Audit – Legal threat hits Binders

Binder Hamlyn could face legal action as a result of its audits of SEP Industrial Holdings plc, which this week finally unveiled its 1998 accounts, delayed because of accounting irregularities involving millions of pounds.

The Surrey-based manufacturer said the irregularities had led to significant misstatement of the management accounts for the year to September 30, 1998, and also of the financial statements for earlier years which had been given a clean audit report by Binder Hamlyn, which linked with Arthur Andersen in 1994.

Prior-year figures have been restated, reducing net assets bought forward at 1 October 1997 by £5.7m. An exceptional item of £3.5m resulting from the problems has also been charged against current-year figures, which show a pre-tax loss of £11m. Binder Hamlyn has now resigned and is expected to be replaced by Deloitte & Touche.

The irregularities came to light following the collapse of Quintech, a software subsidiary that went into receivership last November. SEP had been planning to float it off to take advantage of last year’s boom in hi-tech stocks. Group financial director Paul Curson resigned in January this year following the revelations.

The delay led to the Stock Exchange suspending trading in SEP’s shares in April.

Grant Thornton has been investigating the irregularities and is now understood to be looking at remedies available to the company, which could include legal action against Binder Hamlyn.

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