Cettire Ltd (ASX: CTT) shares are catching the eye with a very strong gain on Tuesday.
At the time of writing, the ASX All Ordinaries stock is up 48% to $1.98.
Though, the online luxury products retailer's shares remain down by 60% from their 52-week high despite today's strong gain.
Why is this ASX All Ordinaries stock surging?
Investors have been scrambling to buy the company's shares this morning after it released its annual report.
This report included Cettire's highly anticipated Independent Auditor's Report from Grant Thornton.
Last month, when the company released its FY 2024 results, its figures were unaudited due to Grant Thornton undertaking additional audit procedures on an expanded scope.
Management advised that the remaining substantive audit matter was a technical review of revenue recognition. Since its IPO, Cettire has adopted a revenue recognition policy whereby it recognises revenue as a principal not an agent, and revenue as the gross selling price net of rebates, discounts, and refunds.
The ASX All Ordinaries stock believed that its current treatment was appropriate. As a result, the FY 2024 preliminary financial report was prepared on the basis that Cettire is the principal.
What's the latest?
This morning, Cettire's annual report reveals that its auditor supports Cettire's view that it is the principal.
It has looked into revenue recognition, customs duty and import taxes, and intangible assets, and given the company the thumbs up. Grant Thornton said:
We have audited the financial report of Cettire Limited (the Company) and its subsidiaries (the Group), which comprises the consolidated statement of financial position as at 30 June 2024, the consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including material accounting policy information, the consolidated entity disclosure statement and the Directors' declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including: a giving a true and fair view of the Group's financial position as at 30 June 2024 and of its performance for the year ended on that date; and b complying with Australian Accounting Standards and the Corporations Regulations 2001.
This appears to have caused a relief rally, which could have also driven a short squeeze. On Monday, the ASX All Ordinaries stock had 10.4% of its shares held short.
