Carter and Carter Group are facing more problems, with an announcement that their trading of shares is still suspended and that an audit by PriceWaterhouseCoopers is being completed. Carter and Carter also announced that the board have now been made aware that the quality of some learner records have been insufficient to draw funding from the LSC. The Group also announced today that they have an indebtedness of £131 Million, which at the time of their press announcement (28th November) was likely to be higher than the organisation’s current performance can currently support.
On 2 October 2007, Carter & Carter Group plc (Carter & Carter or the Company or the Group) requested that the trading of its ordinary shares be suspended with immediate effect pending clarification of its financial position.
Since that time, the Company has been working with its auditors, PricewaterhouseCoopers LLP, to resolve issues identified during the audit of the results for the year ended 31 July 2007. In particular, the Company has been assessing the recoverability of certain current assets as at 31 July 2007 and has been reviewing the accuracy of certain other revenue streams in the business.
The Board has become aware that the quality of some apprentice learner records have been insufficient to support funding claims made to the Learning and Skills Council (LSC).
In addition, the work carried out on behalf of the Board has also revealed deficiencies in relation to the learner records at the Groups Skills division including the falsification of certain supporting documentation. The Board currently understands those issues are restricted to a programme in the North East Skills business, which is in the process of being closed down.
A full review of the Companys financial and reporting procedures is being undertaken to confirm that the full extent of these issues is understood and to ensure that no such errors occur in the future.
The Company has disclosed its preliminary findings to the LSC and to other relevant regulatory authorities, and is co-operating fully with the LSC in determining an accurate position.
The Groups other businesses, namely Employability, Outsource Services, CBE, Quantica Training and NTP, continue to trade satisfactorily and are benefiting from an ongoing cost reduction programme.
Until the review detailed above is completed, the Group remains unable to complete the audit of its results for the year ended 31 July 2007 and, therefore, will be unable to publish its preliminary results for the year ended 31 July 2007, as required by the Disclosure and Transparency Rules, within four months of its year end. Accordingly, trading in the Companys ordinary shares will remain suspended.
During this period there have been a number of changes in management. Peter Marples (Group Director of Business Development) has resigned. Peter was the MD of one of the companies Carter and Carter acquired, Assa Training and Development (who were the first training provider to receive a Triple Grade 1 from the Adult Learning Inspectorate). John Green (Finance Director) has also resigned, and a number of divisional managers have left the Company. Rodney Westhead took on additional responsibility becoming acting Chief Executive whilst a permanent replacement is identified.
In order to strengthen the management function of the Group a strong and experienced interim management team has been appointed to assist with the restructuring of the Group, along with a number of additional senior finance staff.
As previously announced, the Group is continuing to search for a replacement Chief Executive.
The present uncertainty is impacting current trading. The Board is working hard to resolve the issues highlighted above and to secure the ongoing support of the LSC and the banks, both of which are the subject of continuing negotiations.
The Board continues to work closely with the LSC and is in the process of implementing systems and controls to eradicate inaccurate or incomplete record keeping from the business at the earliest opportunity. The Company also remains committed to ensuring that the quality of training delivered remains at the highest level.
As at the 28 November 2007, the Groups indebtedness was £131 million and is likely to be higher than the current performance of the business is able to support. As previously announced, the Company is in discussions with its bankers regarding its financial position and these discussions are ongoing.“