Healthcare Locums facing a shock profits write-off

Aggressive accounting practices at entrepreneur Kate Bleasdale's Healthcare Locums recruitment business were so severe that "a material amount of profit" booked over past years will have to be written off, its new chairman alleged in an extraordinarily damning indictment today.

Healthcare Locums' shares were suspended in January following the discovery of accounting irregularities, and Bleasdale and her chief financial officer Diane Jarvis were suspended. Bleasdale was later dismissed.

New chairman Peter Sullivan told shareholders at the annual meeting today of his "shock" at the state of the accounts, adding that he had "been struck by the extremely poor levels of corporate governance".

Investigators from Grant Thornton have been conducting a forensic probe into the numbers, in particularly scrutinising what Sullivan said were "aggressive accounting practices regarding revenue recognition, capitalisation of costs and impairment of fixed assets."

He predicted this would result in a restatement of prior-year figures, and a "material amount" of profit the company recognised over recent years will need to be written down. Shareholders' wait for the 2010 accounts will continue, he added.

"I am sure that the results of the investigations to date will come as a shock to shareholders - as the situation has to the current board, the company's advisers and the group's lenders," he said.

Meanwhile, the Australian operations the company bought in December are trading well while "the majority of HCL's operations in the UK are sound", he added.

Bleasdale declined to comment.