TI finds Dowty profits lower than predicted

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THE SPECIALISED engineer TI Group said yesterday the true level of pre-tax profits at Dowty Group for the year to 31 March was pounds 26m and not the pounds 32.7m estimated by Dowty when fighting TI's successful pounds 500m bid earlier this year, writes Terence Wilkinson.

It also said that indications from Dowty during the bid that first quarter trading since March had continued at the strong pace seen in the previous three months had not been borne out by events, and profits were flat so far.

Analysts were surprised in the course of the bid when Dowty announced an unaudited profit estimate of pounds 29m compared with the pounds 22m to pounds 23m expected prior to the TI bid. This was later raised to pounds 32.7m by the inclusion of a pounds 3.7m profit on the cancellation of a Ministry of Defence contract.

TI's auditors, Price Waterhouse, conducted a review of Dowty's results with Arthur Andersen, auditors to Dowty, in June.

The pounds 6.8m gap identified by the two teams of auditors includes pounds 1.4m for fixed assets not actually in use and a pounds 2.8m charge for warranty and other provisions.

TI's half-year results showed a 7 per cent fall in pre-tax profits to pounds 50.2m. The shares fell on news of the revised profits at Dowty, closing 28p lower at 286p.

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