Phoenix is investigating accounting irregularities in its former Servo business after an internal review concluded that "certain control processes... have been repeatedly and deliberately circumvented".
The company is anticipating a £14m reduction in net assets this year as jittery investors have already wiped more a than third off the firm's market capitalisation.
In a stock market statement issued today, the IT services player indicates that "a number of accounting balances within Servo Limited and its subsidiaries over a number of accounting periods" have been discovered. These mis-statements relate to deliberate bypass of control procedures by finance staff in the company's Birstall and Leeds offices, Phoenix believes.
Law firm Nabarro and auditor PwC have been appointed to undertake "independent forensic investigations" into the matter, which Phoenix claims is limited solely to the former Servo business. The services outfit has also begun "an operational and business review of the areas impacted".
The firm expects that "the impact of correcting these cumulative mis-statements will result in a reduction to net assets of approximately £14m" when its financial year closes on 31 March 2013. Full-year EBITDA is expected to fall between £38m and £44m.
The company's share price has plummeted by more than a third this morning following the announcement. Phoenix, which posted group sales of £264.6m in FY12, is the UK's twelfth largest provider of infrastructure services, according to recent research from TechMarketView.
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