Your browser is no longer supported

For the best possible experience using our website we recommend you upgrade to the newest version of your browser.

Your browser appears to have cookies disabled. For the best experience of Construction News, please enable cookies in your browser.

Welcome to the Construction News site. As we have relaunched, you will have to sign in once now and agree for us to use cookies, so you won't need to log in each time you visit our site.
Learn more

Interserve trading update reveals £70m blow on Glasgow energy-from-waste deal

Interserve has taken a £70m hit on its Glasgow energy-from-waste deal, it revealed in a trading update today.

The group said its expectations for the UK construction division had been “significantly adversely impacted by a further deterioration” in the deal.

Problems relate to the design, procurement and installation of the gasification plant, together with “continuing challenges with the supply chain” that will result in further cost overruns and delays.

Construction News reported last week that workers had gone on a two-day strike at the plant over a long-running pay dispute.

Interserve said: “The board anticipates a £70m exceptional contract provision to be taken in the first half of 2016, resulting in a similar level of cash outflow spread across 2016 and 2017. We will be pursuing every opportunity to mitigate this situation.”

Interserve said net debt was likely to be around “£35m higher than previously guided” at the half-year and year-end.

City analyst Liberum put out a ‘sell’ note on Interserve this morning, warning that its expected increase in net debt increased the urgency of a sale of RMD Kwikform and “also makes the prospect of capital returns or acquisitions less likely”.

Interserve revealed RMD Kwikform’s managing director Steven Dance has announced he will retire, with Ian Hayes set to succeed him.

Elsewhere, Interserve said trading in support services was “robust and in line with expectations” while equipment services “continues to have good momentum across its international markets”.

Trading in the building and fit-out segments of UK construction “remains healthy”, Interserve said.



Have your say

You must sign in to make a comment

Please remember that the submission of any material is governed by our Terms and Conditions and by submitting material you confirm your agreement to these Terms and Conditions. Links may be included in your comments but HTML is not permitted.