Standards review set to determine Rover future

Officials for the Phoenix bid were in talks with BMW on Tuesday in the latest attempt to save the ailing car plant.

And, before going in to the meeting, they confirmed the car company was not losing nearly as much as the £2m a day claimed by BMW and said accounting standards were crucial to efforts to save the ailing company.

Accountancy Age has already revealed that according to accounts filed discreetly by Rover at Companies House the company was losing hundreds of millions less than claimed by BMW using financial reports drawn up using German accounting standards.

John Hemmings, a Birmingham councillor working with Phoenix, told Accountancy Age this week: ‘The differences in the accounting standards are obviously important when it comes to dealing with Rover.’

Examination of financial reports using UK standards reveals Rover losing £160m less for the year ending Dec 1998 than stated in BMW accounts compiled using German standards.

Rover still made a loss but the figure comes to £509m using UK rules while BMW had the deficit pegged at £670m.

The difference lays in the way investments are depreciated. In Germany depreciation must take place much more quickly which has a dramatic impact on profits.

Alchemy, which pulled out of talks with BMW to buy Rover, has denied its interest in Rover had connection with differing financial reporting standards quoting only ‘management issues’.

Rover accounts for 1999 have yet to be a filed at Companies House but a spokesman at the Midlands car firms said: ‘They would show significantly less losses.’

The Phoenix bid is headed by John Towers, a former Rover chief executive, and includes Lola, the racing car group, Mayflower, the body panels manufacturer and Rover dealers.

Big Five accountancy firms were this week reportedly vying for the contract to liquidate Rover. The only firm out of the running is KPMG, BMW’s auditors.