Great RNS21 Mar 2018 19:29
Fantastic news
This has derisked interserve massively and has pretty much saved it for a minimum of 3 years.
Interserve is a profitable company and it will learn from the mistakes that carillion made. It’s fundamentally a great company.
This whole talk about 20% is nonsense, the share price is up 25% when the RNS was released at 4:26 on a Wednesday....
Interserve have £3 billion in revenues, securing a multi 100 million contract is not unusual, typically these contracts are priced at 7-12% EBIT Margin ( I have worked on the financials in many different tender bids and this is pretty consistent against many sectors). The £50 million in interest payments can get eaten up in 2/3 large contracts secured which is not difficult to do. Let’s not forget a major competitor like Carillion is bust, driving prices higher.
Government contracts will also be much more open to allowing for higher budgets and prices, they won’t risk another carillion with contracts making no margin and their supplier going bust.
Good luck all, 200p in a year.