Possible obligations to pay default interest on sales tax
Yesterday, asknet solutions (formerly Nexway) announced that a ruling by the Federal Fiscal Court (“Bundesfinanzhof” short BFH) against asknet solutions could lead to payment obligations to the tax authorities of up to EUR 0.764 mn. The BFH ruling was preceded by an appeal by the company against a VAT return for the year 2005, which was deemed to have been corrected and which the company had submitted in 2011. This ruling has now been reversed by the Federal Fiscal Court. In the event of an obligation to pay interest on arrears in the aforementioned amount, the Company will examine claims for damages against former members of the Executive Board and tax consultants.
It is currently unclear when and to what extent asknet solutions will be obligated to pay default interest on sales tax claims that have already been settled. It is also unclear whether possible claims for damages against former members of the Executive Board or the former tax consultants will be successful. In the worst-case scenario, the additional payments would reduce the value from our three-phase discounted cash flow entity model by EUR 0.60 per share. In order to take the possible additional payments into account, we are therefore adjusting our price target to EUR 17.30 from EUR 17.90 (base-case scenario). In a Monte Carlo scenario analysis, in which we used alternative sales and earnings scenarios, the best-case and worst-case equity values are now EUR 19.70 and EUR 13.90 per share, respectively. Similar price targets can be derived from an economic value-added model, which is our secondary valuation method. Based on yesterday's closing price of EUR 8.60, our new price target results in a price potential of 101.2% over a 24-month period. We confirm our buy rating for the shares of asknet solutions AG.
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