The company said an accountant at one of General Refrigeration's branches had been dismissed. A team of accountants from the company's auditors, Coopers & Lybrand, has been sent in to assess the extent of the loss and how it occurred.
A spokesman said yesterday that a decision would not be taken on whether to pass the matter to the police until the internal inquiry was completed. He added that the figure of pounds 1.4m was the maximum loss and part of it may be recovered, either as a result of the investigation or from insurers. The company believes the cash drain took place over a period of about five years.
Bullough's pre-tax profits for the year to 31 October 1993 will be reduced to pounds 7.7m against the pounds 9.1m reported a month ago. The spokesman stressed that the loss was a one- off event. Analysts' forecasts for this year's pre-tax profits were expected to remain unchanged at about pounds 16m. The shares fell 12p to 161p.
The company said: 'Investigations are under way to determine the exact nature of the loss. Until this investigation is complete, it is not known how much of the loss is represented by the misappropriation of assets nor how much might be recovered from insurers.'
The setback comes as Bullough has begun to recover from three years of indifferent performance. The shares rose 14p to 186p when the annual results were announced, as the profit figure was about pounds 1m ahead of market expectations.
Derrick Battle, Bullough's chairman, was also upbeat about prospects for this year. He said that heavy restructuring costs incurred in the previous two years were now behind the group and that earnings were firmly on a recovery path.
Bullough has suffered badly in the recession, spending heavily on rationalising its French office furniture business. It has been criticised by the City for a lack of focus, comprising a wide range of small and large businesses in heating and refrigeration, general engineering and office furniture.
A new chief executive, Gordon Bond, was appointed in December to map out a strategy for the group.Reuse content