Accounting scandal wipes £11m off McAlpine's books
Support services giant announces that serious accounting issues in its Slate division have led to an asset write-down of £11m, and an expected £13m nosedive in pre-tax profits
Alfred
McAlpine has been rocked by a damaging accounting scandal at one of its
divisions.The FTSE 100
company disclosed today that it had ‘uncovered material accounting
irregularities in its Slate subsidiary’.
Slate, the world’s largest producer of natural slate, has supplied
products to Buckingham Palace and the Welsh Assembly.
In a statement, McAlpine said: ‘Whilst investigations are currently at a
preliminary stage, the board currently believes that the financial implications
of these accounting issues will involve a restatement of the 2005 net assets of
the business by approximately £11m and a reduction in the expected pre-tax
profit of the Slate business in the year to 31 December 2006 by approximately
£13m, prior to any restructuring and impairment provisions that may be required
in these accounts. The cash position of the group as at 31 December 2006 is
unchanged.’
In the wake of the damaging issues, McAlpine chiefs have taken drastic
steps to redress the balance – and two senior managers at the Slate arm have
been suspended pending further investigation. The company reported that it was
in the process of appointing independent accountants to conduct a detailed
forensic analysis of the Slate business since 2003. McAlpine has also installed
an interim management team, who will report directly to the company’s chief
exec Ian Grice.
The company added: ‘An investigation by Alfred McAlpine’s internal audit team
found ‘a systematic misrepresentation of production volumes and sales for a
number of years by a number of senior managers at the Slate subsidiary. In
addition, those involved sought to conceal the financial implications of their
actions through the pre-selling of slate at substantially discounted prices. The
board believes that the behaviour and collusion of the managers responsible has
been entirely deliberate and involves the possibility of fraud.’
McAlpine is now bracing itself for the Slate business to ‘make an increased
pre-tax loss in the year ending 31 December 2007.’
The scandal has also forced the troubled corporate to shelve the publication
of its latest set of results. In its statement McAlpine said: ‘As a consequence
of the investigation by independent forensic accountants, the Board has
determined to delay the publication of its preliminary results. It will announce
the expected date of their publication as soon as practicable, but expects this
to be no later than 30 April 2007.’
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