Interserve Share Discussion Threads

[jeffian] 14/12/2017 11:32

Why? They put off the tests because they knew they'd fail with all the immediate consequences. They've been given 3 months' breathing space, but it's just a deferral, not a solution. My experience (my "rubbish career"!) is that the banks will handle this to suit themselves, not the company. They won't want to bring the pack of cards down straight away but they'll grab any cash they can for themselves along the way, regardless of the benefits to the company, as evidenced by cashing in a valuable (to the company) SWAPS deal and pocketing the proceeds leaving IRV with higher debt and higher interest costs. Whether it's December or March, the 2 big unknowns remain - the terms of any bank rescue and the final cost of the EfW debacle. This will drag on for a while yet, I'm afraid.

[dandanactionman] 14/12/2017 10:29

All the following imho dyorTo be honest I am disappointed at reaction to yesterday's news. Appears that the media story appears to be sky's version (negative).I had hoped for 80p once announcement on extension of tests for covenants?

[fenners66] 14/12/2017 09:27

"Scott Millar, a managing director at AlixPartners, is joining Interserve in the role of chief restructuring officer"

So what do they need

"the appointment of Sally Cabrini to its Executive Board as Director of Transformation, IT and People "

for?

Another cost - ( Large ) !

they cannot afford

[fenners66] 14/12/2017 08:53

Juggler "Without the EfW penalties the company would be profit making"

Look at the figures above and read the RNS

"We now expect operating profit for the overall group in the second half to be approximately half the level of that which was reported in the second half of last year."

That profitability level EXCLUDES the energy for waste write off and is about £26m LESS than the first half as business has deteriorated.

If you use the same costs from the P&L below the Operating profit line as the first half (again ignoring exceptionals)
with £26m lower operating profit that would make the second half trading at a loss.

So again show me their figures - from where you get a profit .

[losses] 14/12/2017 08:27

INTERSERVE AWARDED FIVE YEAR CONTRACT EXTENSION WITH RWEby Interserve Press Office | Dec 13, 2017Interserve wins RWE ContractInterserve, the international support services and construction group, has won a five year contract worth over £2 million with leading power generation company, RWE.

[losses] 14/12/2017 08:26

INTERSERVE WINS £11.5 MILLION CONTRACT TO BUILD NEW ONCOLOGY CENTRE IN LIVERPOOLby Interserve Press Office | Dec 12, 2017

[the juggler] 14/12/2017 07:47

Losses with regard to job cuts, many of those that have departed have been/will be paid a year's salary in lieu of notice. The outgoing FD is on £31,500 pcm until Nov 18 as are many others of a similar level. Others will be on at least 3 months notice, so savings on salaries will take some time to impact the bottom line.
Without the EfW penalties the company would be profit making. Doubtlessly it will take 3 to 5 years to put this company back on an share price of £3-£5 and reinstatement of the dividend will be a turning point when it happens. They have had a substantial number of contract wins even announcing some earlier this week.
The next 3 months will be key to getting a plan in place that satisfies the lenders, but the headroom is there now for good progress.

[losses] 14/12/2017 07:17

What about the benefits of the restructure... there will be job losses which will equate to savings.

[fenners66] 14/12/2017 00:49

Just read what that 2017 "Operating Profit" really translates into

Since they reclassify loads of costs after the tax on profit calculation on a separate page

It was really £17m
With exceptionals to charge of £10m

Leaving a net £7m

So if that is going to drop at the operating level by £26m then before exceptional costs they may already be losing money

We know they will make a loss because of the additional £36m for EFW
But this calc shows the whole business may be loss making in the second half anyway.

[fenners66] 14/12/2017 00:39

I went to the 2016 annual accounts to find out the extent of the currency swap and associated risks and whilst I was there did a bit of digging to see what this phrase from the recent trading statement meant,

"We now expect operating profit for the overall group in the second half to be approximately half the level of that which was reported in the second half of last year."

Now my guess would be that the gamblers on here have no idea what the "operating profit " mentioned could be.

That is my point - they literally are hoping things get better without understanding anything about the accounts.

