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Speedy Hire chief executive Steve Corcoran resigns after accounting investigation launched

Speedy Hire shares fell by 17.4 per cent in one day after the firm’s announcement that chief executive Steve Corcoran would resign after a £5m hole was found in its accounts.

The firm’s shares had been 23 per cent down at one point, but recovered before the close of the markets on Friday.

Former Costain natural resources managing director Mark Rogerson, who only joined Speedy Hire last month as its new chief operating officer, was mentioned as being considered to replace Mr Corcoran by a source close to the firm.

Prior to joining Costain last year, Mr Rogerson had been with Serco for eight years where he led its defence and aviation business.

Speedy also appointed Andy Wright as managing director of its Middle East and North Africa operations last month.

A company announcement last week said that following the emergence of information suggesting a “mis-statement of accounting balances” within Speedy Hire’s international division, law firm Addleshaw Goddard has been engaged to conduct an independent legal investigation into accounting irregularities.

Financial processes within the international division had been “repeatedly and deliberately circumvented”, the statement said.

Speedy Hire’s international division operates primarily in the Middle East. The group’s UK business is unaffected by the breaches, and the investigation.

The international division financial director was suspended immediately, while other senior management employees are the subject of further investigation.

Speedy Hire expects the total aggregate impact to cost between £4.5m and £5m.

It said pre-tax profit for the current financial year to 31 March 2014 was likely to fall by around £3m, with the balance resulting in a restatement of the reported financial performance for FY 2012 and FY 2013.

In its interim management statement for the six months to 30 September 2013, announced in October, Speedy Hire said revenue increased by 0.4 per cent to £169.8m (2012: £169.1m), with profit before tax (before amortisation) also increasing to £6.8m (2012: £6.6m).

In the trading update last month, the company also said it had grown revenue with its top 10 UK infrastructure customers by 31 per cent and with its top 10 UK customers by 18 per cent.

Mr Corcoran, who has been chief executive since April 2005, will be stepping down from the board and leaving the company at a future date, pending the appointment of a new group chief executive. 

He will remain with Speedy Hire during the interim period to allow the business to continue operating with customers and suppliers.

Liberum Capital analyst David Brockton said: “Speedy still has ample headroom on its facilities well within its banking covenants, but it has breached terms related to honest financial reporting covenant.

“Waivers are being agreed with Speedy’s lending banks and we would expect little issue from those that lend to its UK business.

“Speedy does have a facility for its international business, with HSBC, but we understand only a small amount has been drawn on the facility.”

Mr Corcoran’s resignation showed “swift acceptance” of responsibility despite actions that appeared to be “outside of his control”, Mr Brockton said.

“The resignation of Mr Corcoran demonstrates swift acceptance of responsibility for the group’s failure, despite what appears to be deliberate action outside of his control.”

He added: “In the short term this will further increase investment uncertainty, but it does set the scene for a fuller rehabilitation of confidence in the business once the issues are seen to be resolved and a new chief executive has been appointed.” 

A Speedy Hire spokesman said no timeframe had been set for the appointment of a new chief executive.

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