Sources: Danwood founder to exit as accounts restated

CRN understands Colin Daniels facing exit from boardroom set-up as reseller restates six years of numbers in light of revenue recognition malpractice

Danwood founder and managing director Colin Daniels is understood to be facing an exit from the senior management line-up amid revelations that six years' of accounts have been restated following "accounting weaknesses".

Danwood announced in November that Stephen Francis had been appointed chief executive.

Although sources indicated that managing director Daniels, who co-founded the firm as the Lincoln Office Equipment Company in 1972, was subsequently offered a lesser post, CRN understands he is no longer involved in a senior executive role.

Sources have suggested that the futures of fellow senior managers Richard Coles and Peter Hopton are also in some doubt.

A recent press release trailing the publication of the full-year 2011 numbers talked of "the birth of new Danwood" under a "new management team, in place since October 2012", although details of the team's make-up were conspicuous by their absence. Companies House reveals that, alongside Francis, the appointments of directors Gerry Small and Giles Marshall were filed just before Christmas.

Small's LinkedIn page cites his post as interim financial director, while Marshall arrives at Danwood's top table in conjunction with his role at the VAR's backers, Bregal Capital. Sources report that the private equity firm has been instrumental in the overhaul of the exec team.

The recently filed accounts for the year to 30 September 2011 shed light on changes being made to revenue recognition for MPS (managed print services), as well as "the accounting treatment for various other items, including supplier rebates, leasehold property dilapidations and holiday pay".

The document outlines that, for all years from FY05 through to FY10, hardware sales from MPS contracts were recognised upfront in their entirety, rather than as and when the kit was supplied to end users. The restatement of numbers for the 2010 fiscal year alone sees £16.26m wiped off the top line, with operating profit down more than £8.5m.

For the year ending in September 2011, group sales are reported as £215.6m, with operating losses of £2.7m.