Health Clinic posts loss after accounting errors discovered

The finance director of Health Clinic, a fast-growing chain of opticians, has quit after the company's auditors forced changes to its annual results.

Health Clinic finally posted an £800,000 pre-tax loss yesterday, more than a week after being forced to delay the figures, which had been expected to show a £2.5m profit.

Graeme Walker will stand down as finance director at the end of this month, although he will remain with Health Clinic in what the company described as "project roles". It has not yet been decided if he will have his pay cut.

The company's auditors, PricewaterhouseCoopers, took issue with Mr Walker's accounting decisions. These comprised the timing of proceeds from a sale and leaseback deal, the recognition of sales of contact lenses, and the effects of two new accounting rules.

The company – whose non-executives include the Vodafone chairman, Lord MacLaurin, and Alan Smith, chairman of Mothercare – insisted the changes did not affect the underlying business. Turnover was up 58 per cent to £32.1m after five new clinics were opened during the financial year, taking the total to 19.

Mr Walker said: "I have been involved in this company for five years, I love this company and believe in it, so I am not going. But management credibility is so important and we must be seen to be squeaky clean."

The auditors' changes do not affect previous years and, because they defer profits, should benefit the current year's results. Health Clinic shares bounced 11.5p to 80p, but remain well below the 142.5p level where they stood before PwC's concerns arose.

Mr Walker will be succeeded as finance director by Keith Fleming, who was managing director of Woolworths until January.