ROVER SALE - Alchemy to cut losses.
Venture capitalist company Alchemy will switch to UK accounting standards once it completes its takeover of Rover – a move that will cut the car company’s losses by as much as #160m, Accountancy Age has learned. Rover’s losses have been exacerbated by the use of German accounting standards by parent company BMW. Using UK accounting standards, Rover lost #161m less for the year ending December 1998 than stated in BMW’s accounts drawn up using German accounting standards. According to UK accounts, Rover made losses of #509m in 1998, but BMW’s accounts showed it lost #670m. Under German accounting policies, investments are depreciated faster, depressing profits. A spokesman for Rover said the trend for lower losses in the company’s UK accounts continued into 1999, although the accounts had not yet been filed. He said: ‘They would show significantly less losses.’ Alchemy, whose managing partner Jon Moulton is a fellow of the English ICA, now plans to use UK accounting standards when dealing with its new purchase. However a spokesman said a decision to buy was based on ‘management issues’ and not on the more optimistic financial position revealed by UK accounts. The contract to audit Rover may now be up for grabs. KPMG audited the company but only as part of BMW’s consolidated accounts. Rover losses row, page 5.