UK Government reassures Interserve after Carillion collapse

It commented after shares in the construction and services firm Interserve fell amid reports that its financial health was under special Cabinet Office scrutiny. Interserve operates in Gibraltar.

The Cabinet Office said it monitored all its “strategic suppliers”, and was in regular talks about their finances.

The company, which employs 80,000 people worldwide, issued a profits warning in September saying its profits were likely to halve, in part because of big losses in its energy-from-waste business, said a BBC report. This was followed by a second profits warning in October.

It said it expected net debt for 2017 to be about £513m, in part because of the problems in the energy-from-waste business, but also a “normalisation of trading terms with our supply chain and exceptional costs”.

Interserve is involved in a three-year restructuring programme launched by new management in October aimed at improving efficiency, its procurement process and simplifying the business.

Interserve said: “Last week we announced that we expect our 2017 performance to be in-line with expectations outlined in October and that our transformation plan is expected to deliver £40m-£50m benefit by 2020.”

It said it expected its 2018 operating profit to be “ahead of current market expectations and we continue to have constructive discussions with lenders over longer-term funding”.

A senior market analyst at ETX Capital, said Interserve had had its problems,”but it’s no Carillion”.

Interserve, a rival of Carillion until its financial collapse this week, has seen its share price fall sharply on a report the Government is closely monitoring the company, said SkyNews.

Interserve’s work includes managing the MOD’s training base on Salisbury Plain.

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