Interserve denies 5,000+ apprentices will go the way of Carillion

Even as the fallout from Carillion’s collapse engrossed the nation, another outsourcing giant which trains over 5,000 apprentices also had financial concerns highlighted.

Interserve, an international support services and construction group which runs a large UK training provider called Interserve Learning and Employment Ltd, employs over 80,000 staff worldwide and has an annual turnover of £3 billion.

But in September, the FTSE 250 contractor admitted that its annual profits were likely to halve after a £195 million loss from an energy to-waste contract. A second profit warning followed in October.

Fears about its financial health grew deeper after its rival Carillion suddenly went into liquidation in January, especially when a report by the Financial Times claimed that the Cabinet Office had established a special team of officials to closely monitor the situation.

The government moved swiftly to reassure people that Interserve will not be the next Carillion, but many fear the fall of another huge organisation with fingers in so many pies.

Interserve topped the list of the government’s strategic suppliers in 2017, according to data provider Tussell, winning £938 million of work across a range of areas including health, education and defence.

Interserve Learning and Employment was formerly called ESG and was bought from finance firm Ares Capital in a cash deal worth £25 million in December 2014.

It is rated ‘good’ by Ofsted and currently teaches over 5,000 apprentices. It was given £19 million from the ESFA in 2016/17 to deliver apprenticeships, as well as £2 million from the adult education budget.

The provider has around 700 employees and boasts that it is “one of the UK’s largest private sector providers of training and employment services”.

It also provides vocational training in three FE colleges in Saudi Arabia under the UK’s Colleges of Excellence programme and claims it supports over 65,000 people a year into work or training.

A spokesperson for the firm refused to speculate about what would happen to its learners if it collapsed, and claimed it is in no danger of doing so.

Recently announced government contracts include five-year facility management contracts for the Department for Work and Pensions (£227 million) and the Department for Transport (£190 million).

Other wins include a £500 million construction framework for Manchester city council, and a £140 million facilities management contract extension with the BBC.

Interserve confessed to net debts of about £513 million at the end of 2017, but in a trading update on January 10, its expected operating profit in 2018 was better than forecasted.

“Earlier this month we announced that we expect our 2017 performance to be in line with expectations outlined in October and that our transformation plan is expected to deliver £40-£50 million benefit by 2020,” a spokesperson said.

“This remains the case and we expect our 2018 operating profit to be ahead of current market expectations and we continue to have constructive discussions with lenders over
longer-term funding.

“We are keeping the Cabinet Office closely appraised of our progress as would be expected.”

A Cabinet Office spokesperson added: “We monitor the financial health of all of our strategic suppliers, including Interserve. We do not believe that any of our strategic suppliers
are in a comparable position to Carillion.”