Interserve plc’s (LON:IRV) shares were under the cosh today after the support services and construction group swung to a full year pre-tax loss and suspended its dividend.
The company reported a loss before tax of £94.1mln in the year to 31 December 2016, compared to £79.5mln the previous year, reflecting costs of exiting its energy-from-waste business.
The group announced it was getting out of the business in August following contractual problems, cost over-runs and delays.
An exceptional charge of £160mln related to delays and performance issues on energy-from-waste contracts.
Last week Interserve said it was increasing its exceptional loss by £90mln, following a review of operational developments at the energy-from-waste business and an assessment of the impact of litigation related to a terminated contract in Glasgow.
Interserve has new banking facilities in place to address cash outflows from exited business.
As a result, the company did not propose a final dividend. The dividend will be suspended temporarily while the group reduces its debt and improves liquidity while continuing to invest in the core businesses.
Revenue still managed to rise slightly to £3.24bn from £3.20bn, as growth in international support services, construction and equipment services offset a decline in UK support.
UK support services revenue was affected by delays in procuring government contracts due to uncertainties around the 2015 General Election and Brexit.
“Despite the increased uncertainty following the UK's EU referendum, our outlook for the current year remains positive,” said chief executive Adrian Ringrose.
“This, together with our strong market positions and healthy future workload, underpins the board's confidence in our medium term prospects."
Ringrose last year announced he was stepping down from the board once a successor has been appointed. The company today said the succession plan was “well advanced” without providing further details.
Shares fell 1.27% to 233.75p in afternoon trading.