Taxi maker hit by accounting blunder

Coventry-based Manganese Bronze saw its shares plunge after it said it expected “substantially higher” losses for the first half and admitted an accounting blunder caused by its new IT system.

Manganese blamed a combination of “system and procedural errors” for the accounting mistake, which it said had left it understating losses by around £3.9m 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 the 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”.

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.

Manganese shares have slumped by more than a fifth since the start of the year as it has suffered from sliding sales.

The group said in May that trading in the UK had slowed after a promising start with customer confidence remaining weak. The group has been hit particularly hard outside London, where sales plunged 31 per cent in 2011.

Manganese 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 Japanese carmaker Nissan, which this week launched its own version of the black cab offering reduced CO2 output.