Following the revelations of skulduggery at Ferranti’s subsidiary International Signal & Control Group Plc, Ferranti has finally released its revised accounts, restating its end of year results to reflect the value of fraudulent contracts entered into by International Signal & Control and the true value of International’s net assets when acquired in November 1987. Consequently, Ferranti’s revised capital and reserves at March 1989 now work out as follows: the carrying value of fraudulent contracts has cost the group UKP215m, on acquisition, International had negative net assets of UKP15.3m and a negative taxation effect of UKP25m giving Ferranti UKP40.3m, an adjustment for the completion of other contracts including the Ranger energy management system will lose Ferranti UKP14.4m, while the proposed final dividend which will now not be paid is worth UKP12.7m. All of which leaves Ferranti with group capital and reserves of just UKP16.4m, down from the UKP192.8m it thought it had. Furthermore, revised pre-tax profits for fiscal 1989 are UKP13.1m as against the original figure of UKP55.8m, on turnover now reported as UKP927.5m compared with the original figure of UKP1,053.7m. At the moment Ferranti has agreed borrowing and credit facilities with its banks, but is to sell businesses with the intention of raising UKP100m. It would also like to issue perhaps UKP150m of new equity in order to reduce debt and restore the net value of the group, but a bidder is likely to forestall that any day now.
