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Interserve is back in the black for the first half of 2017 despite having to pay out 拢67.1m to complete its construction obligations before it quits its troubled energy from waste business.

Its UK construction arm, however, recorded a 拢2m loss on the back of challenging market conditions and underperformance in operational delivery on a small number of contracts.

Work on the remaining energy from waste projects is progressing but with delays, the firm said. It expects to 鈥渟ubstantially鈥� complete the construction of the projects in the first half of 2018.

The firm said that it expects to pay out a further 拢25m in the second half of the year, but believes the estimated 拢160m of closing the business is still appropriate. Yet, Interserve warned that 鈥渟ignificant risks and uncertainties鈥� remained.

The firm entered the energy from waste market 鈥� which involves turning household rubbish into energy 鈥� back in 2012 with a deal for work in Glasgow.

Following that Interserve took on schemes at five other sites including Derby, Rotherham and Peterborough. The firm decided to exit the sector in May 2015.

Interserve also reported that the 鈥渟ubstantial majority鈥� of its UK construction work was now focused on projects with average values under 拢10m, plus selective larger contracts such as the Defence National Rehabilitation Centre. This has seen the business鈥檚 future workload fall by 拢0.2bn in the first half of the year.

From 2018 the UK Construction arm is expected to have a 鈥渕ore modest revenue鈥� and in future is anticiapted to be a smaller business, Interserve added.

It reported pre-tax profit of 拢24.9m for the six months to 30 June, up from a loss of 拢33.8m for the same period last year. Revenue was also up from 拢1.8bn to 拢1.9bn.

Average net debt stood at 拢457.3m for the period, Interserve said, adding that it expected net debt to be between 拢475m and 拢500m for the year end.

The company had previously forecasted net debt of 拢450m for 2017, but said this figure had been increased due to 鈥渞evised timing assumptions on insurance receipts in the waste business and by working capital investment in major public sector outsourcing contracts鈥�.

Interserve added that it was continuing to pursue a number of insurance claims, but because it was prioritising the strength of the firm鈥檚 case over quick cash settlements there had been a low intake of cash so far.

The firm said it expected significant inflows of cash in the second half of the year.

Adrian Ringrose (pictured), who became Interserve鈥檚 chief executive in 2003, is being replaced at the beginning of September by Debbie White, a senior executive from outsourcing group Sodexo, having announced his departure last autumn.

The firm is also searching for a new finance director after it was announced in June that Tim Haywood is to leave the company in November in order to 鈥減ursue other interests鈥�.

In his last results at the firm Ringrose, said: 鈥淭rading in the first half of the year was mixed. In the UK, Support Services delivered robust volume but margins were impacted by a number of anticipated cost headwinds, while in construction the continuation of a long period of challenging market conditions, coupled with areas of underperformance in operational delivery, resulted in a small loss for the division.

鈥淲e expect the restructuring and cost reduction measures we have taken in recent months to benefit both divisions鈥� performance during the second half of the year.鈥