Tough trading at SHL sparks fears of new leadership battle

Shares in the psychometric testing business SHL Group dropped 10 per cent yesterday after the company warned that trading conditions continued to be "difficult", sparking fears another leadership battle could be on the cards.

The alert is the latest blow for the business which, just before Christmas, saw a very public and damaging boardroom battle rage between two camps of directors.

Nevill Bain, SHL's chairman who survived that battle, warned yesterday that 2003 would be "another tough year" with the outcome dependent on macroeconomic conditions. While he said he expected profits to be in line with market expectations, he warned that any further downturn "could have a detrimental impact" on the business. Shares in the company closed down 10 per cent at 48.5p.

Sales in the first quarter of the year were in line with the same period a year before, he said, but he admitted that had been achieved "at the cost of some margin erosion".

"Economic conditions in a number of the regions in which we trade are showing some deterioration, particularly in Europe and in Asia Pacific, and this has some impact on our outlook for 2003 overall," he added.

The statement will, no doubt, be watched keenly by the firm's founders, Roger Holdsworth and Peter Saville, who were ousted from their board positions as non-executive directors just before Christmas. The pair, who had objected to the way SHL was being run, had called for the resignations of both Mr Bain and chief executive John Bateson. At an extraordinary general meeting, however, Mr Bain and Mr Bateson won the backing of enough shareholders to keep their jobs after shareholders voted to oust Mr Holdsworth and Mr Saville.

At that time, Mr Holdsworth had threatened to take further action. "The jury is still out. They [current management] have got to perform well," he said then.

About 55 per cent of the votes were cast in favour of resolutions proposing both Mr Holdsworth and Mr Saville be removed from the board while about 60 per cent of the votes cast were against resolutions proposing Mr Bain and Mr Bateson be ousted.

Mr Bain, the former Post Office chairman, is leaving the company on 11 May when his contract comes to an end.