Renold PLC Postponement of Annual General Meeting (8655E)
July 09 2019 - 4:31AM
UK Regulatory
TIDMRNO
RNS Number : 8655E
Renold PLC
09 July 2019
Renold plc
Postponement of Annual General Meeting ("AGM")
9 July 2019
Renold plc ("Renold" or "the Group"), a leading international
supplier of industrial chains and related power transmission
products, today issues the following statement.
Summary
The Group announces the postponement of its AGM scheduled for 17
July 2019. The postponement follows the identification of
historical accounting issues over the three years ending 31 March
2017, 2018 and 2019, arising from an overstatement of certain asset
values and profit over this period by approximately GBP1.8m in the
Gears business unit, which is part of the Torque Transmission
division. No other business units are involved.
In order to rectify these issues, the Group intends to revise
the financial statements for the year ending 31 March 2019, which
will be subject to audit by Deloitte.
In light of these circumstances, the Board believes it is
appropriate to postpone consideration of the resolutions at the AGM
and, consequently, the AGM scheduled for 17 July 2019 will be
adjourned immediately after its commencement. Notice of the
reconvened meeting, which will be held no later than 30 September
2019 and at which revised Annual Accounts for the year ended 31
March 2019 can be considered along with the other AGM resolutions,
will be made available in due course.
Background
Following an internal review of the Gears business unit, an
overstatement of certain asset values and an under-recognition of
certain liabilities totalling up to GBP1.8m has been identified in
the balance sheet as at 31 March 2019, with certain issues dating
back to 31 March 2017.
Upon identifying a potential issue, the Board immediately
initiated an independent investigation and now believes that
adjusted operating profit for the Torque Transmission division, and
therefore the Group, was overstated by GBP0.5m for the year to 31
March 2017, by GBP0.4m for the year to 31 March 2018 and by GBP0.9m
for the year to 31 March 2019.
The overstatement of GBP0.9m for the year ended 31 March 2019
represents 5.5% of the adjusted operating profit reported in the
preliminary results statement dated 28 May 2019. The overstatement
relates predominantly to working capital balances and the impact on
the Group's net debt as at 31 March 2019 is limited to an increase
of GBP0.3m.
The independent internal audit investigation, supported by PwC,
to verify the above findings and to identify any contributory
control weaknesses, is ongoing. The findings of this review will be
delivered to the Audit Committee in due course.
These issues relate solely to the Gears business unit and the
Board's investigation indicates that the overstatement of profit
has arisen from the intentional mis-statement of the financial
reports at a local level.
Outlook
The overstatement of adjusted operating profit for the Gears
business unit in the year to 31 March 2019 was GBP0.9m. The Board's
expectation of performance in the year to 31 March 2020 was based
on profit at the reported levels.
The shortfall in the historical performance of the Gears
business unit also undermines the ability of this operating unit to
make the short-term progress that was originally anticipated.
Hence, expectations for the Gears business unit for the year to 31
March 2020 have reduced by GBP1.1m.
Save for the reduction as a result of the revised forecast for
Gears, outlined above, there are no other changes to the Board's
expectations for the current year. Whilst continuing to be mindful
of uncertain global economic conditions, the Board is confident in
making further progress with its strategic initiatives. In line
with previous guidance, the Group's performance will be weighted
towards the second half of the year, predominantly as a result of
the ramp-up in efficiency at the new Chinese factory, which is
progressing well.
Certain information contained in this announcement would have
constituted inside information (as defined by Article 7 of
Regulation (EU) No 596/2014) ("MAR") prior to its release as part
of this announcement and is disclosed in accordance with the
Company's obligations under Article 17 of those Regulations.
ENQUIRIES:
Renold plc 0161 498 4500
Robert Purcell, Chief Executive
Ian Scapens, Group Finance Director
Peel Hunt LLP 020 7418 8900
Mike Bell
Ross Allister
Ed Allsopp
Instinctif Partners 020 7457 2020
Mark Garraway
Rosie Driscoll
Cautionary statement regarding forward-looking statements
Some of the information in this document may contain projections
or other forward-looking statements regarding future events or the
future financial performance of Renold Plc and its subsidiaries
(the Group). You can identify forward-looking statements by terms
such as "expect", "believe", "anticipate", "estimate", "intend",
"will", "could", "may" or "might", the negative of such terms or
other similar expressions. Renold Plc (the Company) wishes to
caution you that these statements are only predictions and that
actual events or results may differ materially. The Company does
not intend to update these statements to reflect events and
circumstances occurring after the date hereof or to reflect the
occurrence of unanticipated events. Many factors could cause the
actual results to differ materially from those contained in
projections or forward-looking statements of the Group, including
among others, general economic conditions, the competitive
environment as well as many other risks specifically related to the
Group and its operations. Past performance of the Group cannot be
relied on as a guide to future performance.
NOTES FOR EDITORS
Renold is a global leader in the manufacture of industrial
chains and also manufactures a range of torque transmission
products which are sold throughout the world to a broad range of
original equipment manufacturers and distributors. The Company has
a well-deserved reputation for quality that is recognised
worldwide. Its products are used in a wide variety of industries
including manufacturing, transportation, energy, steel and
mining.
Further information about Renold can be found on the website at:
www.renold.com
This information is provided by RNS, the news service of the
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END
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