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Debt levels will peak in mid-2018, says Interserve

11 January 2018

An updated trading report has been issued by Interserve, setting out its expectations for the future following previous profit warnings.

Its 2017 performance is now expected to be in line with its last statement, issued in October, and net debt levels are expected to reach their maximum level in the first half of this year.

Following the appointment of a new management team and the launch of its Fit for Growth initiative, the company now says operating profit is expected to exceed current market expectations this year.

Net debt levels had risen to approximately £513m at the end of last year, attributed to Interserve's issues with Energy from Waste, a "normalisation of trading terms" within its supply chain and "exceptional costs".

"Whilst we anticipate that future cashflows from energy from waste will be broadly neutral, we expect net debt to peak in the first half of FY18 due to the phasing of cashflows relating to energy from waste costs which have already been provided, exceptional costs relating to restructuring actions and the current refinancing activity," the statement read.

It further stated that discussions with lenders were continuing and an announcement on its funding terms will be issued "in due course".

Positive progress was also announced in the review of the Interserve contract portfolio, with further updates will be included in the company's 2017 annual results statement.

The company is one of a number of large FM service providers to have issued profit warnings last year, leading to concern that one of these will fail.

The latest statement offers a more positive view of the company's position, which will reassure industry watchers as long as no more negative statements are issued in the next few months.


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