Britax uncovers £20m errors in accounts

Britax International, the aircraft parts maker, said yesterday that a management "stumble" at one of its units had forced it to take a £20m charge to cover a series of accounting errors.

Britax International, the aircraft parts maker, said yesterday that a management "stumble" at one of its units had forced it to take a £20m charge to cover a series of accounting errors.

The news, coupled with ongoing uncertainty about the possibility of further disclosures, hammered Britax shares, which dived 24 per cent to close at 102p.

David Newlands, Britax chairman, said the unit, Britax Rumbold, which makes aircraft interiors, "hasn't been well run". A full investigation into its operations had yet to be completed. "I don't think that this is endemic, it is just an unfortunate management stumble," Mr Newlands said. "The business had failed to close out old contracts."

The £20m hit will come on top of an exceptional charge of between £3m and £5m relating to the restructuring of the aircraft interior system division, announced last December. Full-year 1999 pre-tax profits at Britax were £61.1m.

Britax said that a failure at Rumbold to follow accounting procedures meant that assets had not been accurately assessed, resulting in their overstatement.

"It has become evident that in prior years the net assets of Rumbold had been overstated principally because of failure to implement properly its contract accounting procedures," the company said. "The board is reviewing its controls, operating procedures and management and any necessary changes will be made."

Mr Newlands said that the problem came to light when there was a rise in capital needs at Rumbold in May. He drafted in Deloitte & Touche to undertake an independent audit of Rumbold's position.

PricewaterhouseCoopers has prepared accounts for Britax in recent years but had no comment to make yesterday.

Mr Newlands said that Rumbold's managers had not been suspended, but were "helping" a new Britax team and Deloitte & Touche to go through the books. There was no evidence of fraud, he said.

It is understood that the bulk of the overstated assets relate to contracts for aircraft seating, which last year accounted for about £30m of Rumbold's turnover of £107m.