Interserve has revealed net debt is expected to be around £513 million at year-end despite reporting good progress on its 'Fit for Growth' performance improvement plan.

In a trading update ahead of its 2017 full year results, the firm revealed its performance for the year is consistent with the trends outlined in October's market update. Net debt is expected to be circa £513m, "reflecting the significant outflow in the year relating to Energy from Waste, a normalisation of trading terms with our supply chain and exceptional costs".

Interserve said: "Discussions with the Group's lenders are progressing and a further announcement with regards to its longer-term funding arrangements will be made in due course."

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However, the Group's three-year 'Fit for Growth' turnaround programme is expected to deliver between £40m - £50m in Group operating profit by 2020.

"Management are confident that the cost savings and management actions identified will contribute at least £40-50m to Group operating profit by 2020, with the in-year impact in 2018 estimated to be £15m," Interserve said.

"As a result of the 'Fit for Growth' initiatives, the Group's operating profit for 2018 is now expected to be ahead of current market expectations."

Debbie White, Interserve's Chief Executive, said: "The new management team, and the Board, have been working to stabilise the business and provide a sound foundation to continue to serve our customers effectively, underpin our future growth and to restore shareholder value.

"This work has focused on managing the balance sheet, conducting a thorough assessment of the contract portfolio, and introducing new management disciplines, processes and cost controls under the 'Fit for Growth' programme."

(LM)