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.

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.