April 30, 2018 / 7:02 AM / 3 months ago

UPDATE 2-Restructuring deepens losses at UK's Interserve, shares plunge

* Pretax loss of 244.4 mln stg as restructuring charges weigh

* Shares fall more than 20 pct

* Expects restructuring gains by 2020 (Adds detail, background)

April 30 (Reuters) - Britain’s Interserve Plc reported a deeper annual pretax loss on Monday, sending its shares 20 percent lower, as CEO Debbie White leads a turnaround of the construction and support services company.

Shareholders on Friday approved a funding plan agreed with creditors in March after the company had warned it might breach covenants.

On Monday, White, who took over as CEO in September, gave a blunt assessment of the company’s “inefficient operating model”.

Interserve’s pretax loss widened to 244.4 million pounds ($335 million) from 94.1 million while revenue of 3.25 billion pounds was fractionally higher.

Year-end net debt jumped 83 percent to 502.6 million pounds.

“The (FY) performance was extremely poor,” White said, noting that a large part of Interserve’s support services business consists of high volume and relatively low margin contracts.

She took on direct responsibility for the support services business in December.

“Historic selection and pricing in this sector has not been as disciplined as it will be in the future,” White said.

Shares in Interserve, which employs about 75,000 people worldwide, plunged following the results, losing more than 20 percent on the London Stock Exchange.

Reflecting its restructuring efforts, Interserve reported a 215.2 million pound charge related to exiting businesses, including from Energy from Waste.

The company maintained its 2020 target at least 40-50 million pounds in annual benefits to operating profit from its “Fit for Growth” restructuring programme.

Britain’s outsourcing sector is grappling with underperforming contracts, a problem which sent rival Carillion into bankruptcy in January.

$1 = 0.7286 pounds Reporting by Radhika Rukmangadhan in Bengaluru; editing by Jason Neely

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