Support services firm to stay in industrial market despite taking hit over ‘financial irregularities’
Interserve this week stressed its continuing commitment to the industrial services market despite taking a £43m hit after “accounting irregularities” in this division.
Interserve’s full year results showed a £30m loss of goodwill at its industrial services business, together with professional costs related to the investigation. Another exceptional item was the cost of integrating facilities management specialist MacLellan.
The charges come six months after Interserve was forced to write down £26m against its 2005 figures as a result of accounting errors. Four executives later lost their jobs.
Taking the charges into account, Interserve reported a pre-tax profit of £15.1m, 58% less than its performance the previous year. However, profit before tax and exceptionals rose 61% to £58m, a strong performance that caused share prices to gain more than 5% to 489.25p when results were announced on Monday. Turnover for the year to 31 December rose 16% to £1.4bn.
Adrian Ringrose, Interserve’s chief executive, said the group did not expect any further financial repercussions from the accounting irregularities.
He said: “We regard the industrial market as one that is attractive and one we will stay in. However, there are contracts there that have cost us a lot of money, and we will look to avoid similar mistakes in future.”
Following a strategic review and an investigation by KMPG and Linklaters, the industrial services business has been integrated with MacLellan and Interserve’s facilities services business under the leadership of Bruce Melizan.
The group this week announced that it would be opening an equipment business in South Africa, and Ringrose said that the company would look at further bolt-on acquisitions in the UK and overseas. He identified Saudi Arabia and Kuwait as potential targets for the group.
He added that the company had been boosted by several large PFI deals this year. Interserve this week announced contracts worth a total of £100m, including the Plymouth Schools PFI, which has reached financial close.