LONDON, (Pakistan Point News - APP - 24th Jan, 2017 ) - BT shares dived by a fifth on Tuesday after the telecoms and tv group warned that profits would take a much larger hit than expected from accounting irregularities in Italy. The company's share price tanked 20.06 percent to 305.90 pence in late afternoon deals on London's rising stock market. BT first revealed the accounting errors in October, estimating it would take a hit of #145 million.
But on Tuesday that figure was massively raised to #530 million ($659 million, 614 million Euros). An independent review of its Italian business uncovered improper accounting practices and a "complex set of improper sales, purchase, factoring and leasing transactions", BT said in a statement Tuesday. The net result was there has been an overstatement of earnings at BT's Italian business over a number of years, leading to the upwards revision in the value of the writedown.
"We are deeply disappointed with the improper practices which we have found," added chief executive Gavin Patterson. "We have undertaken extensive investigations... and are committed to ensuring the highest standards across the whole of BT for the benefit of our customers, shareholders, employees and all other stakeholders." BT added it is attempting to establish how the #530 million impact should be reflected in its financial statements for current and previous periods.
However, the company expects the fiasco to result in a reduction in its third-quarter adjusted revenue and adjusted earnings of around #120 million. "The improper behaviour in our Italian business is an extremely serious matter, and we have taken immediate steps to strengthen the financial processes and controls in that business," BT noted in the statement. "We suspended a number of BT Italy's senior management team who have now left the business. "We have also appointed a new chief executive of BT Italy who will take charge on 1 February 2017."