Speedy Hire CEO quits after irregularities found - UPDATE

29th Nov 2013 11:26

- 3m pound effect on FY profits - 2012 and 2013 results to be restated- Debt terms breachedThe Chief Executive of equipment rental group Speedy Hire has offered his resignation after accounting irregularities emerged in its international division that will reduce group full year profits. The FTSE Small Cap outfit said it had launched an investigation into the management of the division, which only accounts for roughly 5% of group revenues, after discovering accounting mis-statements that when resolved will reduce group pre-tax profits by around £3m in the current year to March 2014.Speedy Hire said after management changes at the Middle East-focused division it had emerged that certain accounting control processes had been "repeatedly and deliberately circumvented" resulting in the "mis-statement of a number of accounting balances", which will also result in a restatement of the reported financial numbers for the 2012 and 2013 annual results by between £1.5m and £2m. The group said in a statement that while it remained in compliance with banking covenants, the circumstances had resulted in a breach of "certain other terms" and hence was engaged in a constructive dialogue with its lenders.The group, which has suspended the finance director of the division and engaged lawyers to conduct an independent legal investigation, stressed that it believed the issues affected a "limited number of smaller contracts" and do not relate to its larger ZADCO and Al Futtaim Carillion contracts nor its Kazakhstan joint venture. Group Chief Executive Steve Corcoran has volunteered to step down from the board, but will remain at his post pending the appointment of a replacement.Brokers universally put the shares on review, with analyst Andrew Gibb at Investec saying: "This is clearly a very disappointing development and whilst it looks to be confined to a division which currently accounts for 5% of group revenues, there are clearly many questions which will need to be answered."OH