Dubai: NMC Health said on Monday a review of its books, prompted by a recent short-seller attack, will initially focus on its cash balances as of December 15.
NMC has been embroiled in a bitter battle with US short seller Muddy Waters, after the latter produced a report on Dec. 11 questioning the company’s accounting practices. The research firm highlighted “red flags” in the company’s reported cash balances, suggesting margins were “too good to be true.”
Abu Dhabi-based NMC, which has been has been undergoing a review of its accounts since then, saw its London-listed shares more than halve in mid-December after the activist hedge fund led by Carson Block announced that it had a bet against the stock.
NMC formed a board comprising of independent non-executive directors that will oversee the third-party review. The board will be chaired by Jonathan Bomford, an Ernst & Young veteran who has been advising the firm on matters of corporate governance and has held positions in NMC’s audit and remuneration committees, the company said on Monday.
The board also comprises of Tarek Alnabulsi, an adviser to family businesses on governance, Lord Clanwilliam, who has earlier handled government and financial communications, and Salma Hareb, a private investor who has experience developing economic zones.
“The appointment of independent advisers to undertake the review is currently being progressed and is expected to be confirmed shortly,” NMC said in a statement.
“The review will focus initially on confirmation of the group’s cash balances as at December 15 and this will be published as soon as possible,” the company said, while adding it hopes to finish the review and publish the findings “well in advance” of the company finalizing and announcing its fiscal 2019 results.
NMC’s shares gained some reprieve after the company announced an independent review of its books, but still ended 2019 down by around 34 per cent.
Though NMC did confirm some aspects of Muddy Waters’ characterization of its debt, notably that it uses reverse factoring which is reported in trade payables, and uses extensive overdrafts, the firm dismissed the report as a whole as “false and misleading.”