Speedy investigates accounting irregularities in Middle East
By Murray Pollok29 November 2013
Steve Corcoran has resigned as group chief executive of Speedy Hire following the revelation that there have been accounting regularities at its International division in the Middle East.
Speedy has suspended the finance director of the division and other senior divisional managers are currently the subject of further investigation. Mr Corcoran himself is not implicated and will remain at the business pending the appointment of a new chief executive.
Accounting mis-statements totalling around £4.5-5.0 million have been found at the division, with Speedy saying that “certain control processes within the International Division have been repeatedly and deliberately circumvented”.
The accounting issues relate to a limited number of small contracts and not to the major contracts with Zadco and Al Futtaim Carillion, nor to the recently announced joint venture in Kazakhstan.
Addleshaw Goddard LLP have been engaged to conduct an independent legal investigation and forensic accountants are now being appointed.
“At this point no final conclusions can be drawn as to the timeframe nor the results of the above investigations”, said Speedy in a stock exchange release.
The International division is growing very fast but still accounts for just 5% of Speedy’s group revenues. The accounting issue is likely to reduce pre-tax profits for the year to 31 March 2014 by around £3.0 million, with the rest of the sums in financial years 2012 and 2013, accounts for which will be restated.
Speedy said it remained in compliance with the financial covenants under its banking facilities but the accounting irregularities have resulted in a breach of other terms and that the company was engaged in a “constructive dialogue” with its lenders.
The announcement of the accounting problems follows changes in senior management at the company. Former board member and director of the International division, Mike McGrath, left the company earlier this month. The new managing director of the Middle East and Africa operations is former Lavendon manager Andy Wright, who joined Speedy just two weeks ago.
The departure of Steve Corcoran will be a major blow for the business. He joined the company in 1987 when it had just 13 outlets and rose to become chief operating officer in 2001 and then chief executive in April 2005.
Although recent years have seen the company impacted by subdued construction activity in the UK, Mr Corcoran was leading a major restructuring of the company, with a much smaller network of stores being created and a focus on customers in regulated industries.