A profits warning on Monday took 18 per cent off the share price in a day. Analysts are concerned about the role of chief executive David Elsbury, who had direct control of the radio division, which was responsible for the pounds 14m profits downgrade.
Sir Ernest, 70, who has been running Racal since May 1966, admitted the announcement was badly handled. It was a "tragedy" that the warning had been made 24 hours before good interim results were announced. The decision was made on Sunday night, he said, following an emergency board meeting at which it was decided to excise three radio orders that had been expected to arrive during the current financial year. This removed pounds 30m of sales and pounds 14m of expected profits.
Advisers from NatWest and Merill Lynch told directors on Sunday night that the profits warning must be made on Monday, in case of a leak. The interims announcement, planned for Thursday, could not be moved to coincide because the releases were not ready, but it was brought forward to Tuesday. Sir Ernest said: "Maybe we should have done it all on Tuesday."
The results showed sales up by 20 per cent and profit before tax up by 11 per cent. Shares fell from 275p to 225p on Monday, recovered to 247p on Thursday and closed at 238.5p on Friday.
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