Double whammy hits Schroders

SCHRODERS stunned investors as it admitted overstating profits for 2000 and said its results for last year would fall short of market expectations.

It said errors calculating fee income from institutional clients had falsely inflated, by £11m, the £149m profit it reported from its core fund management business in 2000.

The operation contributed more than half of group pre-tax profits of £275m in that year. The mistakes came to light after the group began upgrading its computer system, and invoices were finally tallied with income estimates.

PricewaterhouseCoopers, its auditors, declined to comment. Chief financial officer Nick MacAndrew, already due to leave in April, said: 'Ultimately, I am responsible. Some overestimates were made and the reality check that should have been undertaken wasn't. We are identifying the whys and wherefores. We will come to the accountability later.'

MacAndrew was awarded an annual bonus of £428,000 in 2000 and received a £750,000 'special award'.

Schroders also warned that cuts are imminent. Even before the previous year's accounting gaffe is absorbed, it will miss annual profits estimates of £70m for 2001 by up to 10%.