PwC examines Phoenix IT's financial irregularities

The cloud and networking firm suspends a manager as it prepares to reduce its net assets by £14m

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Phoenix IT today confirmed it was investigating issues within its own accounting that could lead to a £14m reduction in its net assets.

The firm, which provides managed hosting, cloud and networking services to UK businesses, released a statement this morning claiming the problems occurred at its Birstall site in Leeds – associated with its Servo subsidiary – where “certain control processes within the finance function… have been repeatedly and deliberately circumvented.”

As a result, it has suspended one of its managers and called in both PricewaterhouseCoopers (PwC) and law firm Nabarro LLP to undertake “independent forensic investigations”

“An operational and business review of the areas affected has commenced,” read a statement from Phoenix, released to the stock market this morning. “At this point, no firm conclusions can be drawn as to the timeframe nor the results of the reviews.”

The company is expecting to reduce its net assets by £14 million after tax, which will be recorded in its financial report for the second half of fiscal year 2012.

As a result, it has readjusted its earnings before interest, taxes, depreciation and amortisation (EBITDA) prediction to come in between £38m and £44m for the year ending 31 March, 2013.




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