This so called "operating profit" is of course all adjusted B/S
The real or statutory figure will be a huge loss - but for the last few years IRV have comforted themselves that despite losing a fortune they could always point to "normalised " numbers that they could describe as strong - ( I wouldn't) and then publish all the headlines based on that.

Of course that kind of denial comes home to roost.

So what did they think operating profit would be?

First Half 2016 £63m
Second Half 2016 £39m
First Half 2017 £46m
Est 2nd half 2017 £20m

Actual Loss for 2016 post tax - £ 120m
Now we can expect even more for 2017 ?

I did note that the directors remuneration report in the 2016 Accounts ran to > 20 pages
Oh and the bonuses are tied to the adjusted "normalised" results so exclude "one off items" and lo and behold they had £200m of adjusted items so there could still be room for a bonus regardless of the actual results.

So the hedges :

2016 results
A gain of £42.0 million (2015: £19.8 million gain) was booked to other comprehensive
income in respect to changes in fair value of the hedges.

Looks like that has gained a further £2m but now any move on the underlying FX will be booked through P&L?

Added a further £10m to debt doing this
Add in further exceptional losses and a deteriorating trading position and we have the reasons why borrowings had to be extended.

So what is the prognosis for the 31st March 18 ?

Debt rising - reported EBITDA falling - more likely covenant tests would fail again, it is Short term relief no doubt , but it may also be the analogy of borrowing from a money lender to pay off credit card debt and then thinking the problem has gone away.

Meanwhile they must look for some family silver to sell.

Enjoy the tick up , for now , it may not last.

[fenners66] 14/12/2017 00:13

Henchard - I did ask the question the other day what the net debt was now. Thanks for doing some calcs.

The longs here have no idea....

[henchard] 13/12/2017 23:11

A tad concerning that although they had over £250m headroom on the existing £640m facilities at the end of H1 they now require an additional £180m. I'd expect the shares to head down again, particularly with no details on the terms of the financing (other than closing out the cross-currency swaps) and if it's true what the sky news article suggests that "Interserve failed to mention the appointment of the external advisers in a statement to the London Stock Exchange on Wednesday afternoon."

[cerrito] 13/12/2017 22:48

Pleasantly surprised that IRV have got albeit just for three months + a further £180m of bank facilities over and above the £640m they have-even though they have had to repay £40m through collapsing the currency swap. Concerned at this new FX liability they have taken on although appreciate they can afford to have some $ borrowings given their Middle East business.

[dandanactionman] 13/12/2017 22:10

All imho dyorHi SamdbAre you saying that you do or don't believe that this is negative?The link to the sky article is https://news.sky.com/story/lenders-to-interserve-force-company-doctor-on-troubled-contractor-11169321

[samdb] 13/12/2017 22:04

Completely different story to what I've heard is going on internally but you've got to trade the price action.

[dandanactionman] 13/12/2017 22:04

All the following imho dyorYahoo and sky appear to have a negative view on today's announcement and rise? https://uk.news.yahoo.com/lenders-interserve-force-company-doctor-175100721I am long these shares but like to try to see both sides of the argument.

[eodfire] 13/12/2017 19:40

A slow but sure recovery underway then. Onward and upward.

[hootza616] 13/12/2017 17:52

Great timing not! However I put my recovered cash into MSG which is up 10% today, so I am actually better off than I would have been. GLA.

[cfc1] 13/12/2017 16:57

Eodfire yeah LOL.......fen666 being one of them hopefully...amazing how the little weasel disappears on positive news or momentum..what a c*&t!

[eodfire] 13/12/2017 16:53

That rns caught a few people out. Smell that burning.

[losses] 13/12/2017 16:50

Surprised we didn't finish in the 80s

[losses] 13/12/2017 16:43

They were waiting Hootza616 to sell lol

[wad collector] 13/12/2017 16:41

Great we are saved ; back to £5 by Xmas?
Agree odd time for RNS . But prob means little.

[cfc1] 13/12/2017 16:34

dandan...I think they have gone from expensive at £3.5 to 70p in 6months....so I buy bombed out shares that have a good pipeline + contact = buy
this is a screaming buy!