Power transmission products manufacturer Renold has postponed its AGM, originally scheduled for 17 July 2019. An investigation has revealed overstatement of profits that appears to have arisen from the intentional mis-statement of the financial reports.
In a statement to the London Stock Exchange, the group said the postponement ‘follows the identification of historical accounting issues over the three years ending 31 March 2017, 2018 and 2019, arising from an overstatement of certain asset values and profit over this period by approximately £1.8m in the Gears business unit, which is part of the Torque Transmission division. No other business units are involved’.
Renold will revise its financial statements for the year ending 31 March 2019, which will be subject to audit by Deloitte. The company said that the Board had immediately initiated an independent investigation and now believes that adjusted operating profit for the Torque Transmission division, and therefore the group, was overstated by £0.5m for the year to 31 March 2017, by £0.4m for the year to 31 March 2018 and by £0.9m for the year to 31 March 2019.
“The overstatement of £0.9m for the year ended 31 March 2019 represents 5.5% of the adjusted operating profit reported in the preliminary results statement dated 28 May 2019. The overstatement relates predominantly to working capital balances and the impact on the Group's net debt as at 31 March 2019 is limited to an increase of £0.3m.”
An independent internal audit investigation, supported by PwC, to verify these findings and to identify any contributory control weaknesses, is ongoing.
