NEWS & ANALYSIS FMJ.CO.UK
LEGAL VIEW
6 DECEMBER/JANUARY 2019
INTERSERVE RESCUE
PLANS PROMPT FEARS OF
CARILLION-STYLE COLLAPSE
Support services and construction group Interserve saw its shares fall by over
half in December, following confirmation it was in rescue talks that could
result in significant losses
for current Interserve
shareholders. The Group,
which had seen its
shares slide over recent
weeks amidst growing
speculation regarding its
financial stability issued a
press statement, outlying
its plans to deleverage its
balance sheet.
It stated: “On 23 November
2018, the Interserve Board
announced that it is working
with its advisers to look at
all options to deliver the
optimum capital structure
for the group to support
its long-term, sustainable
development.
“Interserve and its
lenders are engaged in
constructive discussions
regarding the agreement
and implementation of a deleveraging plan which would deliver a strong balance
sheet with Interserve targeting leverage of approximately 1.5x net debt/EBITDA.
These discussions also involve proposals to amend the Group’s current financing
agreements, including the extension of the maturity dates and repayment profiles of
the existing facilities.”
Debbie White, CEO of Interserve, said discussions with their lenders was a positive
step in the process: “that was agreed as part of the April refinancing. The Cabinet
O ice has also expressed full support for the work we are doing to implement our
long-term recovery plan.
“The fundamentals of our business remain strong. The deleveraging plan will give
Interserve a strong long term capital structure and provide a solid foundation on
which to build the future success of the Group.”
There remains much speculation as to whether Interserve will escape a Carillionlike
fate, but one positive note is that the Government is under a lot more pressure
this time to stave o a collapse. This is because Interserve tops the list of the
Government’s strategic suppliers; it won a total of £938 million of work last year alone,
including £227 million contracts for the Department for Work and Pensions and £190
million for the Department for Transport. The Government will not want to see such a
major supplier fail, especially as the opposition has already weighed in on the issue.
Jon Trickett. Labour’s Shadow Minister for the Cabinet O ice said: “The Government
has once again dropped the ball on outsourcing and it’s the public who will su er.
“Less than two weeks ago, I asked the Government what extraordinary steps they
are taking to monitor the financial health of Interserve.
“They told me they “do not believe that any strategic supplier is in a similar situation
to Carillion,” and in November Interserve continued to win public sector contracts
worth millions, despite e ectively being insolvent.”
Meanwhile we’ll have to wait until the new year to find out the beleaguered group’s
plans as Interserve has advised its finalised deleveraging plan, subject to shareholder
approval, will not be announced until early 2019.
If you have any knowledge of FM news from across the world, please feel free to get in
touch with our assistant editor Sarah O’Beirne at sarah.obeirne@kpmmedia.co.uk
THE TICK BOX CULTURE –
DOES IT ACTUALLY WORK?
Adam Walmsley, Health and Safety
Consultant, International Workplace
Compliance: the action or fact of complying with a wish or
command.
Compliance for safety in buildings is an important way of
measuring performance and good practice. It is a powerful
and valuable management tool. But, in the FM world, it can
also be a practice that may provide a false path to follow.
The quality of the content for a compliance checklist is
heavily infl uenced by suppliers, advisors and enforcement
offi cers. It could be said there is no such thing as a stupid
answer, only a stupid question. As humans, we prefer black
and white answers and the ability to pigeon hole parts of
our world, to make life easy.
We need to consider the law, we have to assess reasonably
foreseeable risk, and respond and manage risk ‘so far as
is reasonably practicable’. That is what the law requires.
Sometimes we get hoodwinked into compliance to justify
doing enough to keep our buildings safe and this is not
what the law requires.
When we undertake risk assessment, we consider
hazards. We can then either respond with compliance, risk
management or a combination of both. Risk should take
the priority. It must be remembered that compliance may
or may not comply with the law and responding sensibly to
a risk may not follow any of the suggested guidance or tick
boxes you have been told to make happen.
Suppliers and contractors may demonstrate how their
product or service will assist with compliance. However, it
may not be enough to comply with the law, if it is not done
in an informed way through risk assessment. This is their
time-tested technique to make money.
Health and safety advisors often initiate compliance
because they need to justify a defi nitive decision for their
client, rather than put their neck on the line knowing there
is a low risk, where there is no cost benefi t in mitigating
the risk at all. As a health and safety professional it is
important to be able to identify the diff erence between ‘so
far as reasonably practicable’ (which covers the whole of
the Health and Safety at Work etc. Act 1974, but there are
also a few bits of secondary legislation i.e. Regulations that
do demand compliance) with ‘must and shall’ statements
for absolute duties in law.
Auditors live in a two-state world of compliance and noncompliance
and have no room for grey areas in-between.
It is hard for them to record a measurement between 0
and 1 as they are measuring outcome criteria, rather than
measuring risk that requires a sliding scale of input.
Enforcement offi cers are looking for compliance to
demonstrate reasonable and unreasonable actions or
behaviours to demonstrate to a court, beyond reasonable
doubt, an off ence was committed. Your defence is to
demonstrate you did what was reasonably sensible to
protect life and it is credible.
When something is non-compliant, ask yourself, what is
the actual risk? Remember you are arranging your safety
management, and you only have three goals: complying
with the law, keeping people safe, and doing it within
budget. Passing the compliance audit is not one of them,
that’s just a nice thing if it happens.
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