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Interserve results better than expected as deleveraging plan gets underway

Services provider Interserve published a slightly strong set of full year results than expected, for although revenues declined to 10.7 per cent to £2,904.0 million, this compares favourably to 2017 which saw a loss of £244 million; while its operating profit rose to 9.7 per cent.

The improvement it said was due to its ‘Fit for Growth’ programme which is “delivering material cost savings and improving efficiency and effectiveness across the Group. The programme delivered £20 million of savings in 2018 and is on track to deliver at least £40-50 million in annual savings by 2021.”

Interserve has also confirmed the Board has approved the Deleveraging Plan, announced in February, believing it to be in the best interests of the Company and its Shareholders as a whole.

It said that the Directors believed the proposed Deleveraging Plan would provide “the Group with sufficient liquidity to service its short-term cash obligations, create a strong and competitive balance sheet and a fundamentally solid foundation from which the Group can improve its business and deliver on its long-term strategy.”

Interserve CEO Debbie White, said: “Despite extremely challenging circumstances, Interserve has made significant progress in 2018. Following the successful completion of the refinancing in April 2018, the business has traded robustly in some difficult markets and continued to win significant new contracts. The ‘Fit for Growth’ programme is delivering material cost savings and a simpler and more effective business structure. The implementation of the Group’s strategy remains on track and we have delivered a significantly improved operating profit this year, in line with our plan.

“Interserve remains focused on positioning the Group for long-term, sustainable success. This means continuing the operational progress we are making to put legacy issues behind us. However, the Group remains over-leveraged and the successful implementation of the Deleveraging Plan is critical to our future, as it will ensure that Interserve has a competitive financial structure for its future growth. I would urge our shareholders to vote in favour of the Deleveraging Plan.”

Some of the details of the results included:

  •  The Group’s Health and Safety performance improved in the year with its Lost Time Incident Rate falling by 25 per cent to 0.98 in 2018
  •  Future workload of £7.1 billion (December 2017: £7.6 billion), with steady momentum particularly in Support Services Defence, Healthcare and Regulated Sectors
  •  Operating profit in Support Services increased by 38.9 per cent from £42.2 million to £58.6 million as a result of an operational improvement plan
  •  In 2018, UK Construction secured access to Government framework pipeline sales opportunity of £1.0 billion International Construction business secured a number of contract wins in the period particularly in the UAE
  •  Equipment Services revenue lower as major UK infrastructure projects not repeated in 2018 and impact of Qatar embargo; strengthened competitive position through roll- out of new product ranges
  •  Continued progress on closing out remaining Energy from Waste projects

Said White: “Interserve has significant opportunities as a best-in-class partner to the public and private sector, and we are making good progress putting in place the right services, governance and financing to deliver a stronger future for our customers and our 68,000 people.”

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