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Interserve posts half-year loss driven by turnaround costs

Interserve has reported a pre-tax loss of £6m for the first six months of 2018.

Costs relating to its refinancing package, job cuts and exiting energy-from-waste work contributed to the half-year loss, which compared with a pre-tax profit of £24.9m for the same period of 2017.

Overall group revenue dropped from £1.75bn to £1.53bn in the first half of the year, while revenue for the UK construction business slumped from £502.3m to £396m.

Interserve has stated its intention to cut back its construction work and has exited the London construction market altogether, the cost of which was £6.5m.

Operating profit for its continuing UK construction business was £5.6m for the period, compared with £9.6m in the same period of 2017.

Net debt at the end of June stood at £614.3m, up from £387.5m last year, with Interserve having secured a £834m refinancing package in March.

The rise in net debt was in line with what chief executive Debbie White previously advised, and is expected to fall to between £575m and £600m by the end of the year.

Ms White said the firm had stabilised in the first half of 2018 and was better positioned for the future.

“Whilst there remains a significant amount of work to do, we have energy and momentum in the business as evidenced by the significant new contracts wins secured in the first half of the year,” she said.

Interserve paid out around £73m on non-recurring items, including £32.1m in adviser fees related to its refinancing and £10.8m in costs related to job cuts, which contributed to the first-half loss.

Costs of exiting the energy-from-waste sector also continued to mount in 2018, leading to cash outflows of £39.7m and a loss of £11.2m for the period.

With these non-recurring items taken into account, underlying operating profit was £40.1m, which was down from the £56.6m reported in June 2017.

The extra borrowing taken on in March and writedowns on other assets have seen Interserve’s net asset value fall from £361.1m to £49.5m.

One positive change was seen in its pension fund, which went from a £48m deficit at June 2017 to a £32.1m surplus by the middle of this year.

Interserve also recognised a £17m profit on its sale of its Haymarket site in Edinburgh.

Interserve posts half-year loss driven by turnaround costs

Readers' comments (1)

  • I’m sure they will all manage to secure maximum bonuses for themselves once again. So underlying performance is down and debt is up, but they will pat themselves on the back anyway.

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