Rolls-Royce Holdings PLC (LON:RR.) saw its shares fall today on news of an investigation into the auditing of the engine maker’s accounts after they failed to flag up the payment of huge bribes to win contracts.
The Financial Reporting Council said it is to examine the work of accountants at KPMG who audited Rolls’s accounts for 2010, 2011 and 2013.
In a statement today, the watchdog said the probe related to Rolls’s agreement with the Serious Fraud Office in January to pay £671mln in fines to settle long-running investigations into allegations it used bribery to secure contracts all over the world.
READ: Rolls-Royce surges as it settles bribery claims
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In mid-morning trading, Rolls shares on the FTSE250 index were down 1.3%, or 11p at 813.5p.
The FRC investigation announcement comes with Rolls holding its annual general meeting today in Derby.
In a trading statement this morning, the FTSE 100-listed firm did not mention the FRC probe but said its chief executive, Warren East will “be confirming that overall trading in the first few months of the year has been in line with expectations and that the outlook for the year as a whole is unchanged.”
Profits, cashflow expected to be weighted towards the second half
The group said that, “as in 2016, profit before financing charges and tax is expected to be weighted towards the second half of the year, with the proportion of profit generated in the first six months of the year expected to be similar to that achieved in 2016.”
It added: “Similarly, free cash flow is again expected to be significantly weighted towards the second half with first half cash flow forecast to be lower than in 2016, largely reflecting the higher volumes of large engines sold at a loss and a number of other one-off cash items.”
Rolls noted that, if rates remain unchanged from recent levels, currency translation factors would improve its reported revenues by around £400mln and its reported profit before tax by around £50mln.
The group also said it remains “on track” to deliver the expected year-on-year incremental cost savings in 2017 of between £80mln-£110mln and achieve its target of £200mln per annum by the end of 2017.