Interserve: Huge government contractors' financial health 'being monitored' after Carillion collapse sparks service sector crisis fears

Company has gross annual revenues of around £3.6bn and employs approximately 80,000 people worldwide

In September the group delivered a highly cautious trading update, saying that business in the UK during the summer had been 'disappointing' (Alamy)

The Cabinet Office has reportedly assembled a team of officials to monitor the health of the UK support services company Interserve, in the wake of the dramatic collapse of Carillion, earlier in the week.

According to the Financial Times, civil servants have been keeping an eye on the company, which is listed on the FTSE 250 stock index and provides a slew of services to government departments, since it issued a profit warning in September last year.

The company has gross annual revenues of around £3.6bn and employs approximately 80,000 people worldwide. It provides services in the cleaning, maintenance, healthcare and construction services sectors, amongst others.

Concerns around the financial health of Interserve have moved into the spotlight this week after Carillion on Monday announced that it was entering compulsory liquidation, raising fears about the future of hundreds of major projects and thousands of jobs at an already challenging time for the British economy.

Shares in Interserve have lost more than 60 per cent of their value over the last year. According to the FT, its performance has been hurt by major losses on a waste-to-energy project in Scotland and pressures stemming from an increase in the national minimum wage.

In September the group delivered a highly cautious trading update, saying that trading in the UK over the summer had been “disappointing, particularly in support services, but also in the construction division”. It said at the time that it expected its performance for the full-year would be significantly below previous expectations.

However, despite the company’s struggles, Neil Wilson, a senior analyst at ETX Capital, said that it would be wrong to draw a direct comparison between Interserve and Carillion.

“Interserve has had its problems for sure, but it’s no Carillion,” he said.

He said that the company’s latest trading update, made earlier this month, had shown improvement.

“Encouragingly it seems to be turning things around,” he said.

Interserve was not immediately available for comment when contacted by The Independent.

A spokesperson for the Cabinet Office said that it monitors the financial health of all of it strategic suppliers, “including Interserve”.

“We are in regular discussions with all these companies regarding their financial position. We do not believe that any of our strategic suppliers are in a comparable position to Carillion,” the spokesperson added.