UK food group Glisten has reduced its profit forecasts for the full year and suspended two executives as a result of finding failures in management and accounting processes at one of its subsidiaries.
The company is reducing its full-year operating profit forecast to around GBP5.8m (US$9.6m), compared with GBP8.0m in 2008. Pre-tax profit is now forecast to reach around GBP4.0m, against earlier guidance of GBP6m. The downgrade follows the uncovering of “apparent failures in accounting practice and management process” at its Halo Foods division.
The company said that the relevant business unit’s finance director and managing director had both been suspended pending an independent and neutral disciplinary investigation. It added that the problems were revealed in an internal audit in mid-June.
Glisten said that sales for the full year will be no less than GBP75m, representing a 2% gain from the previous year, but operating margins in one part of its business would be “significantly below previous guidance”.
Halo Foods is the largest part of Glisten’s Fruit & Cereal Snacks Division (FCSD).
The company said that while the results for the current financial year have been affected, it believes the prospects for its FCSD division are “extremely positive given its strong underlying sales growth and solid profitability, albeit below expectations this year”.
The company added that second-half trading across the rest of the group was “broadly in line with expectations” and all parts of the company remain profitable and cash generative.
Glisten is expected to publish its preliminary results on 14 September.