WHC share sale under investigation
Friday 15 May 1998
Shares in the retirement home group tumbled 66.5p to 339p yesterday after it warned profits would fall well below City expectations. The profit warning wiped pounds 44m off the value of WHC. The announcement comes just weeks after Mr Easterman raised pounds 79,200 by selling 20,000 shares at 396p each. He made an extra pounds 11,400 from the sale compared with the price he would have got if the sold the shares after the profit warning. According to sources close to the company, he sold shares without obtaining authorisation from senior directors.
Mr Easterman has resigned from the group with immediate effect. He is to receive a pay off of pounds 100,000, equivalent to a year's salary.
WHC has unveiled a catalogue of problems which will dent current year profits. Mr Easterman is understood to be at fault for delaying informing the board of the full extent of the problems.
"He could have told the board sooner," said one industry source.
He is being replaced by Stephen Purse, a senior audit partner at KPMG, the chartered accountants.
WHC said profits for the six months to May would fall below the pounds 8.4m the group made in the first half of its financial year. Its main problem has been the performance of two secure homes designed to house mentally ill patients. The number of patients at these units in Newbury and Milton Keynes has fallen well below expectations.
The group has also had teething problems at Libra, the psychiatric business it purchased last autumn. City observers believe that Mr Easterman would have been in a position to be aware of these impending problems. Pat Carter, chief executive of WHC, confirmed that the decision to part with Mr Easterman was taken in the last few weeks.
Mr Carter said: "Some months ago we decided we needed to upgrade the job (of finance director). The recent events confirmed we were right to do so."
The company is believed to have informed the Stock Exchange of Mr Easterman's share dealings. Another industry source said: "Mr Easterman has been made to look like a blithering idiot. The company is hopping mad that it failed to recognise a problem which happened it their own backyard."
Investment column, page 27
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