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Rise in outsourcing lifts Interserve

15 Aug 12 Interserve has unveiled an 8.2% improvement in first-half profits thanks to a strong performance from its support services operations benefiting from increased public sector outsourcing.

Interserve chief executive Adrian Ringrose
Interserve chief executive Adrian Ringrose

Gross revenue was up 2.8% for the six months to 30 June 2012 to £1, 210m (2011 H1: £1177m).

Profit before tax was £32.6m (2011 H1: £30.1m).

Support services in the UK contributed £572.1m of the revenues, an 11.5% increase, and £19.6m of operating profit, up 23.3%. The operating margin increased to 3.4 per cent (H1 2011: 3.1 per cent), reflecting further cost reductions and the emerging scale benefits of increased revenue.

Future workload for the division (UK and international), increased from £4.5bn at the end of 2011 to £4.7bn in H1 2012 with new work won from clients such as West Yorkshire Police, Alder Hey Children’s NHS Foundation Trust, National Grid, BPP, Sainsbury’s, Alliance Boots, William Hill and Ladbrokes. Included within this future workload is more than £600m scheduled for 2013.

UK construction revenue, by contrast, was up just 0.4% to £366.2m while operating profit fell 27% from £10.0m last time to £7.3m.

Equipment services, including RMD Kwikform, saw a £10.2% rise in first half revenue to £81.9m and a 15.3% rise in operating profit to £6.8m.

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Chief executive Adrian Ringrose said: “The medium-term outlook for our businesses remains positive, based on our growth strategy of building strong core businesses, developing internationally and capturing related expansion opportunities.

“In Support Services we are focused on delivering continued margin improvement combined with volume growth. We will continue developing our business internationally, concentrating on the petrochemical sector and on servicing clients with complex real-estate assets.

“We expect both UK and international construction revenues to remain subdued in the near term with growth potentially resuming in 2014. Our margin expectations remain unchanged.

“In Equipment Services, we envisage a continued recovery in revenues and progressive margin improvement driven by growing demand for infrastructure.

“In addition to the trends outlined above in our main businesses, we believe there are a range of further opportunities available in related sectors, services and geographies and we are well positioned to pursue these, both organically and, where appropriate, through acquisition.”

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