Pennon reveals £16m profit hit after Interserve collapse

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Pennon, the owner of water and waste firm Viridor, has taken a £16m hit on its full year profits after the collapse of Interserve

Interserve owes Pennon £72m over the beleaguered Glasgow Recycling and Renewable Energy Centre, which was originally set for completion in 2016.

Following the issues, Viridor issued a notice of termination to Interserve and Doosan Babcock was brought in as a replacement in early 2017.

Pennon’s half year results recognised a gross receivable of £72m due from Interserve Construction Limited. Pennon said it was making a provision in its accounts of £8m in relation to the contract.

However, in its latest trading statement, it has doubled this provision to £16m.

Pennon said: “Given the recent announcements regarding Interserve plc entering into administration we are seeking further clarification regarding the financial position of Interserve Construction Limited the ongoing operating company with whom we contracted, which may change the level of provision to be announced with the full year 2018/19 results on 30 May 2019.

“We will continue to pursue recovery of all amounts due from the operating subsidiary Interserve Construction Limited and will take all the necessary legal and procedural steps to achieve this.”

Pennon added: “With our clear strategy of focusing on the UK water and waste market, supported by a strong balance sheet, Pennon is well-placed to continue to deliver for customers, communities and shareholders.”

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