The troubled engineering group Invensys insisted yesterday it was close to selling its loss-making Baan software business as it unveiled a £1.4bn loss for the year and flagged a £931m black hole in its pension fund.
The company, which has embarked on a massive asset disposal programme to restore its fortunes, also said yesterday there were no signs of any upturn in trading.
Rick Haythornthwaite, the chief executive, said it was simply too early to tell how the year would pan out. "Bouncing along the bottom is pretty accurate," he said, adding: "I think it's too early to call the upturn."
Despite the grim prognosis, Invensys insisted yesterday it was "comfortable" it could get "substantially" more than £1.8bn for all the companies it was looking to sell. "We are in a position where, over the next 18-24 months, we can take our time to divest because we moved early ... it allows us to get what we believe will be substantially in excess of £1.8bn," Mr Haythornthwaite said. He said the company was in "quite late stages of negotiations" with "a few players" about selling Baan - the Dutch software business it paid about £470m for three years ago at the peak of the dot.com boom.
Baan, which made a £25m operating loss in the year, is now expected to be sold for £68m to £85m. At least three private equity firms are said to be considering buying the unit.
Shares in Invensys, which has £1.6bn of debt, closed down 0.25p at 15.75p after it reported a pre-tax loss of £1.4bn for the year to 31 March compared with a loss of £858m a year before.
The company took a £585m goodwill impairment charge - mainly to reflect the fall in value of Baan - as well as a £119m charge to cover restructuring costs and a £741m loss on disposals. But the trading picture was still grim at the operating level with Invensys reporting operating profits had fallen to £250m in the year from £312m a year before. "These results are disappointing. We have faced tougher circumstances than we expected and the headline numbers are not those we hoped for when we announced our strategy in February 2002," Mr Haythornthwaite said.
Invensys also revealed a £931m deficit in its pension fund under the accounting standard FRS 17 although it believes the deficit will be more like £300m to £400m under the triennial actuarial review it is currently carrying out.
Mr Haythornthwaite said Invensys, which has been on a pension holiday for about 12 years, was "confident" it could handle the liability. "I inherited a company that clearly had problems ... there's a clear plan in place and if we get this plan right, then 18-24 months we should see a smaller but a more focused Invensys emerge," he said.
Invensys also said that Mr Haythornthwaite's contractual notice period had been cut to one month from one year and the change of control provision removed, at his request. "I signed on to see this company turn around and I have no intention of going before it's done," he said.Reuse content