Interserve losses soar as new boss takes hard look at contracts

Troubied contractor and outsourcer signed off a £834mln refinancing last week

Support services performance was 'extremely poor'

Debbie White, Interserve PLC s (LON:IRV) new chief executive, took advantage of the refinancing last week to wipe the slate clean at the troubled outsourcer and contractor.

Losses soared to £244mln from £94.1mln even though revenues rose to £3.25bn (£3.24bn) as Interserve took another £300mln (£231mln) in impairment and one-off charges for poorly priced contracts.

Net debt rose to £503mln but fears the support services group might follow Carillion into administration were eased by the signing last Friday of an £830mln refinancing that included a £300mln cash and loans facility.

White has promised to cut costs and add £40-50mln to group operating profit by 2020, with £15mln to come through in 2018.

Operating profits halved to £75mln in 2017, with the performance of support services described as ‘extremely poor’ and construction ‘poor’.

A significant proportion of support services business consists of high volume and relatively low margin contracts, White added.

“Historic selection and pricing in this sector has not been as disciplined as it will be in the future and the contract provision and poor performance is reflective of this.”

Shares tumbled 12% to 94p.

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