Folli says needs time to finish audit, will fix ‘operational failures’

Luxury jewellery maker Folli Follie, whose finances are being probed by the Greek authorities, said it needed time to conclude an audit and would fix any “operational failures”.

The Greek firm’s shares plunged on the Athens stock exchange in May after a long-short equity fund Quintessential Capital Management (QCM) issued a report in May saying the company had overstated the number of retail outlets it operated worldwide.

Folli denied the report, saying it was unfounded and misleading.

Greece’s securities regulator suspended the shares from trading on May 25 after Folli failed to provide requested financial data.

Last week a prosecutor ordered a preliminary investigation into the company after the securities regulator filed a lawsuit against Folli’s management.

Local media reported last week that Folli was dragging its feet on signing a contract with the audit firm that would scrutinise its finances at the regulator’s request.

Folli said in a bourse filing over the weekend that the news was “inaccurate” and that it needed time to prepare “such a demanding and complex task.”

“We will do everything in our power to provide all required information and we are ready to remedy any operational failures, if any,” Folli said in the filing.

A new internal audit committee, a prerequisite for signing the contract with Ernst & Young for the audit, was set up last week, it added.

Folli is 35 percent owned by the Koutsolioutsos family and had sales of 1.4 billion euros last year, with Asian operations accounting for more than two thirds of turnover.

Its Chief Executive George Koutsolioutsos said the company has been under an “unprecedented attack” and would fix any mistakes that a new strict audit might reveal.

New York-based QCM, which previously said it held a short position on Folli shares, had also said in its report that it was concerned about Folli’s finances. [Reuters]