Construction company Interserve has warned that costs from its problem energy-from-waste (EfW) contracts will “significantly exceed” £160m.
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In a trading update, Interserve also warned that its performance for the year would be significantly below previous expectations.
The latest update marks the third time that the company has reported increased costs because of its EfW contracts, which include the Glasgow facility for Viridor. Viridor hit Interserve with a termination notice last November, claiming the contractor had “continually and repeatedly failed to meet delivery milestones”.
Interserve said progress was continuing on such contracts but, due to “anticipated timing and complexities of completion”, the final costs of settling them will “significantly exceed the £160m currently provided”.
“The board continues to believe that the group will be able to operate within its banking covenants for the year ended 31 December 2017,” it added.
Interserve initially announced that it would take a £70m hit from the Glasgow project in May 2016, but warned in February this year that costs had more than doubled to £160m.
Former chief executive Adrian Ringrose, who left his post on 1 September this year, had warned there were “difficult moments” to come in closing out its remaining EfW contracts.
A version of this article first appeared in our sister title Construction News.