Interserve Regulatory News (IRV)

14 Aug 2006 07:00

14 August 2006 Interserve Plc Accounting Issues in Industrial Services Following the organisational restructuring and Board change announced on 20thJuly, as a result of which Industrial Services is to be integrated into theFacilities Services Division, the subsequent programme of internal reviews hasvery recently brought to light information relating to the mis-statement ofaccounting balances within the former Industrial Services Division. Thisinformation suggests that certain control processes within Industrial Serviceshave been repeatedly circumvented over a period of five or more years.The Board believes from the information available to date that the impact ofcorrecting these cumulative mis-statements is to reduce net assets (primarilywork in progress and debtor balances) by some ‚£25 million on a post-tax basis.This adjustment, the substantial majority of which is expected to be reflectedas a prior year adjustment, will be made in the Group's half-year results. Thecurrent cash position of the Group is unaffected.The following actions have already been taken:- six senior employees within the Industrial Services Division have been suspended- interim management arrangements have been put in place under the authority of Bruce Melizan, following his appointment on 20 July as Managing Director of the enlarged facilities services division- an independent forensic review by KPMG and Linklaters is underway, reporting to the Audit Committee; and;- an operational and strategic review of the Industrial Services business streams is being undertaken as part of the integration process announced in July.At this point, no conclusions can be drawn as to the timeframe nor results ofthe forensic and strategic reviews. These reviews may, however, lead to furtherrestructuring charges. The Group has informed its banks and will keep themabreast of developments.Overall, Interserve continues to trade strongly. Our three major divisions,Facilities Services, Project Services and Equipment Services, are each tradingbetter than we had expected and the Board remains confident of the Group'sprospects for future growth.ENDSContactsInterserve Plc Adrian Ringrose, Chief Executive 0118 9602 352 Tim Jones, Group Finance Director 0118 9602 352 Maitland 020 7379 5151 Neil Bennett Liz Morley Notes to EditorsInterserve Plc is a services, maintenance and building group. It is listed onthe LSE (IRV) in the support services sector. Interserve provides servicesacross the whole life of many types of buildings and infrastructure such ashospitals, schools, offices, industrial plant, bridges, waterworks or roads.Around 70 per cent of the services are delivered into the built environment and30 per cent to plant and infrastructure.For the year ended 31 December 2005 the Group reported revenues of ‚£1,168million and profit before tax of ‚£47.9 million with a future workload of ‚£4.8billion.For the 2005 financial year the Group reported its results under the followingfour divisions:2005 Revenue Profit Facilities Services ‚£444m ‚£17.8m Industrial Services ‚£164m ‚£6.3m Project Services ‚£514m ‚£18.3m Equipment Services ‚£107m ‚£20.5m On 20 July 2006 Interserve completed the acquisition of MacLellan Group plc for‚£116 million. The MacLellan business is being integrated into the FacilitiesServices division. At this date the integration of the Industrial Servicesdivision into the Facilities Services division was also announced.www.interserve.comENDINTERSERVE PLC