Interserve Reveals £33.8m Loss after Glasgow Waste Contract Failure

Interserve has revealed that it lost £33.8 million before tax for the first half of the year, after the company wrote off £70 million on a Glasgow waste contract.

The company is now set to quit the energy from waste industry after the huge loss made on the contract with Viridor for the Glasgow Recycling & Renewable Energy Centre.

Interserve blamed issues related to the installation, procurement and design of the gasification plant for the loss.

The exited business is made up of six contracts with £430 million in aggregate whole life revenues that were entered into between mid-2012 and early last year.

The work is expected to finish next year and the impact of these contract will be contained within the £70 million exceptional loss provision that was announced in May at a trading update.

For the six months up to June 30 2016 show a 2.4% increase in turnover to £1,632.9 million, while the business otherwise performed as anticipated. Headline operating profit also increased by 2% to £62.9 million.

In the last six months, the UK Support Services business, which now accounts for the majority of earnings, has won £1 billion of new work. Included in this new work is a five year deal to support the US Air Force bases in the UK, which are worth £230 million over the term.

Meanwhile, the UK Construction business says that trading in the building and fit out areas remains strong, while the International business has grown by 43% in support service and by 17% in construction.

There has not yet been a resolution of the strategic review being undertaken at the Equipment Services division and RMD Kwikform.

Chairman Glyn Barker said that a conclusion is expected later in the year, although there was no suggestion as to whether he meant that it is to be sold.


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