| Greencore reports £15m fraud |
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| Written by Adrie van der Luijt | |
| Wednesday, 25 June 2008 | |
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Greencore Group plc has uncovered a deliberate concealment of costs at its Scottish mineral water subsidiary Campsie Spring.
The convenience food producer said that this had led to a material misstatement of financial performance covering the financial years 2006, 2007 and the current financial year. The board of Greencore (LSE:GCG) said it believed that the financial implications of these issues would lead to a restatement reducing the group’s operating profit by €4m for 2006 and by €8m for 2007. In addition, the estimated impact of this issue in 2008 will be a reduction of operating profit of €9m relative to current expectations, with a consequent impact on adjusted earnings per share of 4 cents. Investigation The board said that its priority had been to move quickly to determine the cause, extent and impact of the concealment since the issues was discovered during a scheduled review by the internal audit function on 6 June. An investigation was instigated by the group chief financial officer on 9 June following a meeting between the leadership of the group finance and the finance director of the Mineral Water business. After initial elements of the investigation were completed, the Greencore board was advised on the potential issues on 13 June. A report containing a provisional analysis of the financial accounts for the three years in question, identifying the concealment issues, sharing the external financial and legal advice and setting out options on how to proceed was submitted to the board on 20 June. The investigation indicates that this concealment of costs was undertaken by the former financial controller of the Mineral Water business who left the business before the concealment was uncovered. Legal advice Greencore said that the three managers with direct supervisory responsibility for the former financial controller had left the business. A new managing director and acting finance director for the Mineral Water business have been appointed. The group said it was taking legal advice on what, if any, elements of this financial impact can be recovered. While the board added that it believed this to be an isolated issue, it said it was conducting a thorough review - independently supported by KPMG - of all the group’s businesses and of its internal control, financial reporting and external audit processes. Apart from adjusting for the impact of this material misstatement, the Board, based on current trading, remains confident that it will meet consensus market expectations for 2008 EPS performance. Related articles Related links |
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