Regent beefs up head office controls

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The Independent Online
REGENT INNS, the pub operator which issued a calamitous profits warning in June, said yesterday that it has doubled head office expenditure and beefed up its accounting controls to ensure that previous errors with sales figures are not repeated. The company disclosed in June that "inconsistencies and inaccuracies" in the way sales figures had been calculated would cause a pounds 1.7m profits shortfall.

Yesterday the company said it had increased the expenditure on its head office functions from 4 per cent of group sales to 8 per cent. Its accounts department now boasts 27 staff, including a new finance director, a new financial controller and four management accountants instead of the previous two.

The company admitted that its central controls had not kept up with the rapid expansion of company. It is considering merging all its offices under one roof to avoid the potential effects of communications problems.

David Franks, Regent's managing director, said: "We have acknowledged the questions over our finances and we have taken all the necessary steps to ensure credibility is restored."

Mr Franks said the board had become aware in mid-April that there might be a problem with the way like-for-like sales were being calculated. However, at that time it was felt that the problem was not serious enough to warrant an announcement to the Stock Exchange. It was only following work by the new finance director and the auditors that it became clear that there would be a material impact on profits.

Regent shares fell by 44 per cent in June when the company said the problems with its sales figures, together with delayed openings, would cause the group to miss profit forecasts. Yesterday Regent reported pre- tax profits up 6 per cent to pounds 13.3m in line with forecasts reduced from earlier expectations of pounds 16m.

Like-for-like sales rose by 1.5 per cent over the year. The shares closed 5p higher at 161p.