Shares in UK contractor Interserve fell 17% this morning after it revealed "extremely poor" figures for 2017.
The company blamed an "inefficient operating model", an excessive cost structure and lower margins for public sector work for a pretax loss of £244m, compared with a loss of £91m for 2016. The figures included an number of write-downs, including a £217m loss on a contract to build waste-to-energy plants.
The core business delivered an underlying profit of £54m, mainly from its RMD Kwikform formworks business. Turnover remained almost stable at around £3.3bn, and debt increased from £274m to £502.6m.
Glynn Barker, the company’s chairman, said the group’s financial performance was "extremely poor".
"The turmoil of the past 16 months is behind us, but the hard work is not. We have made good progress in dealing with the challenges of progressing our exit from energy from waste but significant risks clearly remain," he said.
Debbie White, the company’s chief executive, added that the business had a number of operational problems. She said: "Our purchasing practices, the organisational design and the cost choices made, will not enable us even to achieve margins consistent with our peers in the industry."
Ms White took over from Interserve veteran Adrian Ringrose in September last year.
Interserve is one of Britain’s biggest providers of services to the UK government. Among is contracts is a deal to manage the Ministry of Defence’s property estate and the Foreign Office’s embassies across Europe and a contract to clean the London Underground.
There were fears that the company might follow Carillion into receivership, however it agreed a restructuring deal on Friday (27 April) with banks including HSBC, Lloyds, RBS and Barclays. This will give the company an £834m credit line until September 2021, although the interest will be £56m in 2018, rising to £70m a year in 2019.
The company changed its name from Tilbury Douglas in 2001 to become one of the first UK construction groups to move from traditional contracting to become a provider of outsourced construction services. It now employs 80,000 people worldwide.
Image: The company has been hit by a disastrous move into waste to energy plants (Dreamstime)