29 November 2013 – profit warning
The group has revealed that it has discovered accounting irregularities in its international business and whilst this only accounts for 5% of group revenues, this will result in a reduction of £3m in the pre-tax profits for the year to 31 March 2014. Earlier years may also see some adjustment to reported profits. An investigation has been launched into the issue, whilst the chief executive has resigned. He had been highly thought of and there will now be some uncertainty surrounding the shares until the investigation has been concluded. Regular readers will know that we originally recommended the shares at a price of 24.5p in June last year. Given the uncertain outlook and the good profit we have made we downgrade to SELL.