Support services group reveals one-off cost due to accounting irregularities in industrial services division
Support services group Interserve has been forced to wipe £25.9m off its accounts after accounting misstatements in its industrial services division, it confirmed in its interim results today.
The £25.9m one-off cost was inline with the company’s original expectations and the market reacted well to the news with shares up 12.914% to 352.25p per share at 9.20am today.
The results, originally due on 4 September were postponed after a company reorganisation unveiled the accounting irregularities. The firm also asked its auditor and law firm to investigate.
In a statement chairman, Lord Blackwell, said: "The investigatory work to date has confirmed that controls in Industrial Services (principally relating to revenue recognition in work in progress) were repeatedly evaded over several years in what appears to have been a concerted effort by certain divisional managers to over-state divisional results. The financial aspects of the investigation are substantially complete, which has enabled the board to quantify accurately the adjustment necessary in the light of the mis-statements. The investigation has found no evidence of any such irregularities in the accounts of our other divisions."
Meanwhile Interserve’s revenue for the six months to 30 June 2006 is £649.1m, up from £692.7m, the restated figure for the same period in 2005. Profit before tax was up to £23.1, from £14.1m.
Chief executive Adrian Ringrose said the integration of recent acquisition MacLellan was progressing well. However no mention was made of the potential legal action from MacLellan shareholders who are seeking compensation for the drop in share price following the revelation of the accounting irregularities.