Accounting errors torpedo Lynx Group
The finance director of Lynx Group's IT distribution business has resigned after £5 million-worth of accounting errors - something to do with accruals - were discovered.
This is a hefty blow, considering that it represents half of the already poor profits the company expected to announce for its next interims on 23 November.
There is also very little fat - the group had cash balances of just £500,000 at 30 September.
So the company is to restructure in a move that will see it transform itself from a channel conglomerate into a mini-Misys, concentrating on the banking, insurance and IFA sector. Turnover for this core business is just over £50 million a year.
The group is to demerge Lynx Commercial Systems, the UK's biggest Sage reseller and a top ten UK SAP reseller, before April 2001, the end of the tax year.
With unaudited turnover of £26 million for 2000, Lynx Commercial Systems - to be renamed Ascent - is worth £50 million, according to Lynx Group.
More problematic is the IT distribution business, now up for sale. Lynx says it is actively pursuing ways of maximising shareholder value for a division which turns over £100 million, or thereabouts, a year.
Unfortunately for shareholders, it is very much a buyers' market. Ideal Hardware, a much bigger distribution outfit, was sold recently for £18 million recently (although its previous owner, InterX got to keep the freehold of the Ideal HQ and warehouse, sold yesterday for £16 million).
Last and least Lynx has an automotive IT systems. It turnsover £16 million and it's breaking even.