Best Group shares tumble following accounting scandal
Real estate firm Best Group is facing market pressure after revealing that the amount of funds unlawfully taken from its subsidiary is more than double the initial estimate. Following the announcement and concerns over the company's accounting practices, shares have fallen by 6%.
The real estate company Best Group is in trouble. After announcing to the stock exchange last week that funds were taken unlawfully from its subsidiary, the company reported today (Thursday) that the actual amount involved is more than double what was initially disclosed. Following this announcement, the company's stock is falling by 6%.
The company, which went public last June with a valuation of 3 billion shekels, sent an unusual notice to the stock exchange last week. It stated that between September 2025 and June 2026, between 700,000 and 1 million shekels (including VAT) were mistakenly paid from the subsidiary's funds for private works on properties owned by the controlling shareholders and their relatives, without them being charged. At that time, the controlling shareholders transferred 1.1 million shekels to the company's coffers.
However, today's announcement reveals that the total amount taken is 2.2 million shekels, which has since been returned to the company with interest. Consequently, Best Group announced that it will republish its financial reports for 2025 and the first quarter of 2026 to reflect these corrections.
Net profit increase amid investor concern
An interesting detail from the company's report is that, due to this accounting error, its net profit is actually expected to increase. This is because these expenses were originally recorded as project costs, whereas they should have been registered as a debt owed by the controlling shareholders to the company, which inflates the net profit figure. Despite this, the company's stock is falling by over 6% on the stock exchange, driven by broader concerns regarding the company's accounting conduct.
