Embattled Baltimore admits revenues overstated

Baltimore Technologies, the software company, yesterday added to its apparently endless flow of bad news with the revelation that revenues had been overstated in the past.

The internet security software group, which faces a cash crunch, said it had discovered contracts that had been incorrectly booked as sales, principally during the last quarter of 2000 and the first three months of this year.

The company restated its revenues for last year at £70.1m, down 5.5 per cent from the £74.2m originally reported. Baltimore said sales for the first quarter of the new year were also cut by 3.4 per cent, from £23.7m to £22.9m.

Paul Sanders, who joined the company as chief financial officer in November and is now acting chief executive, said: "These sales should not have been recorded when they were, as we had not received the money. We're now assuming these revenues will never come through."

The irregularities, first uncovered three weeks ago, were carried out by a small number of employees in the India, Middle East and Africa region, Baltimore said.

Products were "sold" but the customers would only have to pay when they had been paid by their end-clients. This condition, contained in secret documentation separate from the standard Baltimore contract, was never authorised by head office.

The employees involved left the company before the practice was discovered and, at the time they departed, had so far only received a small part of the commission they were due for the transactions.

Mr Sanders was formerly at the healthcare group SSL, which has recently discovered massive overstatement of revenues. The SSL irregularities were found to have taken place during the period Mr Sanders was its finance director.

He said: "I was the finance director at the time but I'm not in any position to comment about SSL."

Baltimore said that its revenues for the second quarter were £16.5m, an increase of £1m from its previous guidance for the period, but flat on the first quarter of last year.

David Johnson, an analyst at Beeson Gregory, said: "If it can go wrong at Baltimore, it has been going wrong. And it's done itself no favours in the way it has presented itself to the City."