Interserve's 2006 performance trimmed by £11m hit

Interserve has announced that while it traded strongly during 2006, the year’s financial results have been hampered by exceptional items – with the combined toll of these running to a total of £11m.

The biggest single hit stands at £8m and this is the professional costs triggered by the unearthing of accounting misstatements in the industrial services division.

In addition to this, after buying MacLellan Group in July 2006, there have subsequently been one-off costs of £4m as a result of integration, in particular the closure of the central head office and what Interserve describes as “support function rationalisation”.

The combined pain of these two setbacks was trimmed back somewhat thanks to a £1m gain realised on the disposal of a PFI asset.

In a trading statement issued on the Stock Exchange this morning, Interserve hinted that there could be more troubles ahead. The statement said: “Additionally, in concluding the strategic and operational review of Industrial Services, the group will be reviewing the carrying value of goodwill in that business.”

Commenting on the rest of the business, the statement said: “Key markets in the UK and Middle East have remained buoyant,” said Interserve, “with new contracts secured and preferred bidder appointments totalling over £1.8bn.”

Reporting on the past year it added: “Each of the three main divisions made strong progress, compensating for losses in industrial services which have continued at a similar level to the previous year.”

PFI is a growing part of Interserve’s business. It is currently in the final stages of negotiations on a further five projects.

Interserve will announce its full results on 12 March.