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Interserve profit boosted by exceptional gains

10 Mar 10 Interserve has posted a pre-tax profit of £89.2m in its full-year results for 2009, an increase of £9.3m on the 2008 figure.

Interserve has posted a pre-tax profit of £89.2m in its full-year results for 2009, an increase of £9.3m on the 2008 figure.

However, this was chiefly due to exceptional items which added £16.3m to its balance sheet. Otherwise, its profit before tax would have been down by £3.1m on the previous year.

Turnover increased by 5.9% to £1.9bn (2008: £1.8bn).

Interserve said it had already secured 80% of 2010 revenue, and 58% of anticipated 2011 revenue. It boosted its order book by £2bn in 2009, and has been awarded contracts in 2010 to date totalling £500m.

The firm reduced its net debt by 65% from £109.2m to £37.3m.

Its pension shortfall has fallen by 37% to £68.6m

Interserve gained £16.3m in exceptional items, after contributing £33.2m in PFI assets to its pension scheme, and receiving a £20.6m pension curtailment gain. However, this was partly offset by its Office of Fair Trading fine (£11.6m), and impairment of goodwill.

Operations review

In the UK, Interserve believes prospects for increased outsourcing, and demand for social infrastructure should provide opportunities. However, it is taking “concerted action to reduce our cost base in a number of our newer public sector facilities management contracts where trading has been weaker than anticipated”.

In the Middle East, Interserve said its businesses have continued to trade well, benefiting from a good geographic spread of work, and solid local partnerships. It believes “medium-term growth drivers for the region as a whole remain attractive, notwithstanding a quieter Dubai construction market”.

The UK now contributes approximately 40% of Interserve’s profits with the international businesses contributing 60%.

Chief executive Adrian Ringrose said: "Interserve made good progress during difficult conditions in 2009. While the Group is not immune to the current economic challenges, it benefits from a solid and balanced UK position, continued opportunities internationally, good revenue visibility and a strong balance sheet.

“Given the risks in the external environment, 2010 will be a challenging year, particularly in the first half.”

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