Accounting errors impact on Parexel in 09

By Nick Taylor

- Last updated on GMT

Related tags Parexel Generally accepted accounting principles

Accounting errors related to the purchase of ClinPhone reduced Parexel’s operating income by $15.9m (€11.2m) in fiscal 2009 and the impact of these charges will continue into the next year.

The accounting charges caused Parexel’s operating income in 2009 to fall by 13 per cent to $75.6m. Furthermore, Parexel expects the charges to have a net negative impact on revenues of $16-18m in fiscal 2010.

However, the gross figure is roughly double this, according to James Winschel, Jr, chief financial officer at Parexel, and consequently the net figure could change if there was a slowdown in business activity.

Looking ahead to fiscal 2010 Parexel said uncertainty still surrounds the marketplace. Since the duration of the economic downturn is not known Parexel is entering the new fiscal year with caution but Josef von Rickenbach, Parexel’s CEO, believes there are encouraging signs.

Having noticed an increase in the number of proposals in the pipeline Rickenbach expects a “gradual improvement in new business activity over the second half of calendar year 2009​”.

In addition Rickenbach believes that Parexel has taken measures to adapt to the new operating environment and this was realised in the fourth quarter when total costs and expenses fell by 11 per cent to $272.8m.

Total revenues for the year grew by seven per cent to $1.2bn.

Global operations & business sectors

An advantage Rickenbach believes Parexel has is its “strong and established global footprint​”, which he claims increasingly popular among clients.

This popularity is demonstrated by the growth in the company’s Asia-Pacific business, which grew by 35 per cent to $95.6m in fiscal 2010.

Although the region still accounts for a small proportion of total revenues its growth outstripped the other two geographies, the Americas and Europe, Middle East and Africa.

Service revenues generated by Parexel’s clinical research services business and Perceptive Informatics both grew in fiscal 2009. However, the consulting and medical communications services business experienced a six per cent decline, totalling $121.8m.

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