The Spice Girls, a near £4 million hole in the accounts and a major new competitor... it has been quite a week for Manganese Bronze.
The Coventry-based maker of iconic London black taxis revealed a near £4 million hole in its accounts and warned of mounting losses last week – sending shares plunging by a third in the space of hours.
The announcement came just days after the company showcased its products to the world as the Spice Girls chose its TX4 cabs to help them to re-enter public consciousness through their performance at the closing ceremony of the London 2012 Olympic Games.
Meanwhile, the firm faces competition from Japanese carmaker Nissan, which this week launched its own version of the black cab, offering reduced carbon dioxide output.
Manganese blamed a combination of “system and procedural errors” for the accounting mistake, which it said had left it understating losses by around £3.9 million dating back several years.
The group, which has postponed its half-year results until next month, said it failed to transfer a number of transactions and balances to a new IT system, introduced in August 2010.
Its accounting woes come at a torrid time for the group, which is suffering from weak demand for its vehicles amid the UK recession. Manganese said it continued to trade at a loss as conditions remain “challenging” and said there was £2.8 million in the bank at the end of June. It expects higher sales in the second half, but is unsure if this will keep it on track for full year forecasts.
Manganese, which is 20 per cent owned by China’s largest private automaker Geely, reported a 10 per cent plunge in UK sales in 2011 as drivers continued to shy away from buying new vehicles due to economic uncertainty.
“Due to a combination of system and procedural errors, a number of transactions relating to 2010 and 2011 and some residual balances from the previous system were not properly processed through the new IT system,” it said.
“The cumulative effect of these errors is an estimated £3.9 million understatement of historical losses which go back over several years although the work to apportion the loss between previous years is not yet complete.”
Manganese shares have slumped by more than a fifth since the start of the year and fell from 25p to 17p in two hours on Tuesday morning.
However, the company is hoping for a sales boost in the second half from demand for the new Euro TX4 taxis in London as a result of Mayor Boris Johnson’s Air Quality strategy for the capital. But it faces competition from Nissan, which this week launched its own version of the black cab.
Nissan has said the vehicle will be “competitively priced” below the new TX4, offering self-employed taxi drivers a viable alternative to current options.
The manufacturer last year reported a pre-tax loss of £2.1 million from revenues of £75 million; it sold 1,502 vehicles in the UK and 705 internationally.
The firm had a market value of £5 million at close of trading on Tuesday, which represented a major fall compared to £230 million five years ago.