The oil and gas services group Hamworthy has been forced to admit to a £4.6m blunder over the value of its stocks. The £250m firm blamed the finance boss of one of its subsidiaries who has now been replaced.
But the admission hit the shares which fell 5 per cent in early trading. They closed down 9.75p at 487p.
Hamworthy's chief executive, Joe Oatley, said the accounting errors were discovered at its inert gas system unit based in Norway. He said "weaknesses" in financial controls had been noticed and a new executive put in to take a closer look at the systems.
"One of his tasks was to go through the numbers and try and make some sense of them. He immediately noticed discrepancies and so we raised the red flag and sent in Ernst & Young to investigate," said Mr Oatley.
Although no fraud was involved, the accounting probe found stocks had been overstated to the tune of £4.6m over the past few years.
"The bulk of the discrepancies relate to the value of work in progress where the individual concerned made certain assumptions about the level of stocks which were incorrect," said Mr Oatley.
The company is making an immediate adjustment of £1m to the accounts for the year ended last March.
The inert gas systems unit is the smallest within the Hamworthy group and makes systems that are installed on ships that carry volatile substances to improve safety and avoid the risk of cargoes catching fire.
The market thought the issue was likely to cause the company some embarrassment, although analysts were generally pretty sanguine about the affair.
The broker Collins Stewart said the company's cash position "is not affected and the trading outlook and end markets are as strong as ever".Reuse content