Interserve losses widen after ‘difficult’ year

Interserve CEO Debbie White

Support services and construction firm Interserve has reported a £244 million loss after a full contracts review saw a further wave of write-downs.

In what the firm described as a “difficult” 2017, losses soared to £244m from £94.1m the previous year even though revenues rose to £3.25 billion (£3.24bn in 2016) as Interserve took another £300m of impairment and one-off charges for poorly priced contracts.

Net debt rose to £503m, due in the main to £95.9m of Energy-from-Waste-associated outflows and other non-underlying items. But fears the support services group might follow Carillion into administration were eased by the signing last Friday of an £830m refinancing that included a £300m cash and loans facility.

Operating profits halved to £75m in 2017, with the performance of support services described as ‘extremely poor’ and construction ‘poor’.

Chief executive Debbie White has promised to cut costs and add £40-50m to group operating profit by 2020, with £15m to come through in 2018.

Ms White said: “2017 was a difficult year for Interserve, but it was also a year of significant progress. As a new management team, we have stabilised the business and taken the first actions to establish a solid foundation from which we can both serve our customers effectively and underpin improved future operational and financial performance.

“This work has focused on refinancing, conducting a thorough assessment of the contract portfolio, and introducing new management disciplines, processes and cost controls under the ‘Fit for Growth’ programme. We are confident that the cost savings and management actions identified will contribute at least £40-50m to Group operating profit by 2020, with the 2018 benefit estimated to be £15m.

“The refinancing we recently agreed with our lenders is a major step in securing a firm financial platform to underpin the Group’s future. Of course there is much still to do. However, we are encouraged by the support from our lenders and the new facilities will allow us to execute our business plan, focus on delivering a good service for customers, drive improved operational and financial performance.”

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