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Interserve chairman blames 'self-inflicted mistakes' for sliding losses

Interserve’s chairman has blamed “self-inflicted mistakes” and a lack of discipline over contracts for the company’s dire financial performance, as it revealed it made a loss of ?244m last year.
Reporting a slew of writedowns and spiralling debt, Glyn Barker said that the outsourcer had been faced with a “number of significant challenges” including market conditions, but that many of its problems had come from within.
“Overall the group's financial performance in 2017 was extremely poor,” Mr Barker admitted, who became chairman in March 2016.
The latest wave of writedowns included a ?77m impairment cost, ?86m after a review of its contracts, a further ?35m from a delayed energy-from-waste project, which has already cost it ?160m, and ?33m in restructuring.
Interserve’s net debt increased to ?502.6m, from ?274.4m in 2016, although revenue rose slightly to ?3.25bn. Shares in the company plunged 12.79pc on Monday morning to 93.23p.
Interserve
Interserve is one of the UK’s largest providers of cleaning and construction services, and works for major clients including the Ministry of Defence, Thomas Cook and London Underground. It employs 80,000 people, including 25,000 in the UK.
Chief executive Debbie White, who joined the company last autumn, has spent weeks negotiating with lenders to extend the company’s loans in order to give it the financial clout to move forward. The talks had been made harder by the collapse of fellow construction and support services firm Carillion in January, which meant banks were more hesitant to lend.
The new facilities, which give Interserve ?834m available to borrow until 2021, were signed off by shareholders on Friday.
Interserve chairman blames 'self-inflicted mistakes' for sliding losses

Debbie White, Interserve's chief executive
Ms White said that the new management team had been “awfully busy” trying to get the company back on track. Her turnaround plan, dubbed Fit for Growth, is designed to deliver ?15m of benefit this year and between ?40m and ?50m by 2020 and she said those savings were on track.
“My outsider view of Interserve was that it had dedicated and loyal employees supported by a very stable customer base,” she said. “We have a good workload of ?7.5bn lined up and we have continued to win new contracts.”
Since joining, Ms White has implemented more management oversight of contracts and monthly business reviews, neither of which had been happening under her predecessor Adrian Ringrose, who left at the end of 2016, she explained.
She said she would be concentrating on winning contracts in areas where the business performs well. “For construction, that’s in the health and education space,” she said. “For support services, it’s about increasing our capability and standardising what we do - no one is asking us to reinvent the wheel.”
Interserve is expected to make a small pre-tax profit of around ?35m this year as it offloads some of its more troublesome contracts.
Andrew Nussey, analyst at Peel Hunt, said he expected that a few small divisions could be sold but that the cost-saving plan appeared to be working. “The new management has successfully navigated the first stage of the turnaround,” he said.
In February, Interserve announced it would close its power business as part of the restructuring.
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