Interserve shares soar after it exits energy-from-waste deals

SHARES in support services and construction company Interserve jumped 16pc yesterday as the firm announced it had exited problematic energy-fromwaste contracts.

The FTSE 250 company will no longer operate renewable energy facilities, citing “unique challenges” in the market, including in the supply chain.

Interserve said in May that it faced a £70m charge on a £146m energy-fromwaste contract in Glasgow, which had been hit by cost over-runs and delays. At the time, shares in the company plummeted nearly 30pc on its worst day in 13 years. They rose by 52½p yesterday to close at 372½p.

The company had struggled to stay on budget for the design, procurement and installation of a gasification plant at the Glasgow Recycling and Renewable Energy Centre, and has had problems with its supply chain. As a result, the board has had to allocate £70m to pay for delays – £35m this year and £35m for 2017.

This meant the company recorded a £33.8m loss for the first half of 2016, although revenues grew 2.4pc to £1.6bn and the company’s dividend rose 2.5pc to 8.1p.

Adrian Ringrose, chief executive of Interserve, said the problems with the energy-from-waste contracts had “overshadowed” the first six months of the year. But he added that he was opti- mistic about the rest of the year, because the company’s pipeline of work remained steady at £7.6bn.

“The business, in a world of volatility and uncertainty, has continued to perform well, especially in terms of our cash position,” he said.

“The medium-term drivers which underpin the business are still there – the Government’s and other bodies’ need for efficiency, the need to manage risks, and the changing population demographic – all of which lead us forward.”

Earlier this week, Interserve was awarded a two-year extension of its contract to provide security services to the BBC, worth more than £20m.

Interserve handles all manned guarding, close protection and control room operations at a variety of BBC sites, including Broadcasting House in London, Pacific Quay in Glasgow and the Media City UK complex in Salford.