Despite share prices plummeting to a 30-year low, the support services and construction giant Interserve has moved to provide assurances about its financial future and recovery programme.
The share price had dropped to levels not seen since 1984 today with the company’s shares falling to 31.19p after closing by more than 10% yesterday (12 November) to 39p. But since media reports this morning, shares have risen back up to 38p after the company released a statement.
“Interserve notes recent press commentary surrounding the group and the movement in its share price,” it said. “Interserve confirms that the implementation of the group's strategy and the Fit for Growth transformation programme remains on track and the group continues to expect a significant operating profit improvement in 2018, in line with management's expectations.”
Speculation about its future had arisen after one if its clients, Renewi, revealed that Interserve had missed a deadline on a joint venture in Derby that aims to produce energy from waste. Interserve has responded by insisting they “continue to make progress” on the energy from waste project and confirmed the construction completion certificate has been achieved.
However, it has been a troubling couple of years for the multinational firm with concerns about its future intensifying since the demise of Carillion in January.
In March, the company was forced to agree a refinancing deal worth almost £300m with its banks after several worrying months reassuring lenders and investors in the wake of the collapse of Carillion.
In August, it was announced that its UK construction managing director Gordon Kew would be leaving the company as part of an ongoing major restructuring process. He was replaced by George Franks who ran the firm’s international construction business with the move to merge the UK and international construction divisions an attempt to bring about more savings to the company.
At the time, chief executive officer Debbie White said changes “support our vision for a simpler, more efficient and more effective Interserve”. While bringing businesses together would help “reduce complexity and support the transfer of people and skills”.
The British contractor earlier in the year cited an “inefficient operating model” and high overheads as the reason for very disappointing results in 2017. For the year to 31 December 2017, the company posted a pre-tax loss of £244.4m on a revenue of £3.25bn. This compares with a revenue of £3.24bn and a pre-tax loss of £94.1m a year earlier.
Poor results led to its Fit for Growth programme which was said to be on target to deliver £15m savings in 2018 with £8m secured in the first half. The company also refinanced its loan facilities in April, leading net debt to rise to £614m from £502.6m.