Financial irregularities in industrial services division contribute towards huge fall in pre-tax profit

Support services group Interserve has taken a £43m hit in its full year results following an investigation into accounting irregularities in its industrial services division.

After the £43m hit, which also included costs associated with the integration of MacLellan, Interserve reported pre-tax profit of £15.1m - a drop of 58% on its performance last year.

Andrew Ringrose
Ringrose: "Strong position" despite £43m hit

However, profit before tax, exceptionals and amortisation leapt 61% to £58.1m. Turnover for the year to 31 December 2006 rose 16% to £1.4 bn.

The hit includes a £30m charge against the goodwill value of the industrial services business, and previously announced professional costs associated with the accounting irregularities.

The charges follow an investigation into accounting misstatements, revealed last September, which forced Interserve to write down £25m on its industrial services division accounts last year. Interserve sacked four executives over the misstatements, which were investigated by KPMG and Linklaters.

Chief executive Adrian Ringrose said that despite the investigation, which is now complete, Interserve was trading in a strong position.

He said: “With the underlying strength of the business demonstrated in our 2006 performance, our record future workload and the opportunities created by our acquisition of MacLellan, Interserve’s future prospects are encouraging.”

The company also announced new contracts today worth a total of £100 million. They include the Plymouth Schools PFI contract, which has now reached financial close, and a contract to design and build aircraft parking stands for future aircraft fleets at RAF Brize Norton in Oxfordshire.