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Brunel Results Hit by Fraud at U.S.office

Brunel Results Hit by Fraud at U.S.office

Dutch specialist staffing firm Brunel said it found evidence of fraud at its U.S. office, forcing it to take a &euro9.7 million charge and sending its shares to a seven-month low. The announcement came on top of the company’s full year results.

Brunel's Chief Executive Jan Arie van Barneveld said financial results had been overstated by an individual employee since the third quarter of 2011, which was only discovered a few days ago.

Van Barneveld said the employee inflated sales and as a result margins looked higher than they really were. Sales were manipulated for operations in the United States, Canada, South America, Chad and Angola, he said.

Brunel, which derives 69% of its sales from providing workers to the global oil and gas industry, said sales had been inflated by 16.8 million euros and earnings before interest and taxes (EBIT) by 9.7 million euros. Shares of Brunel fell as much as 25 percent and were down 22 percent to a seven-month low of 29.84 euros by 0931 GMT.

Brunel does not expect to be fined by U.S. regulators over the fraud, Van Barneveld said.

Results for 2012

Brunel International NV: Revenue growth FY 2012 of 26% FY EBIT of &euro 68 million, including Brunel International NV : Brunel International NV: Revenue growth FY 2012 of 26% FY EBIT of &euro 68 million, including exceptional items.

Revenue growth full year 2012 of 26%. Full Year EBIT of &euro 68 million, including exceptional items Proposed dividend &euro 1.00 per share (2011: &euro 0.90 per share) 

General

During 2012 year-end closing process we have been confronted with overstatements of revenue and cost of sales reported by local management of the American region. The overstatement for the full year amounted to revenue &euro 16.8 million and EBIT of &euro 9.7 million of which on EBIT-level &euro 6.2 million and &euro 3.5 million related to 2012 and 2011 respectively. The full amounts have been adjusted accordingly in the Q4 2012 results.

Jan Arie van Barneveld, CEO of Brunel International: "Brunel experienced a difficult quarter as a result of control issues and incidental costs. For me this is a disappointment. At the same time the business and the underlying trend of both revenue and profitability remained very good. There has been slight growth in The Netherlands. Our business in Germany and other European countries continued to grow strongly. According planning the Australian offshore projects activities decreased in Q4 and this has been more than offset by strong growth in the traditional Energy business. Despite all the issues Brunel's business developed well."

Outlook for 2013

Although the activity level for Offshore projects will be significantly lower in 2013 then in 2012, we expect the traditional Energy business growth will compensate and subsequently the total Oil & Gas division will generate low single digit growth. For The Netherlands we expect a flat revenue development and for Germany high single digit growth.

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