Interserve fresh profit warning as waste job costs spiral

Aaron Morby 5 years ago
Share

Interserve has delivered a fresh profit warning this morning as the costs of exiting its problem energy from waste contracts exceeds the £160m initially expected.

Incoming chief executive has just started work at Interserve
Incoming chief executive has just started work at Interserve

The unexpected warning saw shares in the group halve in value to just 77p in early trading on the Stock Market.

As a result of legacy waste projects and poor trading in the last few months Interserve warned that group performance would be significantly below previous expectations.

The board said it continued to believe that Interserve would be able to operate within its banking covenants for the year ended 31 December 2017.

Interserve was plunged into a £94m loss last year after making a £160m provision for exiting its waste business after revealing serious problems at its Glasgow Recycling and Renewable Energy project.

Interserve first alerted shareholders to problems on the £154m project for client Viridor back in May 2016, then estimating the project would cost it £70m. Since then the cost of exiting energy from waste has steadily soared.

At the half-year point in June this year Interserve said it expected construction to return to profitability in the second half of the year.

The latest profit warning comes as new chief executive Debbie White enters her second week at the helm of Interserve after taking over from former boss Adrian Ringrose.

In an update on current trading and progress on its energy from waste contracts the firm said: “Trading in the UK in July and August was disappointing, particularly in support services, but also in the construction division.

“Further progress continues to be made on contracts within our exited Energy from Waste business.

“However, the anticipated timing and complexities of completion mean that the board now considers it likely that the final costs will significantly exceed the £160m currently provided.”

“As a result of this, the board now believes that the outturn for the year will be significantly below its previous expectations.”

A further update will be provided in due course.

Latest news

Failed London fit-out specialist owed trade firm 13m

Twenty 1 Group owed HMRC £9.7m leaving more than 300 firms with no hope of payment
7 hours ago

B&K returns to strong profit growth across the group

Pre-tax profit jumps 23% to £65m as revenue edges up to £1.18bn
18 hours ago

British Land expects tender price inflation to hit 10%

Developer says 91% of costs are fixed on planned schemes
18 hours ago

Morgan Sindall set for £80m leisure and health hub

West Suffolk public service development to be built at no extra cost to tax payers
19 hours ago

Plans in for £500m Hollow Mountain pumped hydro scheme

Work removing 2m tonnes of rock could start within two years
2 days ago

L&G to pump £4bn into West Midlands developments

West Midlands Mayor Andy Street signs landmark investment deal with L&G
18 hours ago

Hunt starts for £250m Stockport 8 site developer

Town centre 8-acre site is earmarked for 1,200 homes, shops and leisure
1 day ago

Higgins bags trio of East London passivhaus schemes

Partnership to build 220 affordable homes for Newham council
1 day ago

Water industry revives PFI model for £1bn job

Vast Haweswater Aqueduct upgrade to pilot new DPC model, hailed as the future for water companies
2 days ago

VolkerRail fined £550,000 after trench collapse

Court hears how two metre deep excavation was unsupported
2 days ago

‘Ratty the Robot’ takes bite out of costly pipe inspections

Pipe-crawling tetherless robo-rat makes light work of complex underground inspections
2 days ago

Graham gets green light for £124m M25 Junction 28

Consent allows work to start this Autumn on Essex junction upgrade
2 days ago

Six win £600m panelised housing DPS deal

Better Building alliance of 29 housing associations signs up manufacturers
2 days ago

Watkin Jones reports record £2bn pipeline

Student rooms and BTR builder plans corporate name change in big rebrand
2 days ago

Race starts for £500m Scottish zero carbon hospital job

Bidding starts for new University Hospital Monklands near Airdrie
3 days ago

Manchester airport taxis out £60m terminal 2 pier job

Bidding to start before the end of 2022 for project start early next summer
3 days ago

Plan for 1,100-home complex at Leicester factory site

Galliford Try investments plots Corah Factory transformation
3 days ago

Axed House by Urban Splash staff plan legal action

Ex-workers consult with lawyers following administration
3 days ago

Summer slowdown fears as latest contract award data droops

Latest Barbour ABI Snap Analysis paints uncertain picture
3 days ago

Farrans wins £39m Somerset recycling hub

Site preparation gets underway for Keynsham Recycling Hub
3 days ago

Balfour gets green light for £250m M25 junction 10

Autumn start for M25 junction 10/A3 Wisley interchange improvement scheme
6 days ago

Leeds plumbing contractor sinks with loss of 30 jobs

Dickinsons Plumbing and Heating goes down but renewables arm salvaged in sale
6 days ago

HS2 achieves first diesel-free construction site

Skanska Costain STRABAG JV runs Kilburn site with green kit
6 days ago

Administration confirmed at House by Urban Splash

160 jobs lost following "operational issues" at modular factory
7 days ago

Network Rail fined £1.4m after worker crushed by track machines

Judge highlights "many layers of failure" within site management
6 days ago

Kier picked for £350m Leatherhead regen plan

Property arm to draw up plans to redevelop two large town centre sites
7 days ago

Two seriously injured in London steelwork collapse

Two steel erectors left fighting for their lives after collapse at Ardmore site
1 week ago

Urban Splash modular staff start looking for new jobs

Work stops at House by Urban Splash factory and housing sites
1 week ago

Building facade specialist CMS goes into administration

Building envelope firm had turnover of £43m
1 week ago

Office work uplift returns construction output to growth

New commercial work drives output uplift for the first time since the pandemic
7 days ago

Contractor services