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6 months ago
UPDATE 1-UK's Interserve falls to loss on exit charge, suspends dividend
February 28, 2017 / 8:20 AM / 6 months ago

UPDATE 1-UK's Interserve falls to loss on exit charge, suspends dividend

(Adds details, background)

Feb 28 (Reuters) - Interserve reported an annual loss and suspended its dividend on Tuesday after the British support services and construction company booked a bigger-than-expected charge on its exit from the energy-from-waste sector.

Interserve fell to a pretax loss of 94.1 million pounds ($117 million) for the year ended Dec. 31 from a profit of 79.5 million a year earlier.

Last week, it more than doubled an expected charge associated with the exit to about 160 million pounds after reviewing operational developments at the unit, but some analysts doubted the increased charge would be enough.

Interserve announced it would exit the energy-from-waste business in August, after noting cost overruns and delays in the Glasgow contract.

The company has also been drumming up business for its support services division as construction in the UK has been hurt by supply chain failures and pricing pressure.

However, on Tuesday Interserve said it was focused on reshaping its UK construction business, as performance there was disappointing.

It said annual revenue was largely flat at 3.2 billion pounds, as growth in its international businesses was offset by a modest decline in its UK support services unit due to delays in government procurement because of 2015 general elections and uncertainties over Britain's exit from the European Union.

A number of British support services companies have been hit by Brexit worries, which has caused delays to contract decisions and forced some to warn on profits. Data out this month indicated that business investment fell in the fourth quarter compared with the July-September period.

Interserve proposed no final dividend, meaning that its 2016 dividend fell to 8.1 pence from 24.3 pence a year earlier.

"The board has a medium term objective to reduce our overall indebtedness and enhance liquidity levels further whilst continuing to invest in our core businesses. We have therefore taken the difficult decision to suspend the dividend temporarily," Chief Executive Adrian Ringrose said in statement.

$1 = 0.8047 pounds Reporting by Esha Vaish in Bengaluru; editing by Jason Neely and Susan Thomas

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