London taxicab maker blames IT errors for £3.9m accounting hole

The company that makes London's iconic black taxicabs has blamed a series of IT errors for a £3.9m ($6.2m) hole in its accounts covering the past several years.

On Tuesday, Manganese Bronze revealed the under-reporting of losses in a statement, saying the company will have to delay its half-year results and restate financial results from 2010 and 2011. Its share price fell by one-third, from 25p to 17p, on the announcement.

The Coventry-based black cab maker said the problems began in August 2010, when it uploaded general ledger balances into a new integrated IT system meant to manage its global supply chain.

"Due to a combination of system and procedural errors, a number of transactions relating to 2010 and 2011 and some residual balances from the previous system were not properly processed through the new IT system," Manganese Bronze said in the statement. "This problem led to the over-statement of stock and under-statement of liabilities in the financial statements of previous years."

"The cumulative effect of these errors is an estimated £3.9m understatement of historical losses which go back over several years, although the work to apportion the loss between previous years is not yet complete," it added.

The company, which signed a joint venture partnership with Chinese car maker Geely in 2007, did not say which parts of its business the accounting hole covers.

A Manganese Bronze spokesman declined to identify the system or who provided it, when contacted by ZDNet. He said the company is not releasing this information now, though more details may come in its half-year results, which have been postponed from 20 August to around 24 September.