Accounting Error in Chile Subsidiary Forces Austin Engineering to Restate FY24 Financials
Austin Engineering has restated its FY24 financials due to revenue recognition errors in its Chilean subsidiary, leading to an upward revision of its FY25 revenue and profit guidance.
- Accounting error in Chile subsidiary overstated FY24 revenue by $4.9 million
- FY24 EBIT reduced by $3.3 million after restatement
- FY25 revenue guidance increased from $370 million to $377 million
- FY25 EBIT guidance raised from approximately $41 million to $46 million
- Company commits to strengthening internal controls and compliance
Accounting Error Uncovered in Chile Operations
Austin Engineering Ltd (ASX, ANG) has announced a significant restatement of its FY24 financial statements following the discovery of accounting errors within its Chilean subsidiary, Austin Ingenieros Chile Ltda. The errors relate to the premature recognition of revenue from certain tray production transactions, which inflated the reported revenue and profit figures for the 2024 financial year.
The company identified that some trays were recorded as revenue in FY24 when they should have been recognised in FY25. This misallocation led to an overstatement of FY24 revenue by $4.9 million and EBIT by $3.3 million. The restatement will correct these figures and adjust the receivables balances accordingly.
Impact on FY25 Guidance and Financial Position
While the restatement reduces FY24 results, Austin Engineering has simultaneously revised its FY25 guidance upward. The company now projects FY25 revenue to increase by approximately $8.3 million to $377 million, with underlying EBIT rising by about $5.2 million to $46 million. These adjustments reflect the deferred recognition of the transactions initially misreported in FY24.
Importantly, Austin’s management emphasises that the accounting error does not materially affect the company’s overall financial position, as it primarily involves shifting revenue recognition between financial years rather than altering cash flows or asset values.
Strengthening Controls to Prevent Recurrence
CEO Sy Van Dyk acknowledged the issue as isolated to the Chilean operations but underscored the company’s commitment to improving internal controls. Austin Engineering is conducting a thorough review of its contract administration, tray management, and revenue recognition processes in Chile to enhance compliance and data integrity.
This proactive approach aims to mitigate the risk of similar errors in the future and maintain investor confidence in the company’s financial reporting.
Looking Ahead
The restated FY24 financial statements and updated FY25 results are expected to be lodged by the end of August 2025. Investors and analysts will be watching closely to assess the full impact of these adjustments and the effectiveness of Austin’s internal control enhancements.
Bottom Line?
Austin Engineering’s restatement corrects past overstatements while setting a stronger foundation for FY25 growth and governance.
Questions in the middle?
- How will Austin Engineering’s internal control improvements affect future financial reporting?
- Could similar revenue recognition issues exist in other subsidiaries or regions?
- What impact might foreign exchange fluctuations have on the final restated figures?
