27th Aug 2019 10:14
(Alliance News) - Renold PLC on Tuesday said an investigation into historical misreporting found the issue was confined to its Gears unit, with previous guidance unchanged.
Shares in Renold were up 3.8% at 23.50 pence in London in morning trade.
The company, which supplies industrial chains and power transmission products, postponed its annual general meeting in July in order to revise financial statements after finding "historical accounting issues" in Gears, part of Renolds' Torque Transmission division.
Renold said an independent investigation is now complete and has determined the accounting issues only applied to Gears.
The overstatement of profit from Gears announced in July of GBP1.8 million over three years is "broadly consistent" with the investigation's findings and guidance is unchanged from July.
In total, the investigation found net assets as at March 31 had been overstated by GBP2.5 million and adjusted operating profit was overstated by GBP1.0 million for the year ended March 31. This was due to "intentional misreporting of financial information at a local level".
The expected GBP300,000 drop in cash and net debt on March 31 as a result of this is unchanged.
For 2019, adjusted operating profit was revised to GBP15.4 million from GBP16.4 million, operating profit to GBP15.2 million from GBP16.2 million, and pretax profit to GBP10.2 million from GBP11.2 million.
Chief Executive Robert Purcell said: "These events are frustrating and deeply disappointing but the board, in conjunction with the audit committee, have acted swiftly to fully investigate all matters. We are working closely with Deloitte, the group's auditor, to ensure that recommended improvements to the internal control environment are quickly and effectively implemented.
"With the investigation and audit of the revised accounts completed, we can refocus our efforts on operational improvement and generating value for shareholders."
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