In an update on its current trading position, Interserve, the international support services and construction group, has said that it expects a £70m exceptional contract provision to be taken in the first half of 2016 caused by “a further deterioration in our Glasgow energy from waste contract”.
The statement explained: “However, our expectations for the UK construction division as a whole have been significantly adversely impacted by a further deterioration in our Glasgow energy from waste contract.
“The issues relate to the design, procurement and installation of the gasification plant, together with continuing challenges with the supply chain that will result in further cost overruns and delays. As a result the Board anticipates a £70m exceptional contract provision to be taken in the first half of 2016, resulting in a similar level of cash outflow spread across 2016 and 2017. We will be pursuing every opportunity to mitigate this situation.
“Our balance sheet remains robust. However, taking full account of the cash impact of the contract provision noted above, net debt is expected to be around £35m higher than previously guided at both the half year and the year end.”