The company confessed to the errors today after a trade loading investigation revealed customers, mainly UK wholesalers, took on Pounds 63m of excess stock. SSL added it had made a similar error last year.
The excess stock will lead to a one-off hit of about Pounds 50m in lost margin, additional manufacturing costs and direct exit costs, according to SSL. Pre-tax profits for the financial year ended March 31 are now expected to be approximately Pounds 90m.
‘Because they have taken on so much they have excess stock on their shelves, SSL won’t be able to sell them as much,’ explained a company spokeswoman. SSL expects the excess stock to be eliminated during the current financial year.
The trade loading review, which revealed the stock foul up, also prompted an investigation into results. According to SSL, external advisers discovered an overstatement of sales and profits figures of about Pounds 25m in 1999 and 2000.
The company also said it had over-estimated the exceptional costs of its 1999 merger, previously stated to be Pounds 225m. But it added the board ‘is confident’ that the errors will not affect current trading and underlying trading continues in line with expectations.
Chief executive officer Brian Buchan, who was appointed in March 2001, said: ‘Whilst it is unwelcome it is entirely necessary that this investigation takes place.’
Despite these reassurances, angry investors sold their shares, causing the company to close more than 8% down. SSL’s shares have lost 38% since November.
In mid February former chief executive Iain Carter stepped down from his post after the company issued its second profit warning in since November.
SSL was created in 1999 in a merger between Seton Scholl Healthcare and London International Group. Its products include Scholl foot products, Durex condoms and medical products such as surgical gloves.
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