Fudged market update crashes Interserve stock
YET another profit warning sent shares in support services group Interserve down by more than 50pc in less than an hour yesterday, wiping £114.4m off the firm’s market value.
But with Interserve’s last set of results containing the sort of impenetrable management speak that would make David Brent blush, some have argued that it is not doing itself any favours.
Interserve, which worked on huge construction projects such as Wembley stadium, said that its results for the whole year will be significantly below expectations – its third profit warning in the last 18 months.
It primarily put this down to poor performance in July and August across its support services and construction divisions.
And it said costs relating to exiting its failed energy-fromwaste business, which led it to posting a loss last year and suspend its dividend in February, are now expected to exceed £160m.
The firm was forced to exit the business last year when it took a £70m charge after being sacked from a key Glasgow project.
But Russ Mould, investment director at AJ Bell, said Interserve could have prevented such a large fall by using simpler language.
Just one example comes from the firm’s August half-year results, where it said: ‘The construction of energy from waste facilities, where there was contractual responsibility taken for process risk, and business streams exited as a result of the strategic review of equipment services, along with directly associated costs, are considered to be exited business.’
As well as tackling Interserve’s debt and cleaning up the energyto-waste deal, Mould said new chief executive Debbie White – who joined this month – must improve transparency.
‘A company’s interim and fullyear results are there to provide clarity,’ he said.
‘Such fudging has done the company no good. It will now cost more than the expected £160m to extricate itself from the energyto-waste mess.’ Shares slipped 51.6pc, or 78.5p, to 73.75p.
The FTSE 100 fell by 1.1pc, or 84.31, to 7295.39, as the pound jumped to a one-year high against the dollar after the Bank of England said rates could rise for the first time in more than a decade.
Foxy Bingo owner GVC Holdings hit an all-time high after predicting that full-year earnings will be ‘comfortably ahead’ of expectations. Gaming revenues shot up 10pc in the first half to £420m, driven in particular by growth in poker and casino revenues.
However, after a string of acquisitions under chief executive Kenny Alexander, the firm has put any further expansion on hold until the Government has completed its betting review. Shares rose 6.5pc, or 52p, to 851.5p.
Cleaning firm Franchise Brands fell 10pc, or 7p, to 63p despite reporting threefold revenue growth in the first half and a 38pc jump in pre-tax profits to £1m.
Among other brands, the firm owns a popular oven cleaning firm Ovenclean and a small- scale, scratch-and-dent repairs service for cars called ChipsAway.
Investors were put off after the firm warned it will weigh up the prospects of specialist plumbing brand Kemac due to ‘disappointing’ trading and sales to water utilities companies this year. Cloud video- editing platform
Forbidden Technologies sank 18.9pc, or 1.25p, to 5.38p after it put a loss of £930,000 over the first half of the year down to the resignation of chief executive Aziz Musa in February.
And biopharmaceutical technology firm Abzena plummeted 26.9pc, or 12.5p, to 34p, warning that full-year revenues will be significantly lower than expected.