Symonds shares slump on third profit warning

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The Independent Online
Shares in Symonds slumped 8.5p at one stage yesterday after the electronics to engineering group unveiled its third profit warning this year. The warning came as the group revealed the findings of a damning report by the Arthur Anderson accountancy firm which confirming April's revelation that management had deliberately overstated sales in its precision engineering division. As a result, Symonds said profits for last year would be some pounds 1.5m below expectations, prompting analysts to slash their forecasts from pounds 3.7m to pounds 2.2m yesterday, against pounds 1.45m achieved in 1995-96. The shares, which were 82p in June last year, recovered their earlier fall to end unchanged at 35.5p.

The failures of management at PED have already seen the dismissal of its former managing director, Ken Garner. Another three senior members of management have been suspended while internal disciplinary proceedings are undertaken against them.

But Rod Ackrill, the Midlands property developer who chairs the company, suggested that further legal moves were unlikely. "We will continue to consider legal action on the basis of the report now delivered, but we haven't uncovered any signs of any personal benefit", he said.

The Andersen report confirmed that management accounts had been falsified, consistently invoicing sales where no goods had been despatched to make up for shortfalls on sales forecasts. This had been done to disguise very poor trading during the year. "These mis-statements have resulted from a concerted effort between certain members of the management to override internal controls", the accountants found. These failings and other problems, including difficulties on major contracts, production hiccoughs and larger volumes of low margin work, mean the division is now expected to record a loss of over pounds 1.1m for the year.

Mr Ackrill said there had been no problems with the group's normal auditors, Deloitte and Touche, and new management were already starting to tackle the problems of low margin business taken on PED by the old management.

Separately, the group announced that Jim Symonds, a relative of one of the group's founding families, was stepping down as chief executive and would retire next month. Mr Symonds joined the company with Mr Ackrill in 1993 as part of moves to revitalise the group.

At PED, Mr Garner has been replaced by Patrick Curran, a former senior manager at Burnfield. A quality manager and manufacturing manager have also been appointed to the division.