Institutions may sue Wickes
Tuesday 02 July 1996
Large shareholders will decide their next step once Wickes has established the full extent of a profits overstatement scam that may have cost pounds 20m last year alone. A report into the accounting irregularities begun last week may not be concluded for another fortnight, sources close to Wickes suggested.
Several leading DIY retailers, including Kingfisher, owner of the B&Q chain, have already indicated their potential interest in Wickes' 108 UK stores.
"Obviously the credibility of a company is dented when this kind of thing happens and it also dents the price, but there is an underlying business there that should be interesting to somebody," said an institutional investor.
If a bid fails to emerge, investors could try to force through more boardroom level changes to instil confidence in the company.
Henry Sweetbaum, former pounds 1m-a-year chairman and chief executive, became a senior management casualty when he resigned last Wednesday, the day after the scale of the problem became apparent. Finance director Stuart Stradling is also set to go once the current investigation being carried out by auditors Price Waterhouse and law firm Linklaters & Paines is over. Wickes has also suspended two managers pending the result of the internal inquiry.
The initial investigation estimates that profits may have been overstated by as much as pounds 40m-pounds 50m over the last few years.
The overstatement of profits mainly relates to payments made by suppliers to secure contracts with Wickes. The company apparently encouraged suppliers to pay in advance a percentage of the additional profit that would be generated by new store openings. This had the effect of inflating profits in the first year and boosting bonuses for management.
Shares in Wickes remain suspended at 40p, having almost halved last week on news of the accounting problems.
- 1 Exclusive: Abusers using spyware apps to monitor partners reaches 'epidemic proportions'
- 2 Margaret Thatcher 'expressed fears of Asian rising' at Anglo-Irish summit in 1984
- 3 The 'Black Museum': After 150 years, public set to see exhibits from police’s grisly crime museum
- 4 Sussex couple die in suspected Christmas Day 'suicide pact'
- 5 The Unluckiest People of the Year 2014 (and one very unlucky giraffe)
Exclusive: Abusers using spyware apps to monitor partners reaches 'epidemic proportions'
Margaret Thatcher 'expressed fears of Asian rising' at Anglo-Irish summit in 1984
UK weather: Warning for more snow and ice as freezing temperatures and gales hit Britain
UK weather: Travel chaos continues as King's Cross train delays add to snow on roads
The Unluckiest People of the Year 2014 (and one very unlucky giraffe)
British actor Idris Elba cannot star as James Bond because he is black, says shock jock Rush Limbaugh
Rozanne Duncan: Ukip expels councillor for 'jaw-dropping' comments made in BBC TV interview
Germany anti-Islam protests: 17,000 march on Dresden against 'Islamification of the West'
Ukip member gets into Christmas spirit with Union Flag plea to Santa 'for our country back'
Immigrants make UK racist, says Ukip councillor Trevor Shonk
BBC director Danny Cohen: Rising UK antisemitism makes me feel more uncomfortable than ever
iJobs Money & Business
Not specified: Selby Jennings: VP/SVP Credit Quant Top tier investment bank i...
Not specified: Selby Jennings: Quantitative Research | Global Equity | New Yor...
Not specified: Selby Jennings: SVP Model Validation This top tiered investment...
Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...