Shares in outsourcer Interserve (IRV) fell by as much as 32 per cent after it announced that provisions set aside to cover its exit from the energy-for-waste business would be insufficient. Management was forced to more than double provisions to £160m from £70m, to cover incurred and anticipated losses.
The Glasgow-based business's problems were largely caused by one of its main subcontractors, Energos, going into administration. This was followed by the termination of a contract with Pennon-owned (PNN) energy recovery company Viridor for the construction of a £154m recycling and renewable energy centre.
Chief executive Adrian Ringrose warned that "uncertainties do remain" over the ultimate timing and costs of the exit, but said the group would be able to absorb the balance sheet impact. To further buffer the additional costs from the exit, the group has set up new banking facilities to increase its debt capacity by a further £66m and added 2.5 years to the repayment terms.
