Interserve to exit energy-from-waste business after 70 million pound charge

By Noor Zainab Hussain and Esha Vaish

(Reuters) - Interserve Plc, a British support services and construction company, said it would exit its energy-from-waste business, after it took a 70 million pound charge in the first half from cost overruns and delays in a contract in Glasgow.

Shares in the company were up 16 percent at 375.93 pence at 0913 GMT on the London Stock Exchange.

Interserve also said its outlook for the full year remained unchanged despite the increased political and macro-economic uncertainty following Britain's vote to leave the EU.

The company, whose activities range from providing care services for people in their own homes to building repairs at Britain's Sandhurst military academy, said the energy-from-waste business has six contracts signed between 2012 and 2015, with total whole-life revenue of 430 million pounds.

"Every pound of revenue is valuable of course, but we are interested in the revenue that we generate profit from, not the revenue that we generate losses from," Chief Executive Adrian Ringrose told Reuters.

"I think exiting that part of our business will be a very beneficial thing to do," he added.

Interserve said it expects to complete these contracts during 2017 and the impact of these contracts on its income statement would be contained within the previously announced charge.

Ringrose said there was "limited" forward market opportunity in industrial projects in the next few years, adding that the company would not have earned a "great deal of work" from the sector in any event.

The outsourcing company also reported a 2.1 percent rise in headline operating profit to 62.9 million pounds in the six months ended June 30.

BREXIT: RISK AND OPPORTUNITY

"It is a little too soon to tell how Brexit is going to play through, but certainly we can see why it might generate opportunities much as it might generate risk," Ringrose said.

Ringrose said the formation of a new department of state in the UK to negotiate and implement Brexit offered Interserve opportunities.

"We are in the business of servicing the government and its properties, the civil servants that work in it," he added.

The weakness in the sterling would also help Interserve, which earns a third of its revenue from outside the UK, Ringrose said.

Ringrose also said Interserve would benefit from the fact that it offers services that customers need, rather than those that are "entirely discretionary".

"We keep the lights on, we keep people safe, we keep people warm. Clients need to keep spending money on the sort of services we deliver," he said.

(Reporting by Noor Zainab Hussain and Esha Vaish in Bengaluru; Editing by Sunil Nair)