Aerostructures shares collapsed 35p to 24p yesterday as the company announced that turnover next year would be up to pounds 15m less than in 1994. The business was floated at 120p a share in June. The latest announcement comes just a few weeks after the company said 'operational difficulties' threatened profit margins on contracts with British Aerospace. Aerostructures' warning is the latest in a series of setbacks to hit investors in Britain's newly floated companies. Warnings have been issued by Canadian Pizza, Coda, Clinical Computers, DRS Data, McDonnell Information Systems, Nottingham, United Carriers, Azlan and Business Post.
Investors last night blamed brokers and bankers for putting pressure on managers to raise expectations too high and floating companies at greedy ratings.
Aerostructures, where Lord King, the former chairman of British Airways, is non-executive chairman, also disclosed yesterday that its chief executive, Andrew Barr, is quitting due to ill health. David Ring, the commercial director, will take over temporarily.
Anthony Fry, a director of Rothschild, said: 'We are certainly going to be the subject of flak. I've had some in my direction already. Institutional investors are extremely cross and I understand that. However, I believe the next time Rothschilds come over the horizon with a new flotation, if it is a good company, the institutions will invest.'
Both Rothschild, and Aerostructures' broker, Smith New Court, said they would not resign. Mr Fry said investigations by the bank, lawyers and auditors into why problems at the company had escaped detection at the time of the flotation had not shown advisers to have been lax.
A spokesman for Smith New Court's corporate finance team, Alan Kelsey, said there would obviously be 'a credibility gap' in re- establishing Aerostructures' image in the City, but that advisers would work hard to get 'a full understanding of the company into the marketplace'. Aerostructures and its advisers are due to meet at least two of its large shareholders, Abbey Life and Henderson Administration, on Monday.
Any formal boycott of Rothschild by institutions is highly unlikely. However, Rothschild is trying to float Century Inns, which runs 300 pubs, and there is some speculation that this may be overshadowed by recent events.
Aerostructures announced yesterday that in the six months to end- June pre-tax profits fell from pounds 3.7m to pounds 2.4m following a pounds 2.7m exceptional provision covering expected losses on contracts, mainly with BAe. The interim dividend, forecast in the prospectus to be 1.44p, has been passed. It also said it was transferring pounds 5.2m of work originally scheduled for 1995 back to BAe, its former parent.
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