The one-stop-shop property services group, has made a £4.4m provision to cover the alleged fraudulent valuation that was identified in its City office a year ago.
The quoted company said today in its 2006 full-year results that the £4.4m charge ‘is the directors’ best estimate, having taken appropriate professional advice in respect of the issues arising’.
In March last year it emerged that the Cheshire Building Society planned to sue Erinaceous subsidiary Dunlop Haywards
for fraud, after one of its valuations was used to secure a loan of £11.5m on a building that was said to be worth as little as £2m.
The police raided the home of Ian McGarry, head of valuation in Dunlop Haywards' City office, who was then arrested and released on bail without charge. The case was then passed to the Serious Fraud Office.
The £4.4m provision coupled with £6.1m of restructuring costs reduced Erinaceous’ operating profits to £26.5m in 2006, down from £26.9m in 2005. Pretax profits dropped by 19% to £18.8m. Revenue rose by 50% to £227.2m and the full-year dividend was raised by 18% to 5p a share.
CEO Neil Bellis said the year had been one of ‘considerable progress’.
Erinaceous’s share price was down 5% to 291.5p in early trading today in response to the figures.