Phoenix IT shares hit by irregularities

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Shares in Phoenix IT crashed by a third yesterday as the managed hosting, cloud and disaster recovery company said someone had been fiddling the books at one of its main businesses.

Phoenix said "certain central processes within the finance function" at its Leeds office "have been repeatedly and deliberately circumvented".

It declined to comment on whether the police had been called in or whether any money had been stolen.

Phoenix said a finance manager had been suspended over the alleged "mis-statement of a number of accounting balances". Accountants PwC and City legal firm Nabarro have been called in to conduct forensic investigations.

Phoenix reckoned that the alleged fudging of the books amounted to some £14m stretching back over the past 18 months. Much of this will be taken as an adjustment to last year's profits, but it cut expectations for this year's earnings by between 14 per cent and 34 per cent.

Phoenix said the accounting irregularities came to light as part of new chief executive David Courtley's reorganisation of the business, switching some subsidiaries across to a single company-wide accounting system, which revealed the apparent black holes.

The shares crashed 75.5p to 135p.