28.11.2013

Financial issues cause CEO resignation at Speedy

The chief executive of UK rental company Speedy, Steve Corcoran, has resigned following the discovery of financial irregularities within its International division.

The move follows the recent take over of the division by ex-Lavendon director Andy Wright. As a result of miss-statement of its financial results the company will re-state its 2012/13 financials and is likely to take a £3 million hit on pre-tax profits in the current year which ends in March. Additionally, while the restatements will not break the company's loan covenants, it does trigger some clauses in its agreements with lenders, as a result Speedy has opened discussions with its funders.

Forensic accountants and a legal team have been appointed and the International Division's finance director suspended. The statement says that Corcoran also believes it is appropriate that he resigns and that he will depart following the appointment of a replacement.
Please register to see all images

Steve Corcoran

The full statement is as follows:

Following management changes within Speedy Hire's International Division, which operates principally in the Middle East, information has very recently emerged indicating the miss-statement of a number of accounting balances within the International Division over recent accounting periods.

The information currently available suggests that certain control processes within the International Division have been repeatedly and deliberately circumvented. The issues are believed to affect a limited number of smaller contracts. These issues do not relate to the ZADCO and Al Futtaim Carillion contracts nor the Kazakhstan joint venture. The International Division accounts for approximately 5% of total Group revenue.

The following immediate actions have been taken:

- Addleshaw Goddard LLP have been engaged to conduct an independent legal investigation and forensic accountants are in the process of being appointed.

- The Finance Director of the International Division has been suspended and other senior divisional management are the subject of further investigation.
At this point no final conclusions can be drawn as to the time frame nor the results of the above investigations. Whilst it is not possible to be definitive until the full results of the investigations are known, the Board believes, based on the current information available that:

- The accounting mis-statements are isolated to the International Division and are not expected to have a material impact on cash.

- The total aggregate impact of these issues is estimated to be in the order of £4.5 million - £5 million. Of this amount it is estimated that PBT for the current financial year to 31 March 2014 is likely to reduce by around £3 million with the balance resulting in a restatement of the reported financial performance for FY 2012 and FY 2013.

- The Group's UK businesses, which represented 95% of Group revenue and 96% of Group EBITA in the year ended 31 March 2013 are unaffected by these issues.

The Group remains in compliance with the financial covenants under the Group's banking facilities but these circumstances have resulted in a breach of certain other terms. The Group is engaged in a constructive dialogue with its lenders.

Given these events, Steve Corcoran believes it is appropriate that he resigns as Group Chief Executive, will be stepping down from the board of Speedy Hire and will be leaving the company at a date to be finalised. He will remain with the business for a period to allow for continuity with customers, suppliers and employees and pending the appointment of a new group chief executive.