Xchanging CEO quits amid accounting concerns
Company founder David Andrews is to step down from the Xchanging board with immediate effect amid analyst concerns over "unnecessarily aggressive" accounting practices.
The chief executive resignation follows an operating profit warning that the company would miss analysts’ expectations resulting in its share price falling from 60½p to 56½p.
In a trading update Xchanging warned that underlying operating profits in 2011 will be "below the lower end" of analyst expectations of £55.5m to £80.2m.
Matthew Earl, an analyst at Matrix, told The Telegraph: "Aggressive accounting appears to have caught up with Xchanging” and also warned that the group's decision to write down assets could trigger a breach of one of its banking covenants.
Henry Carver, an analyst at Peel Hunt, added that "bankruptcy remains a distinct possibility".
The accusations have been strongly denied by Xchanging, however, the business processer which handles procurement, accounting, HR and technology jobs, has said it will refine how it accounts for contracts.