Accounting irregularities at Alfred McAlpine slate division

ALFRED McAlpine plc, the support services group, have uncovered material accounting irregularities at their North Wales slate subsidiary. Investigations by the company’s internal audit team have revealed a systematic misrepresentation of production volumes and sales for a number of years by a number of senior managers.

In addition, the investigations found that those involved sought to conceal the financial implications of their actions through the pre-selling of slate at substantially discounted prices. Alfred McAlpine say they believe the behaviour and collusion of the managers responsible was entirely deliberate and involves the possibility of fraud.

Although the investigations are still at a preliminary stage, it is understood that the financial implications of the accounting irregularities will involve a restatement of the 2005 net assets of the business by approximately £11 million and a £13 million reduction in the expected pre-tax profit of the slate business for the year ended 31 December 2006.

The historic actions of those involved are also expected to have a material impact on the profitability and cash generation of the slate business during the next 12 months, which is likely to result in an increased pre-tax loss for the year ending 31 December 2007.

As a result of the internal audit team’s findings, the board of Alfred McAlpine has appointed independent accountants to conduct a detailed forensic analysis of the slate business since 2003, and suspended two senior managers of the slate business – managing director Chris Law and operations director Geraint Roberts – pending further investigations.

As a consequence of the independent investigation by forensic accountants, publication of Alfred McAlpine’s preliminary results for 2006 will be delayed until 30 April 2007 at the latest.