London Taxis International’s parent company Manganeze Bronze issued a rather worrying press release signalling the loss of nearly £4m. Or in simple layman’s terms very nearly 122 complete £31,995 TX4 ‘Style’ models. This accounting oversight seems to be the last thing the manufactures of London’s bespoke hire car need.
With the latest 15 year rolling licensing requirements set to pension off at least 4000 of the iconic FX4 Taxi by 2013, and the threat of London’s badge-holding Cabbies switching allegiance to rival Mercedes-Benz (or potential newcomer Nissan) are the cracks beginning to show at LTI?
Manganeze Bronze’s share price dipped heavily off the back of the statement to fall to a year low, (of two thirds of its year high figure) to close at 13.75p a share.
Parent Manganeze Bronze’s statement follows: ‘Further to its announcement of 19 July 2012, Manganese Bronze Holdings PLC (“the Group”) announces that it is delaying the release of its unaudited half-year results for the six months ended 30 June 2012 from 20 August due to the need to restate prior years’ financial results because of accounting errors that have come to light. The half-year results will be announced on or before 24 September 2012.
‘In August 2010 the Group introduced a new integrated IT system to help to manage the increasingly complex global supply chain and uploaded the closing general ledger balances from the previous IT system. 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 through the new IT system.
‘This problem led to the over-statement of stock and under-statement of liabilities in the financial statements of previous years. The cumulative effect of these errors is an estimated £3.9m understatement of historical losses which go back over several years although the work to apportion the loss between previous years is not yet complete. In accordance with the provisions of IAS 8, the balance sheet at 31 December 2011 and the financial results for 2011 and prior years will have to be restated.
Trading in the first seven months of the year has been difficult and remains challenging with the Group continuing to trade at a loss. As announced on 17 May 2012, sales for the first half were lower than in the comparative period in 2011 and the Group currently expects to report net losses for the first half that are substantially higher than reported last year. The Group is expecting higher sales in the second half but does not know at this stage if results for the full year will be in accordance with market expectations.
‘As at 30 June 2012, the Group had £2.8m of headroom on its agreed banking facilities and continues to enjoy the ongoing support of its bankers and Geely’.