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Sun September 22 2019

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Interserve reports progress on rescue plan

10 Jan 18 Interserve says that its 2018 operating profit will be ahead of current market expectations thanks to its ‘Fit for Growth’ turnarounds plan that it launched in October 2017.

Interserve chief executive Debbie White
Interserve chief executive Debbie White

Interserve has been haemorrhaging cash from problem waste-to-energy contracts. At risk of collapse, it negotiated a short-term deal with lenders last month that keeps the business together until 31st March 2018 at least.

In the meantime, new chief executive Debbie White has been working to put the rest of the business on a firmer footing. In a trading update today, the company indicated that she is making progress.

'Fit for Growth' is a three-year plan focused on improving organisational efficiency and procurement processes, standardising and simplifying processes across the business. The board expects cost savings to contribute at least £40m or £50m to group operating profit by 2020, of which £15m should be in 2018.

Talks are also continuing with lenders over longer-term funding. Interserve’s debt is running at £513m and rising. It is expected to peak in the first half of 2018 due.

Chief executive Debbie White said: "The new management team, and the board, have been working to stabilise the business and provide a sound foundation to continue to serve our customers effectively, underpin our future growth and to restore shareholder value. This work has focused on managing the balance sheet, conducting a thorough assessment of the contract portfolio, and introducing new management disciplines, processes and cost controls under the 'Fit for Growth' programme."

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