Shares in Interserve (IRV) fell sharply after the support services provider recently announced it would more than double the provisions set aside to cover its exit from the troubled 'energy from waste' (EFW) business. Unsurprisingly, resolving this is now a priority for the group. In its full-year results, management warned that "there remains a range of possible outcomes and it will be some time before we have full visibility of the actual final cost of resolution". The exit provisions not only weighed on earnings, but prompted moves to enhance liquidity levels, including the suspension of the final dividend, while extended banking facilities have also been finalised.
UK support services, the largest division by revenue, declined 3 per cent to £1.78bn due to a number of issues, including a rise in the national living wage, increased pension costs and suspension of government procurement during the 2015 general election. However, the division expects its £5.7bn order book and increased bidding opportunities to deliver a small increase in volumes through 2017.