SIG shares fall on overstated earnings

UK specialist building products supplier SIG saw its shares tumble after saying its 2016 profits were overstated by up to £3.7m (€4.2m), writes Geoff Percival.

The news follows SIG last month noting a historical overstatement of cash associated with the issuance of cheques around previous reporting period ends; something which has affected the group’s debt-reduction aims.

SIG said it has now suspended a number of individuals and is working with auditors Deloitte to ensure “the correct accounting treatment”.

The new review follows a whistleblowing allegation of potential accounting irregularities at unit SIG Distribution. SIG said its forensic review had revealed an overstatement for 2016 and a further overstatement of up to £400,000 before 2016.

SIG shares closed 4.2% down yesterday having fallen up to 6.4% in earlier trading.

The company is a rival of Kingspan in the building insulation and energy management market. Last month it said an increasingly difficult UK market was offset by a recovery in its mainland European and Irish divisions in 2017. It said that continental European revenues rose 5.8% last year and sales were up by 8% in Ireland.

The company said it had identified a number of actions to remedy the problems and had engaged auditors KPMG to conduct a review of financial reporting at the division for the year to the end of last December.

Still, SIG reaffirmed its 2017 underlying profit forecast. It is set to announce the full-year results on March 9.

- Additional reporting Reuters