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Interserve's debt set to increase by more than £100M

Interserve

Interserve’s expected year-end net debt is to be in the range of £625M to £650M, up from £503M last year.

In its trading statement covering the first nine months of 2018, the contractor revealed that its expected year-end net debt has increased due to further cash outflows on its energy from waste projects and an increase in credit given to firms in certain Middle Eastern markets.

However, the firm also said that it expects “significant operating profit improvement” this year.

The company’s Fit for Growth programme also remains on track to deliver its target of £15M in savings in 2018, it said.

Interserve’s Fit for Growth programme is in its first full year having been launched the end of 2017 as a three-year plan to improve organisational efficiency, improve procurement processes and ensure greater standardisation and simplification across the business.

In its trading statement, Interserve also revealed that revenue from its UK construction division has continued to decline in its third quarter. The division is expected to report a loss in the second half of the financial year.

The UK construction arm of the firm last year made an operating loss of £19M on turnover of £1.1bn.

Interserve’s RMD Kwikform business within its equipment services division is expected to report a percentage decline in full year profits due delays in major infrastructure projects.

A cash inflow in the second half of year resulting from the firm’s energy from waste project is also anticipated following the receipt of certain milestone payments, according to Interserve.

Interserve chief executive officer Debbie White said: “The [Interserve] board 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, particularly in closing out and exiting the energy from waste business.

“It also means reducing debt and putting a strong long-term capital structure in place. To this end we will announce a deleveraging plan for the group early in 2019.”

Following the release of its third quarter trading statement, Interserve’s shares fell to 3% to 33p in early trading.

Earlier this month, the share price of Interserve fell to its lowest point in more than 30 years following a claim from waste-to-product manufacturer Renewi which said the firm had missed a deadline on a joint venture on an energy-from-waste plant in Derby.

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