LEGAL ACTION from former Healthcare Locums founder Kate Bleasdale, and the potential for lower revenues, has seen the company’s new management team issue a going concern warning.
In its unaudited prelim results for the year ending 31 December 2011, in which it posted a £12.9m operating loss, chairman Peter Sullivan (pictured) described 2011 as “without doubt…the most challenging year in the history of Healthcare Locums”.
Accounting irregularities and governance concerns saw the company’s board replaced. US investors have sued the company, Bleasdale, former FD Diane Jarvis and ex-chairman Alan Walker. Bleasdale has herself sued HL for sexual discrimination.
Alongside the uncertainty created by the lawsuits, several large contracts are due for renewal in its UK and Australian businesses.
These issues have seen the management issue a going concern warning. However, with the backing of its bankers, and attempts to mitigate its risks, the company has adopted the going concern basis of accounting in preparing its financial statements.
A dividend paid by the company on 10 January 2010 was unlawful, advisors have suggested, as the company should have known it failed to have sufficient reserves to make the payments. The board and its advisors are still looking into further dividends paid out on 1 April and 25 June 2010.
While shareholders will not be chased to repay, the board is looking into whether it can recoup the funds from former directors. “…The board is considering whether remedies are available against former directors to recover unlawful dividends paid to them and damages for breach of duty in authorising the relevant dividends,” said management in the results statement.
Corporate governance was “extremely poor” under the old management team, said the company, and a programme has made “significant steps” to put in place more robust policies and procedures – however the programme is not yet complete.
“The board has appointed new auditors (Deloitte), lawyers (SNR Denton) and nominated advisor and broker (Investec) and remuneration advisors (PwC) and now has a team of advisors that are well able to guide the board and the company in the future.”
The finance function is also being reviewed and “reshaped” under new CFO Sue Bygrave, who was appointed on 6 February 2012.
“During the remainder of 2012, the UK control environment will also be improved by the planned implementation of revisions to the corporate structure to reduce the number of active legal entities, the rolling out of a new IT front-office system that will assist in embedding enhanced controls and standard policies and procedures.”
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