Shares in support services group Interserve yesterday lost a quarter of their value after the company said it had suspended six senior staff following the discovery of accounting irregularities.
The stock dropped 25 per cent - or 91 pence to 265 pence - wiping £108 million off the value of the firm, after Interserve said it had uncovered misstated accounting balances in its industrial services arm which would cause a £25 million cut in net assets in interim results.
The services, maintenance and building group, which announced a restructuring and board shake-up last month, also said it may take further restructuring charges following an independent review and an operational study of industrial services, although its cash position is not affected.
A spokeswoman said the company, which has its project services division in Erdington and its equipment services group at Aldridge, had told its banks and City regulator, the Financial Services Authority, of the problems, but added that the police were not yet involved.
She said the company believed its financial controls are adequate, but added: "Obviously any system of control can be bypassed if those in a position of trust and authority are prepared to circumvent it."
However, she declined to give further details about the staff suspended and said it was too early to predict what the level of restructuring charges could be.
Altium Securities said in a note that the £25 million equates to almost 50 per cent of the company's anticipated pretax profit for 2006.
It said it expects industrial services to make operating profits of £6.8 million on sales of £170 million this year.
The broker noted it could be a one-off hit and Interserve had attempted to cushion the blow by stating the other three divisions were trading ahead of expectations.
ABN Amro said in a note: "A 20 per cent write-off to net assets, plus the potential for more, is clearly bad news."
Reading-based Interserve does work for the Ministry of Defence, local authorities and firms including Barclays and BT. The group said a programme of internal reviews following an organisational restructuring and board change that it announced on July 20 had revealed the irregularities.