Maddox on the spot as it fails to match forecasts

MADDOX GROUP, the computer servicing company headed by the South African entrepreneur Hugo Biermann, is facing a storm over allegations that it has failed to live up to profit and dividend forecasts made last year.

Its first hurdle will be tomorrow's extraordinary shareholder meeting, which has been called to approve the sale of two of the company's main subsidiaries. However, it is expected that investors will reserve their anger for the annual meeting at the end of next month.

Much of the criticism will be directed at Mr Biermann, who came to prominence as one of the founders of Thomson T-Line, the Vernons pools group sold to Ladbroke for pounds 180m.

Maddox has failed to live up to forecasts made when Mr Biermann reversed his two private companies - Cables & Flexibles and Seacoast Electric - into a quoted company, Pathfinder Group, to create Maddox in February last year. At that time, Maddox said it intended to pay a dividend for the year to 31 December 1992 at some point during 1993.

The company has now said it cannot pay that dividend because it has had to write off a pounds 1m investment held by Pathfinder, wiping out reserves that would have been available. According to Ernst & Young, Maddox's auditors, questions raised by them led the directors to review the investment's value.

Investors are also angry because of forecasts at the time Cables & Flexibles and Seacoast were purchased that they would make profits of more than pounds 2m. The Independent on Sunday has learnt that at the same time Ernst & Young had produced a working capital statement predicting profits of pounds 1.1m. In the event, the businesses made losses.

Mr Biermann said the forecasts by Ernst & Young were conservative estimates made merely for the purpose of determining whether the group had enough working capital.