LONDON (Alliance News) - Support services and construction firm Interserve PLC's shares fell sharply Monday as the company reported a significantly widened loss in what it called a "difficult" 2017.
Shares were down 16% on Monday at 89.36 pence each. In May last year, the shares were priced as high as 245.75p.
Interserve posted a pretax loss of GBP244.4 million for 2017, compared to a GBP94.1 million loss the prior year. Before non-underlying items and the amortisation of acquired intangible assets, the figure was a profit of GBP52.4 million, compared to GBP137.3 million in 2016.
Interserve's wider loss was due to increased administrative expenses to GBP79.1 million from GBP50.8 million, as well as a GBP60.0 million impairment of goodwill and a larger negative share of result of associates and joint ventures.
Revenue for 2017 stood at GBP3.25 billion, narrowly higher than the GBP3.24 billion it posted in 2016.
Net debt increased significantly to GBP502.6 million from GBP274.4 million, due in the main to GBP95.9 million of Energy-from-Waste-associated outflows and other non-underlying items, Interserve said.
The company is still paying no dividend, having axed it in February last year.
Interserve said an "inefficient" operating model and an "excessive" cost structure left it exposed to weaknesses in its Support Services and Construction performance in the UK, as well as a deterioration in Energy-from-Waste, a sector which Interserve has now exited.
In Support Services, revenue decreased year-on-year to GBP1.81 billion from GBP1.91 billion, with operating profit shrinking to GBP41.7 million from GBP89.5 million.
Interserve's Construction business posted revenue of GBP1.04 billion from GBP870.8 million, but it swung to a GBP200,000 operating loss from a GBP42.1 million profit the year before.
In the third division, Equipment Services, revenue was GBP229.0 million from GBP224.1 million, and operating profit was GBP54.4 million from GBP48.6 million.
On Friday, Interserve had said it had agreed the terms of a major refinancing from lenders worth GBP291.1 million, and it said Monday this means it now has the platform to execute its 'Fit for Growth' plan to rebuild underlying performance.
The company expects the 'Fit for Growth' plan to deliver GBP15.0 million to operating profit in 2018 and "at least" GBP40.0 million to GBP50.0 million by 2020. The programme cost GBP16.5 million in 2017 and is expected to incur a cost of GBP15.0 million in 2018.
Chief Executive Debbie White said: "2017 was a difficult year for Interserve, but it was also a year of significant progress. As a new management team, we have stabilised the business and taken the first actions to establish a solid foundation from which we can both serve our customers effectively and underpin improved future operational and financial performance.
This work has focused on refinancing, conducting a thorough assessment of the contract portfolio, and introducing new management disciplines, processes and cost controls under the 'Fit for Growth' programme."
She continued: "The refinancing we recently agreed with our lenders is a major step in securing a firm financial platform to underpin the group's future. Of course there is much still to do.
"However, we are encouraged by the support from our lenders and the new facilities will allow us to execute our business plan, focus on delivering a good service for customers, drive improved operational and financial performance."
The company also said Monday that Non-Executive Director Keith Ludeman will leave after its annual general meeting on June 12 for unspecified reasons.
