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Construction and services group Interserve says it will leave “no stone unturned” in its efforts to untangle itself from troublesome waste contracts with the minimum of damage, but the troubles of recent months have still forced it to suspend dividend payments to investors.
The company has swung to a £94.1m pre-tax loss for 2016, against a profit of close to £80m in 2015. Revenues held up well, and in fact grew a little to £3.24bn. But it says “Brexit uncertainties”, higher wage bills, and swelling costs relating to an ‘energy from waste’ plant in Glasgow have hit hard. Earlier this month, the company revealed that early estimates of a £70m price tag for exiting the project were too low. It switched to £160m, knocking shares by some 22 per cent.
Today, chairman Glyn Barker said:
We have undertaken a detailed and thorough analysis of the situation and made a reasonable, prudent assessment of the potential outcomes. I must stress, however, 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.
CEO Adam Ringrose said the decision to suspend the dividend was “difficult”, noting:
While liquidity available to the group is adequate, having put in place new banking facilities that expand and extend our debt capacity, the Board has a medium term objective to reduce our overall indebtedness and enhance liquidity levels further whilst continuing to invest in our core businesses.
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