RSS feedsAlfred 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.'
