Interserve issued a fresh profit warning today amid expectations that the cost of quitting its troubled Energy from Waste (EfW) contracts will now “significantly exceed” the £160 million it had expected.

In a trading update released this morning, the firm said the outturn for the year will be “significantly below its previous expectations”.

“Trading in the UK in July and August was disappointing, particularly in support services, but also in the construction division,” Interserve said.

Interserve was plunged into a £94m loss last year after making a £160m provision for exiting its waste business after revealing serious problems at its Glasgow Recycling and Renewable Energy project.

In February, the firm raised its estimate of the costs from £70m to £160m.

And while “further progress” continues to be made on contracts within the firm’s exited EfW business, the contractor added the cost of quitting the sector was also now turning out to be even higher than expected.

Interserve said today: “However, the anticipated timing and complexities of completion mean that the board now considers it likely that the final costs will significantly exceed the £160m currently provided. A further update will be provided in due course.”

The Board said it continued to believe that Interserve would be able to operate within its banking covenants for the year ended 31 December 2017.