Interserve PLC (LON:IRV) saw its shares almost halve this morning after the support services and construction group warned that it now believes “that the outturn for the year will be significantly below its previous expectations” and said the final costs of exiting its Energy from Waste business will be much higher than expected.
In a brief trading update, the small cap firm said trading in the UK in July and August was disappointing, particularly in support services, but also in its construction division, leading to its warning.
The group added that further progress continues to be made on contracts within its exited Energy from Waste business.
However, Interserve said the anticipated timing and complexities of completion mean that the Board now considers it likely that the final costs will significantly exceed the £160mln currently provided.
The company said it continues to believe that the group will be able to operate within its banking covenants for the year ended 31 December 2017.
In reaction, in early morning trading, Interserve shares dropped 48%, or 73.75p to 78.5p.