SNACK food firm Glisten said underlying profits slumped by 49% in the wake of difficult trading and accounting errors in one of its fruit and cereal businesses.
The Leeds-based group posted pre-tax profits of £3.38m for the 12 months to June 30, with one-off items stripped out, compared with £6.68 million the previous year.
This follows revelations that its Halo Foods business – one of its largest divisions – had been understating costs in the race to provide cut price snacks in the consumer downturn.
Glisten said it had addressed the Halo problems swiftly and the business had enjoyed a profitable first quarter in the current financial year.
The group also assured investors it had made a good start to the new year – with like-for-like sales ahead 13% at £25m in the first 17 weeks.
Chief executive Paul Simmonds described the previous 12 months as “challenging”.
He said that before the issues at Halo “we had considered that Glisten was performing reasonably well in the context of difficult market conditions typified by low consumer confidence and ’trading-down’.
He said: “Some of our business units delivered excellent trading performance again this year, but sadly this was overshadowed by the issues which arose within Halo.”
Glisten suspended two senior bosses at Halo after discovering the irregularities and said management had been replaced from within the group.
The results described how Halo had developed a plan centred on launching its own “price-fighting” range under the Snax label.
However, poor planning meant that in the fourth quarter demand exceeded Halo’s ability to supply products cost-effectively.
“A failure to account correctly for these forced operational inefficiencies together with incorrect accounting for some specific running cost items masked poor profit delivery during this period,” Glisten said.
Group sales failed to live up to analysts’ expectations for the year.
But the 1% increase n takingf to £74.4m was still a record revenues result for the firm, according to Glisten.