12 February 2002 Accounting discrepencies have been uncovered at troubled disaster recovery services supplier Guardian IT. The revelation has prompted chairman Richard Raworth to hand in his resignation in response.
The company says that the discrepancies amount to between £2 million (€3.2m) and £2.5 million (€4.1m) for the year to the end of December 2000 and earlier. This will be charged as an exceptional cost against the company’s net profits in 2001.
Guardian IT has also made corrections of between £1 million (€1.6m) and £1.5 million (€2.4m) to its operating profit for 2001. The company says this is related to abandoned projects, a previously announced write-off for its disaster recovery centre at Heathrow in London and other re-organisation costs.
Illustrating the scale of the problem, Guardian IT says it faces a several other goodwill impairment and restructuring charges, adding that it is currently talking to banks about temporarily relaxing certain covenants.
Following the announcement the company’s share price plummeted by a third to just 50p (€0.80) in early trading. KPMG has been appointed as independent forensic accountants to conduct a review, while the announcement of Guardian IT’s full year results have been pushed back to April after the investigation will have been completed.
PricewaterhouseCoopers (PwC) is the company’s current auditor.
Guardian IT says it expects to write down a further £8 million (€13m) for its Heathrow centre and will also face other charges relating to the closure of its New York facility.
Full year operating profits are now expected to be between £11.5 million (€18.7m) and £12.5 million (€20.3m), compared to the £13 million (€21.2m) to £14 million (€22.7m) range previously forecast.
“Neither I nor your Board was aware of the issues that would have given rise to this announcement,” said chairman Raworth in his resignation statement. However, Guardian IT’s board has asked Raworth to retain his position until the investigation is completed.
Catastrophe at Guardian IT