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Press Release

    News and Media - Interserve

Full Year Results Announcement 2018

by Interserve Press Office | Feb 27, 2019

Interserve, the international support services, construction and equipment services group, today announces its unaudited financial and operational results for the year ended 31 December 2018.


2018 2017 %
Revenue £2,904.0m £3,250.8m (10.7%)
Total Operating Profit *1, 2 £92.7m £84.5m 9.7%
Margin % *1 3.2% 2.6% 0.6%
Loss before tax (£111.3m) (£244.4m) 54.5%
EPS *1 1.1p 35.6p (96.9)%
Statutory EPS (89.2p) (176.0p) 49.3%
Net Debt £631.2m £502.6m (25.6%)

*1 before non-underlying items and amortisation of acquired intangible assets.

*2 2017 Restated for exited businesses from £74.9m to £84.5m

Deleveraging Plan to secure long-term future of Interserve

  • Prospectus to be issued on the date of this announcement, setting out the Deleveraging Plan in detail
  • The Directors believe the proposed Deleveraging Plan will provide the Group with sufficient liquidity to service its short-term cash obligations, create a strong and competitive balance sheet and a fundamentally solid foundation from which the Group can improve its business and deliver on its long-term strategy
  • The Deleveraging Plan is a consensual restructuring of Interserve, which is required to provide sufficient liquidity, cash and bonding facilities to allow the Group to service short term obligations to avoid a default in the Existing Financing Arrangements. Such a default, were it to occur, would be expected to have material adverse consequences for stakeholders and, in particular, for existing shareholders
  • The Deleveraging Plan fully preserves the pre-emption rights of existing shareholders. If they take up their entitlements in the equity raise their ownership will not be diluted and they will participate on the same terms as lenders
  • The Deleveraging Plan will be subject to approval by Interserve's shareholders on 15 March 2019

Financial performance

  • Significant operating profit *1 improvement up 9.7 % to £92.7m (2017: £84.5m)
  • Loss before tax reduced from £244.4m to £111.3m
  • Revenues declined 10.7% to £2,904.0m (2017: £3,250.8m) due to a fall in UK Construction and a more disciplined and commercially focused Group-wide bidding process
  • Operating profit margin *1 increased by 23% from 2.6% to 3.2%
  • The ‘Fit for Growth’ programme is delivering material cost savings and improving efficiency and effectiveness across the Group. The programme delivered £20m of savings in 2018 and is on track to deliver at least £40-50m in annual savings by 2021
  • Net debt increased to £631.2m within the expected range of £625-650m, primarily driven by:
    • incremental cash costs from Energy from Waste contracts;
    • incremental exceptional costs on a number of Construction projects;
    • delays in collecting receipts from certain Middle Eastern customers;
    • an unwind in the UK Construction business working capital as the division’s revenue continued to decline, partly due to the Group’s disciplined approach to pursuing work but more so as the Group’s financial position started to impact its ability to successfully win contracts, this has accelerated in the first half of 2019.

Transformation programme delivering strong operational progress and strategic momentum

  • The Group’s Health and Safety performance improved in the year with our Lost Time Incident Rate falling by 25% to 0.98 in 2018
  • Future workload of £7.1bn (December 2017: £7.6bn), with steady momentum particularly in Support Services Defence, Healthcare and Regulated Sectors
  • Operating profit in Support Services increased by 38.9% from £42.2m to £58.6m as a result of a multi-year operational improvement plan
  • In 2018, UK Construction secured access to Government framework pipeline sales opportunity of £1.0bn
  • International Construction business secured a number of contract wins in the period particularly in the UAE
  • Equipment Services revenue lower as major UK infrastructure projects not repeated in 2018 and impact of Qatar embargo; strengthened competitive position through roll-out of new product ranges
  • Continued progress on closing out remaining Energy from Waste projects

Debbie White, Chief Executive Officer, Interserve plc said:

“Despite extremely challenging circumstances, Interserve has made significant progress in 2018. Following the successful completion of the refinancing in April 2018, the business has traded robustly in some difficult 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. The implementation of the Group’s strategy remains on track and we have delivered a significantly improved operating profit this year in line with our plan.

Interserve 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. However, the Group remains over-leveraged and the successful implementation of the Deleveraging Plan is critical to our future, as it will ensure that Interserve has a competitive financial structure for its future growth. I would urge our shareholders to vote in favour of the Deleveraging Plan.

Interserve has significant opportunities as a best-in-class partner to the public and private sector, and we are making good progress putting in place the right services, governance and financing to deliver a stronger future for our customers and our 68,000 people.”

Interserve will be holding a webcast presentation for analysts and investors with Debbie White, CEO, and Mark Whiteling, CFO, at 09.15 GMT, which can be accessed at: https://3xscreen.videosync.fi/2019-02-25-interserve-fy-results-2018

Participant dial in numbers:
Dial in: 0800 358 9473
Participant Access Code: 42379575#
International participants can check the correct international dial in codes here.
The replay of the webcast will be available after the event at: www.interserve.com

 -Ends-

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION RELATING TO INTERSERVE PLC.

LEI: 549300MVYY4EZCRFHZ09

For further information please contact:

Jonathan Refoy
Interserve plc
+44 (0) 7880 315877

Martin Robinson
Toby Bates
Lisa Jarrett-Kerr

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. We are headquartered in the UK and FTSE-listed. We have consolidated revenues of £2.9bn and a workforce of circa 68,000 people worldwide.

www.interserve.com
For news follow @interservenews

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