Support services and construction group Interserve reported a more "consistent" trading performance for its financial year after issuing a pair of profit warnings in the autumn.


After one warning in September, in October Interserve said it was having talks with its lenders after a further costs from its difficult exit from the energy-from-waste programme meant there was a "realistic prospect" that it could breach its banking covenants.

On Wednesday, Interserve said it net debt at year-end would come in at roughly £513m, reflecting the significant outflow in the year relating to the EfW programme, a normalisation of trading terms with its supply chain and other exceptional costs.

While the group expects future cash flows from the EfW business unit to be "broadly neutral", net debt was seen peaking in the first half of the year due to the phasing of cashflows relating to restructuring and refinancing activities.

Management was confident that it's 'fit for growth' programme, focussed on improving efficiency, procurement processes and greater standardisation and simplification across the group, would contribute cost savings of at least £40-50m to the firm by 2020, including £15m this past year.

Talks with lenders are progressing and that "a further announcement with regards to longer-term funding will be made in due course".

Overall trading performance before exceptional items is expected to be in line with expectations for the year to December 2017, with house broker Numis forecasting £45.5m profit before tax and earnings per share of 26.6p.

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," she added.

As of 1040 GMT, shares had rocketed ahead 21.04% to 120.50p.

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