Wainhomes review reassures the City

Wainhomes attempted yesterday to draw a line under recent financial irregularities at its northern subsidiary with the announcement of the results of a review of the housebuilder's management structure and systems. The market seemed convinced by the findings and the shares closed 1p higher at 85p.

Bill Ainscough, who took over as temporary chief executive following the dismissal of his predecessor Ron Smith, said he was satisfied that the problems were confined to Wainhomes' northern division. But he warned that the hit to profits caused by falsified invoices and valuation irregularities would be more than twice the original estimate of pounds 2m.

Ron Smith, who paid for the incident with his job, is suing the company for wrongful dismissal. He has issued a writ claiming pounds 450,000 to compensate him for damage to his personal dignity and reputation.

In order to implement changes recommended by the review, John Cassidy, formerly finance director of Barratt Developments, has been appointed group operations director. Previously a non-executive director of Wainhomes, he is replaced in that role by Stewart Douglas-Mann, chairman of corporate finance at Guinness Mahon and and former managing director of the Stock Exchange.

The review was conducted by Mr Ainscough, Mr Cassidy, Davis, Langon & Everest, a firm of chartered quantity surveyors, and KPMG, the auditors.