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Renold discloses accounting error

The engineering group's shares collapsed on the announcement
Renold discloses accounting error

Renold (RNO) postponed its July annual general meeting after identifying historical accounting mistakes over its financial years to 2017, 2018 and 2019. The precision engineering products group, which moved its shares from the main market to Aim in June, revealed that it had overstated asset values and profits within its gears unit by around £1.8m. Renold shares fell by around a fifth to 26p on day of the announcement.

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The unit sits within Renold’s torque transmission division. Adjusted operating profits for the segment were overstated by £0.5m for the year to 31 March 2017, by £0.4m for the year to 31 March 2018 and by £0.9m for the year to 31 March 2019. “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,” the company added. It has reduced its expectations for the gears unit in the year to 31 March 2020 by £1.1m. The rescheduled AGM will be held no later than 30 September. 

On the day of the announcement, non-executive chairman Mark Harper took the opportunity to top up his Renold holding. On 10 July, the company disclosed that his wife Mandy Jane Harper had purchased 98,000 shares on 9 July at a total value of around £2.49m, bringing Mr Harper’s total interest up to 706,449 shares, or 0.31 per cent of issued ordinary shares. Renold could not be reached for comments.