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Press Release

    News and Media - Interserve

Third Quarter Update

by Interserve Press Office | Nov 23, 2018
  • Overall trading for 2018: strong profit growth in-line with management expectations
  • Fit for Growth programme on track to deliver its target of £15m savings in 2018
  • Year-end net debt expected in the range of £625m-£650m
  • Deleveraging plan moving forward for announcement in early 2019

Interserve, the international support services and construction group, provides an update on trading for the first nine months of the year ending December 31st, 2018.

Overall the Group has continued to trade in-line with management’s expectations during the first nine months of the year. The implementation of the Group's strategy and the Fit for Growth transformation programme remain on track and the Group expects a significant operating profit improvement in 2018, in line with management's expectations.

Divisional Performance

Support Services has continued to make good progress in the second half relative to both the first half and the comparable period in 2017, reflecting the cost and margin actions taken in the business as well as the mobilisation of new contracts in the first half.

UK Construction has continued to see revenue decline in the period and we expect UK Construction to report a small loss in the second half. Following the combination of the International and UK construction businesses under a single leader, we have completed a comprehensive review of all projects in the UK and confirm that we have adequately provided for anticipated losses.

International Construction is still anticipated to have a stronger second half than that reported in the first half as we conclude several contracts. Whilst the order book for the International business, particularly in Qatar, continues to be lower than expected at this time of the year, the business secured a number of good contract wins in the period, particularly in the UAE where a strengthened oil price provides a more favourable backdrop for this competitive market.

Equipment Services had a challenging first half following the completion of major project activity in 2017. Continuing delays on major infrastructure projects in key markets persisted into the third quarter and RMDK is expected to report a percentage decline in full year profits similar to the first half 2018. RMDK remains a highly profitable business and has strengthened its competitive position during the period with the roll-out of new product ranges in the UK.


2018 is the first full year of the Group’s ‘Fit for Growth’ transformation programme, initiated by the Group’s management team following their arrival at the end of 2017. ‘Fit for Growth’ is a three-year plan to increase the Group's organisational efficiency, improve Group-wide procurement processes and ensure greater standardisation and simplification across the business.

The Fit for Growth programme remains on track to deliver its target of £15m savings in 2018. During the third quarter, we have continued to progress the plans for the delivery of the next phase of savings to achieve the targeted £40 - £50m of annualised savings in 2020.


Interserve continues to make progress on closing out its remaining Energy from Waste projects and the construction of all the projects is now complete. All of the plants are now operational, receiving waste, and in the final commissioning phase in readiness for handover.

As noted in the Group’s Half Year Report, risks to the programme remain and the Group encountered some additional delays in the third quarter. The Group continues to expect a net cash inflow in the second half following the receipt of certain milestone payments, although additional penalties resulting from these delays means that this inflow is expected to be less than anticipated at the time of the Group’s Half Year Report at circa £15m.

The successful handover of all of its remaining Energy from Waste projects remains a core priority for the Group. Interserve continues to expect to benefit from significant further insurance proceeds arising from these projects in 2019. The receipt of further insurance income remains a key focus for the Group.


The impact of the additional cash outflows on Energy from Waste as well as an increase in receivables in certain Middle Eastern markets, has meant that we now expect year-end net debt to be in the range of £625m-£650m. We anticipate that this working capital increase will unwind in 2019.

In April 2018 Interserve completed a refinancing to provide financial stability for the Group with new facilities through to 2021 to enable delivery of the Group's business plan. Pursuant to this agreement, Interserve will announce a deleveraging plan for the Group in early 2019. The Board is working with its advisers to look at all options to deliver the optimum capital structure for the business to support its long-term, sustainable development. This process includes options to bring new capital into the business and, as previously announced, progressing the disposal of non-core businesses.

Debbie White, Chief Executive Officer, commented:

“Interserve has made significant progress in 2018. Following the successful completion of the refinancing in April, the business has traded robustly in some challenging markets and continued to win significant new contracts. The 'Fit for Growth' programme is delivering material cost savings and a simpler and more effective business structure. Overall we remain on track to deliver a significantly improved financial performance this year in line with our plan.

“The Board remains focused on positioning the Group for long-term, sustainable success. This means continuing the operational progress we are making to put legacy issues behind us, particularly in closing out and exiting the Energy from Waste business. It also means reducing debt and putting a strong long-term capital structure in place. To this end we will announce a deleveraging plan for the Group early in 2019.

“Interserve has significant opportunities as a best-in-class partner to the public and private sector, and we are working with all stakeholders to put in place the right standards, services, governance and financing to deliver a stronger future for Interserve’s customers and our 74,000 people.”


For more information contact:

Martin Robinson
Tulchan Communications
+44 (0) 207 3534200

About Interserve

Interserve is one of the world’s foremost support services and construction companies. Everything we do is shaped by our core values. We are a leader in innovative and sustainable outcomes for our clients and a great place to work for our people. We offer advice, design, construction, equipment, facilities management and frontline public services. Headquartered in the UK and FTSE listed, we have gross revenues of £3.7 billion and a workforce of circa 74,000 people worldwide.

For Interserve news follow: @interservenews

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