Spicer Holdings has had to issue a profit warning after a host of weak performances by subsidiaries, as well as "management irregularities" at MIS-CDS Group Holdings.
Spicer, in the news lately regarding snags in talks about its proposed merger with the IQ Business Group, has sacked the MD of MIS-CDS after it discovered gross management irregularities at senior management level.
The precise nature of the irregularities is being investigated, the group says.
Spicer Customer Relationship Solutions (CRS) and Spicer Professional Services (SPS) have both not performed to expectations, but the group says their restructuring is progressing "satisfactorily".
Stock variances and system inadequacies have had a negative effect on Spicer Specialised Services' performance. Spicer says these issues have been attended to.
In addition, the group has invested about R100 million in MIS-CDS, CRS and SPS in the past year.
"This investment was funded by a combination of issues of new shares, existing cash resources and borrowings.
"The increase in the number of issued shares and the additional interest burden will have a negative impact on Spicer's earnings per share."
The company says it still expects positive headline earnings for the six months to 31 December 1999, although they will be lower than the year-earlier period.
Spicer says the talks with the IQ Business Group are continuing, and the IQ management has been briefed on the situation at MIS-CDS.
The outcome of the talks will be announced on 21 February.
Spicer announced recently that events had caused a hitch in its talks to merge with IQ, while it was reported yesterday that IQ MD Johan Roets was not about to call off the deal.
"Events of concern have unfolded very recently within Spicer, which have necessitated IQ to reconsider the terms of the current proposed transaction," said Roets.
Spicer was originally to pay about R400 million for IQ, but last month it was reported that the price could rise to R635 million after the completion of a due diligence.
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