Spring Ram advisers stand back: Accountants 'made known' reservations about profit forecasts
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Your support makes all the difference.ADVISERS to Spring Ram, the kitchen and bathroom fabricator, are trying to distance themselves from the increasingly beleaguered company.
Arthur Andersen, the accountancy firm that has audited Spring Ram's accounts since it was floated in 1983, said it had 'made known its reservations about analysts' expectations for the 1992 pre-tax profits at an early stage'.
Before last week's profits warning and temporary share suspension, analysts - including Spring Ram's own stockbroker, Panmure Gordon - were predicting profits of pounds 40m.
Yesterday's publication of the results for 1992 merely confirmed last week's warning.
Taxable profits fell to pounds 25.6m from a restated pounds 33.6m. The cost of fraud uncovered last November at Balterley Bathrooms, one of its subsidiaries, was taken as an exceptional charge of pounds 3.1m.
Profits from kitchen sales dropped to pounds 12m against pounds 13.5m, but the bathroom division slumped to losses of pounds 4.8m from profits of pounds 5m.
Spring Ram was supported by a pounds 7.8m profit through the sale of four shell companies. They carried a tax status attractive to companies suffering from problems with advance corporation tax.
Arthur Andersen has been angered by what it saw as an attempt to shift blame for the profits warning debacle in its direction.
Its statement yesterday clearly inferred that Spring Ram directors were responsible for keeping analysts' profit expectations unrealistically high.
'It is not true that the auditors disclosed to the board, only days before the 1992 preliminary results were due, that they could not support the board's figure for profit before tax,' the statement said.
Panmure Gordon and the company's merchant bank, NM Rothschild, are also thought to be unhappy. Without board changes the two City advisers may look for a way out of the mess.
The position of Stuart Greenwood, finance director, who has been under intense pressure from institutional shareholders to resign, will be decided at a full board meeting this week.
Spring Ram also reiterated yesterday a promise made in November that it would appoint two non-executive directors.
(Photograph omitted)
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