers, inter-company cross border trade and foreign exchange management.
The integration of the software meant that any sales made online or in shops, logged as a stock reduction in real time. Reorder points were set so that the system issued orders automatically. Real time recording of card sales fed into the accounting system of the relevant company along with the automatically generated invoice.

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