Interserve suffers £244m loss after further write-offs

Aaron Morby 4 years ago
Share

Debt-stricken Interserve plunged to a £244m loss after a full contracts review saw a further wave of write-downs.

Interserve chief Debbie White says there is still much to do to get Interserve back on track
Interserve chief Debbie White says there is still much to do to get Interserve back on track

The core business delivered an underlying trading profit of £52m, mainly from the RMD Kwikform business, before nearly £300m of write-offs.

Revenue was stable at £3.25bn, while operating profit was adversely impacted by poor performances in both support services and construction.

The latest wave of write-downs included a £77m impairment against goodwill, a £86m hit from a sweeping contracts review, a further £35m from delayed energy from waste projects and £33m in restructuring.

The review carried by accountant PwC covered 18 contracts, nine financially complete, seven where final accounts need to be settled and two that are still in construction.

Chief executive Debbie 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.”

She added: “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. “

White added the ongoing streamlining programme would cost a further £15m this year, with the construction business expected to shrink further as it adopted a more selective approach to securing work.

Interserve underlying trading
Profit 2017 2016 Revenue 2017 2016
Construction UK -£19.4m £25m £1.05bn £871m
Construction Int. £19.2m £16.9m £290m £296m
Support services £41.7m £89.5m £1.88bn £1.986bn
Equipment services £54m £48.6m £229m £224m
Energy from waste -£35m -£160m £49m £91m

 

During the year UK construction posted a £19m loss which was largely offset by international construction profits.

Further progress was made on remaining energy from waste contracts during the year.

But slippages in the anticipated completion dates saw Interserve set aside an extra £35m provision – in addition to the £160m provided in 2016.

This was required to enable it to complete the outstanding projects in Derby, Margam, Templeborough and Dunbar to complete.

“We expect to complete substantially the construction of the projects in the first half of 2018, though significant uncertainty remains on the timing of commissioning,” she added.

Under the present business plan Interserve expects average net debt to rise from £502m to £650m in the first half of this year before improving to a full-year average of £630m.

Interserve’s debt began to mount from just £40m in 2014 after buying cleaning and repairs specialist Initial Facilities for £250m.

Its new financing deal gives Interserve access to almost £300m of cash and bonding, and runs until 2021.

 

Latest news

Ten demolition firms named in cartel probe

Biggest names in demolition face massive fines over "unacceptable" behaviour on 19 contracts worth over £150m
1 day ago

Imtech vows to avoid big resi jobs after return to profit

Engineering services arm puts trio of loss-making residential jobs behind it
22 hours ago

Sisk replaces Morgan Sindall on £1bn Midlands Highways Alliance

Four firms secure places in Midlands framework renewal race
2 days ago

Winvic wins Bristol Redcliff Quarter 468 flats job

Grainger buys planned build to rent project and brings in Winvic to start this Autumn
22 hours ago

Peel takes on Wirral Waters after Urban Splash modular collapse

Developer is reviewing whether to return to traditional build methods after modular specialist collapse
23 hours ago

Kier launches £80m JV to build 2,000 homes by 2027

Property arm JV with Lloyds fund to develop housing on urban brownfield sites
2 days ago

Mace chief Reynolds replaces Mitchell at CLC

Mark Reynold takes over as co-chair of the Construction Leadership Council
2 days ago

Cost inflation forces bid rethink for £200m M5 junction 10

ECI simplified and amendments made to reflect rising construction costs
2 days ago

Wages among key trades keep pace with cost of living rise

Self employed plasterers, plumbers, roofers and scaffolders enjoy wage rises ahead of annual inflation rate
2 days ago

Midgard drives recovery at JRL Group

Revenue tops £600m again at diversified contractor
2 days ago

Green light for £100m Norwich A47 dualling

Galliford Try to start work in October on 2.6km dualling between Norwich and Acle Straight
2 days ago

Design change sees 70,000 cubic metres of concrete cut on HS2 stretch

Revamp of Staffordshire cutting will mean 6,700 fewer concrete mixer lorry loads
2 days ago

Subcontractors and suppliers wanted across the Midlands

Constructionline Meet the Buyer event in Derby: Register now
3 days ago

Contract race starts as cost of giant aqueduct job hits £1.75bn

United Utilities looking to shortlist three bidders for Haweswater Aqueduct Resilience Programme
3 days ago

M&S blasts Gove after Oxford St rebuild plan called in

Retailer "bewildered" after Housing Secretary steps-in over embedded carbon concerns
4 days ago

Springfield buys rival Scottish house builder for £46m

Mactaggart & Mickel Group takeover deal includes 17 sites with planning for 700 homes
3 days ago

Costain bets on hydrogen infrastructure

Consortium launches to develop hydrogen infrastructure for shipping and aviation in the Westcountry
3 days ago

Caddick starts on Star Wars bar office scheme

Host of employee-friendly features on new building at Crewe Business Park
3 days ago

Murphy to host virtual recruitment day

Specialist engineering and civils contractor opens doors online to potential new staff: Register now
4 days ago

Plans in for Isle of Dogs 52-storey resi tower

460 flats skyscraper to replace offices at 4 & 5 Harbour Exchange Square
4 days ago

Van Elle seals piling deal on Transpennine Route Upgrade

Firm appointed to the piling framework for the West of Leeds section
4 days ago

Demolition firm fined £5,000 after fatal platform fall

Contractor went into administration following death plunge at Scottish Power site
4 days ago

Modular specialist TopHat to open vast housing factory

Goldman Sachs-backed house builder to open Europe's largest modular factory in Corby
5 days ago

Asphalt giants make low carbon standard for road mixes

Tarmac and Aggregate Industries make warm mix asphalt new standard on highways jobs
5 days ago

Wates launches Retrofit brand for net zero work

Wates Retrofit to target domestic and non domestic clients
4 days ago

BAM wins £24m Wigan net zero carbon school

BAM has started enabling works at Fred Longworth High School development
4 days ago

Urban Splash modular failure to cost supply chain £12m

Suppliers left with mountain of worthless invoices following Urban Splash House collapse
5 days ago

Kier to trial hydrogen generators on site

Zero-emission generator to start trial on South West site
5 days ago

Hinkley Point remobilises to over 8,000 workforce – video

Construction work on second reactor achieves 20%-30% efficiency savings
5 days ago

Kier and Wates win £500m deal to expand six prisons

New houseblocks to be built at HMPs Bullingdon, Channings Wood, Elmley, Highpoint, Hindley and Wayland
5 days ago

Contractor services