Accounting errors hit Alumasc's profits

Board of Alumasc Group promises to strengthen management and processes to prevent another accounting mistake occurring

Written by Barbara Buchanan

Building and engineering products firm Alumasc Group said profitability for its division which makes die cast components will be £1m lower due to accounting errors.

An internal audit flagged up problems relating to Alumasc Precision’s inventories which prompted management to commission Ernst & Young to conduct an investigation.

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The group said the work was now ‘largely complete’ and showed an overstatement of inventories and other assets to the tune of £2m to £2.5 m but said there was ‘no indication of theft or any personal gain’.

In an interim management statement the group said: ‘Whilst cash generation is not affected, the run rate of profitability into the next financial year will be lower by a similar amount.’

It added: ‘The Board is taking the necessary vigorous action to prevent recurrence, strengthen management and processes, and to improve profitability.’

Group revenues for the nine months to March increased 26%, despite a prolonged Easter break which impacted the third quarter this year. The group said positive trading in the third quarter has continued into the fourth quarter to date.

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