GREENCORE'S SHARE price slid 14.87 per cent after the convenience food company cut its profit forecast for the current year after telling the market of a €21 million irregularity in its Scottish mineral water unit that went unnoticed for more than two years.

Already under pressure from sterling's weakness against the euro and struggling to recover cost increases from the steep rise in commodity prices, the company said yesterday that it had uncovered a "deliberate concealment of costs" leading to "material" misstatements of the unit's performance in 2006, 2007 and the current year.

Company chief Patrick Coveney, who has been in office for less than three months, declined to name the former financial controller of the unit, who had left the business before concerns first surfaced during a routine internal audit on June 6th.

Items which should have been charged to the unit's income statement from 2006 were instead charged to its balance sheet through a "complex movement" of individual ledger items, he said. An investigation discovered that costs charged to the Greencore group were not the same as those seen at local level.

Greencore's internal financial system, its internal audit unit and its external auditor, PricewaterhouseCoopers, failed to detect the irregularity until this month.

Greencore shares closed down 36½ cent at €2.09 last night, having dipped as low as €2 earlier in the day. The share stood at €5.67 at the end of June last year.

Operating profits for 2006 will be cut by €4 million, the 2007 outcome will be cut by €8 million and the "estimated impact" for the year to September will reduce operating profits by €9 million.

This is likely to cut adjusted earnings per share by 4 cent per share from the previous consensus forecast of 28.2 cent per share, said Mr Coveney.

This matter aside, the company said it was confident that it will meet consensus market expectations for earnings per share this year.

But stockbrokers said the affair was likely to weigh heavily on Greencore's share price until confidence in its internal control systems and numbers are fully re-established. That will take time, warned NCB analyst Paul Meade.

"The discovery of this level of internal fraud, within a key division recently expanded via acquisition to overcome capacity issues, is a major set back to Greencore's new management team," he said.

Greencore has dismissed three managers with direct supervisory responsibility for the former financial controller of the unit in question. A new managing director and acting finance director have been appointed.

"The group is taking legal advice on what, if any, elements of this financial impact can be recovered," Greencore said.

"While the board believes this to be an isolated issue, it is 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."

Greencore will restate its 2007 accounts. It is examining whether the 2007 restatement can include the effects in 2006 of the matter.