An investigation into accounting irregularities at Speedy Hire’s International Division has confirmed that they were the result of deliberate actions by employees.

The company announced in November that, following management changes within its International Division, information had emerged indicating the mis-statement of a number of accounting balances within the International Division.  Preliminary indications were that the total aggregate impact of these issues was estimated to be in the order of £4.5 million - £5.0 million.

In a statement issued at the time, Speedy said:

“Following management changes within Speedy Hire's international division, which operates principally in the Middle East, information has very recently emerged indicating the mis-statement of a number of accounting balances within the international division over recent accounting periods.  The information currently available suggests that certain control processes within the International Division have been repeatedly and deliberately circumvented.  The issues are believed to affect a limited number of smaller contracts. These issues do not relate to the ZADCO and Al Futtaim Carillion contracts nor the Kazakhstan joint venture. The international division accounts for approximately 5% of total group revenue.”

The news prompted the resignation of then Chief Executive Steve Corcoran who had been with the company for over 25 years.

The Board appointed Addleshaw Goddard LLP and Deloitte LLP to conduct an independent legal and forensic investigation into the accounting irregularities and internally Speedy has carried out a comprehensive review of carrying values in the International balance sheet.

In a statement issued this morning by the London Stock Exchange,  Speedy Hire said:

“The accounting irregularities were the result of the deliberate actions of a small number of employees - these employees have now left the business. The total financial impact has been confirmed at £4.8 million plus fees.”

The Profit & Loss adjustment in Speedy Hire’s accounts for the current financial year to 31 March 2014 will be £2.7 million, with the balance arising in prior periods.

Speedy Hire said it has now appointed an experienced new management team and that the company has strengthened internal cost controls, together with implementing a new reporting structure which will provide much greater transparency on activities within the International Division.

Ishbel Macpherson, Chairman, commented:

"Over the last four years, Speedy has established a platform in the Middle East, built local relationships and won major contracts.  The discovery of the activities of a small number of individuals that resulted in these accounting irregularities has been more than disappointing.

The Board has acted quickly and decisively to confirm the impact, embedded a new management team and improved financial controls.

Whilst there will be an impact on both the current and previous financial years, the Group remains committed to our customers in the region and positive about the opportunities.  We look forward to updating the market on 26 March 2014."