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Wiggins realign profits (downwards) Sharecast web-page http://www.sharecast.com/ By Kam Patel JULY 27: Airports and property developer Wiggins Group, which has built up a reputation for rapid growth, was today forced to revise down its annual results for the past five years because of controversial accounting policies. The move follows concerns expressed by the Financial Reporting Review Panel, which polices accounting standards, over several of Wiggins' ventures - including a 350-acre land deal with property company MEPC last year. The revised figures mean that Wiggins' previously reported £12.1m profit for the year ended March 31, 1999, has now been restated into a £4.4m loss. The key issue stems from Wiggins' accounting of the 350-acre site at Manston in Kent. The buyer, MEPC, anticipated using the land in stages over the next few years but had not yet started to draw on the site. The agreement involved MEPC paying £100,000 per acre plus 50% of net development profits, and £100,000 for the second 200 acres plus 50% of the net development profits. Wiggins had accounted for the transfer of the first 150 acres in its 1999 accounts and intended the remaining 200 to be included in its 2000 results. Wiggins has now decided to recognise revenues from these transactions as the land is actually drawn down, the group announced earlier today. The Financial Reporting Review Panel also argued that a separate agreement with MEPC concerning a 20 acre site amounted to a financing arrangement and not a sale. The group has now restated figures all the way back to 1996. A £1m profit before tax in that year has been reduced to just £831,000. For 1997, a profit of £4.88m has been transformed into £6m loss, while 1998 profit of £5.1m has dived into £3.8m loss. The adjustments have, however, boosted Wiggins results for the year ended March this year. They now show a £25m profit but the group says that 'it needs to be understood that we have moved revenue from previous years into the current year.' A property analyst said: 'The market has been aware for quite some time of aggressive profit reporting by Wiggins.' Despite the revisions, the market took the news calmly. Wiggins shares eased a penny to 35.75p. |