Interserve's pension £79m short

The transitional arrangements for the new pension accounting standard, FRS17, has highlighted the fact that Interserve has a net pension deficit of £79m in its defined benefit scheme.

The new standard, if up and running right now, would prompt a charge to Interserve's pre-tax profit of £7.7m. Without this burden, the group was able to unveil a figure (12 months to 31 December) of £37m (£39m).

Announcing the latest financial results last week, chairman Mike Bottjer said that in 2001 Interserve had operated its pension scheme accounts to SSAP24, the previous standard, and the latest actuarial valuation in March 2000 had shown the market value of the scheme's assets to be £283m, representing 129% of the benefits that would accrue to members. As a result, Interserve suspended its company contributions.

During 2002, the value of the equities held in the pension scheme dropped in value from £280m to £230m while Interserve's investment in bonds stayed little changed at £4.3m. The defined benefit scheme has been closed to new entrants.

Interserve's turnover was slightly down at £1.1bn (£1.2bn). Segmental analysis shows two of the four operating divisions pushing ahead: facilities services (operating profit £16m, up £2m) and project services (£18m, up £5m) while there were setbacks in industrial services (£10m, down £4m) and equipment services (£14m, down £2m).

Forward orders stand at £3.2bn with a further £0.5bn in the pipeline.