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Friday, 28 June, 2002, 06:20 GMT 07:20 UK
Accounting worries hit Kwik-Fit sale
Kwik-Fit employee
Kwik-Fit employs some 12,000 people
Another accounting worry has emerged at a leading UK company.

According to the Financial Times newspaper, accounting irregularities have emerged at the tyre-fitting company Kwik-Fit as auditors prepared it for sale.

Ford Motor Company bought Kwik-Fit in 1999 for 1bn ($1.6bn), but is now expected to receive just 300m for the sale - well below the 800m it once expected.

The problems came to light when accountants PriceWaterhouseCoopers, investigating the company's finances, found that goods from suppliers were not being charged against profits because invoices had not been sent.

The effect was to understate liabilities and boost profits by around 3.4m.

Worries mount

The problems first came to light in December when Ford asked the accountants for a full investigation, and the losses relate to the financial year ending 31 December 2001.

Sir Tom Farmer, who founded the company in 1971, was said to be unaware of the problems.

Ford is facing big financial problems in the United States after announcing losses of $5bn in the last financial year, and cutting thousands of jobs.

Ford has already taken a loss of $700m in its last set of accounts on the potential sale of Kwik-Fit.

It was hoping to sell the company to a private equity firm, and potential bidders included Apax and CVC.

Kwik-Fit is the UK's largest independent car-repair firm, with 1,900 branches.

Its value has also been affected by decline in the European car repair market as the economic slowdown continues to bite.

But the revelations are bound to add to concerns that the accounting scandals in the United States relating to WorldCom and Enron may spread to the UK.

See also:

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12 Jan 02 | Scotland
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