Interserve has bagged a £227m contract in some much needed good news for the troubled firm

 
Courtney Goldsmith
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The embattled support services firm warned on profits yesterda (Source: Getty)

Troubled support services company Interserve announced a new contract worth £227m just a day after it warned on profits, boosting shares by as much as nine per cent at the market open.

Under the deal, Interserve will provide facilities management services - mechanical, electrical and building maintenance - for the Department for Work and Pensions for five years.

It will also provide cleaning, catering, waste disposal, removal and secure destruction of confidential waste services to over 700 buildings throughout the UK, covering over 1.3m square metres of space.

Yesterday, shares in Interserve tumbled more than 27 per cent after the firm warned it may breach its banking covenants due to a downturn in the market.

The company said operating profit in the second half was expected to be around 50 per cent lower than previously expected.

That caused London hedge fund Marshall Wace, which made top gains betting against embattled contractor Carillion, to turn its attention to Interserve.

Debbie White, chief executive at Interserve, said: "Our goal is to deliver a seamless transition to providing facilities management services to the department."

At the time of writing, shares were up 9.01 per cent at 71.4p.

Mike van Dulken, head of research at Accendo Markets, said the major contract win offered hope after yesterday's warning of deteriorating market conditions.

He said:

Successful bargain hunters form yesterday will be rubbing their hands, hoping more such announcements are on their way to help the shares fill the latest gap down.

In the same vein, they may also be wondering whether a depressed share price (record lows yesterday) makes the company similarly vulnerable to bid speculation, something that sent Carillion shares up over 50 per cent just two months later.

Read more: Carillion conqueror hedgie sets sights on rival Interserve

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