Contractor Interserve has reported a pre-tax loss of £244m, citing an “inefficient operating model and excessive cost structure” as it continues to combat a series of under-performing contracts
Interserve has been hit with a series of losses, particularly in the energy-from-waste sector where it has had to write off more than £250m, including a project in Glasgow which ran £95m over budget.
Revenue was stable at £3.25bn, while operating profit was adversely impacted by poor performances in both support services and construction.
Additional losses incurred in 2017 include a £86.1m write-down following a major contract overview across the business, undertaken by PwC, and £33m towards group restructuring.
Across its different divisions, the group reported a £19.4m loss in UK construction, while profit halved at its support services business, falling from £89.5m to £41.7m.
Chief executive Debbie White, who took over from Adrian Ringrose in September 2017, 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.”