Contractor Interserve has reported a pre-tax loss of £244m, blaming an “inefficient operating model and excessive cost structure” as it continues to battle with a series of under-performing contracts.
The group has been hit with a series of losses, particularly in the energy-from-waste sector where it has had to write off more than £250m, including a project in Glasgow which ran £95m over budget.
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.
Additional losses incurred in 2017 include an £86.1m write down following a major contract overview across the business, undertaken by PwC, and £33m towards group restructuring.
There was also a £77m impairment against goodwill, and an additional £35m hit from its delayed energy-from-waste projects.
Across its different divisions, the group reported a £19.4m loss in UK construction, while profit halved at its support services business, falling from £89.5m to £41.7m.
In a scathing statement, chairman Glyn Barker said the group’s results had been “extremely poor”.
“Success in our business requires discipline over the selection and pricing of bid opportunities, strong operational control over margin and cash generation, and an efficient, competitive cost infrastructure.
“It is clear to me that these disciplines have been inadequate in Interserve for a number of years. This is reflected not only in the underlying weak performance last year, but also by the provisions in these accounts against certain contracts resulting from our recent contract review.
“It is of no consolation to observe that many of these issues are also reflected in the performance of some of our competitors in construction and support services.”
The group reported a forward order book of £6.1bn for its support services business for the year, up from £5.7bn.
In construction, its order book dropped to £1bn in the UK, down from £1.2bn.
Following a contract review, the group said it established a contracts and investment committee which will sign off any contract win above £5m. Interserve has previously said it would move away from bidding for construction contracts worth more than £10m.
Projects the group is delivering in the North West include the £35m Rutherford Cancer Centre in Liverpool’s Paddington Village.
The group has five offices in the North West – two in Wigan, a base for its RMD Kwikform business in Skelmersdale, an engineering services office at Salford Quays, and an office in Liverpool.