UK: Traditional London cab maker finds GBP3.9m 'accounting error'
The manufacturer of London’s traditonal TX series black cabs has uncovered a GBP3.9m (US$6.1m) black hole in its accounts, sending shares plummeting by almost 40%.
The Times newspaper reported that Manganese Bronze said the accounting errors span 2010 and 2011, following the introduction of a new IT system.
According to the company, not all of its residual balances from the previous system were processed through the new IT system, resulting in the “over-statement of stock and under-statement of liabilities" in the financial reports of previous years.
Manganese Bronze is 20% owned by Geely Automobile of China (which makes the TX cabs there for some markets) and the discovery means it will have to delay the release of its half year results by over a month. The company will also have to restate its balance sheets for the years in question.
The company also said trading in the first seven months of 2012 had been “difficult and remained challenging" and that it expected to report net losses for the first half “substantially higher" than 2011.
The company said in a statement: “Due to a combination of system and procedural errors, a number of transactions relating to 2010 and 2011 and some residual balances from the previous system were not properly processed.
“The cumulative effect of these errors is an estimated GBP3.9m understatement of historical losses which go back over several years although the work to apportion the loss between previous years is not yet complete."
Manganese reported a 10% fall in UK sales in 2011 as customers continued to hold back from buying new vehicles due to economic uncertainty. It has been hit particularly hard outside London, where sales plunged 31% in 2011.
The company is hoping for improved second half sales driven by demand for the new Euro TX4 taxis in London as a result of the city Mayor’s Air Quality strategy for the capital.
However, it faces competition from Nissan, which last week launched its own version of the black cab offering reduced CO2 output.