Interserve losses grow as ‘mistakes of the past’ bite

Shares in Interserve tumbled yesterday as the troubled outsourcer fell deeper into the red as its chairman bemoaned “self-inflicted mistakes of the past”.

The group saw losses more than double to £244.4 million in 2017 and the figures come amid a tumultuous period in which the company has warned over profits and sought emergency financing.

The outcome compares with a £94.1m loss in 2016, while revenue was broadly flat at £3.25 billion.

Shares moved 12% lower in morning trading.

Chairman Glyn Barker said: “Interserve has suffered unprecedented levels of disruption and faced a number of significant challenges.

“The company was affected by general market headwinds and external events; however much of this resulted from self-inflicted mistakes of the past.

“The resulting stress and uncertainty have led to anxiety among our staff, suppliers and customers and significant loss of value for our shareholders from the fall in our share price.”

Interserve was hit by disappointing trading in July and August, and in October warned over profits and a potential breach of its banking covenants as it grappled with escalating staff costs, squeezed margins and a flagging performance from its justice business.

There were also fears the fallout from the collapse of fellow outsourcer Carillion could engulf the sector.

Interserve holds several government contracts and employs 80,000 people.

Earlier this year, the outsourcer received a lifeline from its lenders, which include HSBC, Lloyds, RBS and Barclays, after agreeing a refinancing deal that will see the business receive a £196.6m cash injection and £95m in bonds.

Chief executive Debbie White said: “As a new management team, we have stabilised the business and taken the first actions to establish a solid foundation from which we can both serve our customers effectively and underpin improved future operational and financial performance.”

Shares in Interserve closed down 13.15p at 93.75p yesterday.

Interserve chairman Glyn Barker.