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Interserve faces investigation over exit from EfW business

Contractor Interserve is being investigated by regulator the Financial Conduct Authority over its former energy-from-waste (EfW) business.

The company said the probe was “in connection with the company’s handling of inside information and its market disclosures in relation to its exited EfW business during the period from 15 July 2016 to 20 February 2017”.

It said it would co-operate fully with the investigation and update the market on the outcome.

Interserve warned in September 2017 that costs from its problem EfW contracts would “significantly exceed” £160m and soon after added £35.1m to that figure.

The Financial Times reported that Interserve’s share price increased by more than 12% in 2016 when it said in that year that it would withdraw from the EfW market after trouble with several contracts.

In a statement on Interserve’s annual results last month, chairman Glyn Barker said its overall financial performance “was extremely poor with headline profit falling to £52.4m”.

Baker blamed “an inefficient operating model and excessive cost structure [which] left the group exposed to weaknesses in the UK performance of support services and construction, in addition to a further deterioration in EfW during the middle of the year”.

These pressures led Interserve to refinance its debt, a process Barker said was successfully completed in April.

Chief executive Debbie White said in her review: “The outlook on some of our EfW contracts deteriorated during the year, leading to the increase in our provision announced last September.”

She said it planned to complete the construction phase on all remaining EfW projects in the first half of this year, having secured renewable obligation certificates for a project in Derby. The others are at Margam, Templeborough and Dunbar.

White said the EfW contracts, particularly one in Glasgow, had been affected by “issues relating to the design, procurement and installation of the gasification plant”.

“Progress on these issues was adversely affected by sub-contractor insolvencies and the consequential impacts on project timing and costs.”

Viridor said in March that spending on the Glasgow facility would go £95m over budget, as it was trying to claw back costs incurred through delays caused by Interserve.

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