AIT directors stump up £700,000

AIT Group today provided a glaring example of the pain in the technology sector when the software company revealed its directors have had to lend it £700,000 to stave off insolvency.

The shares crashed from 492 1/2p to a five-year low of 180p as it also warned that delays in securing a major contract meant pre-tax profit would be £1.1m lower than expected in the year to 31 March 2002. Analysts had forecast a £6.6m profit.

AIT's cashflow crisis stems from it booking profits from sales contracts which have been signed but not paid. While this is thought to be allowed under UK accounting standards, it means the company's 'short-term cash requirements are likely not to be covered by its available borrowing facilities'.

It said four of its directors had made loans totalling £700,000 to ensure it could 'meet certain immediate payment obligations'.

These are believed to include a deferred payment on last year's £9m purchase of fellow software group IMA. AIT has net debt of £10.5m to Royal Bank of Scotland.