10th Jul 2009 07:00
TRADING UPDATE
Interserve Plc, the services, maintenance and building group, today provides an update on trading in advance of announcing half-year results on 11 August 2009.
Trading performance
Trading in the first half has continued in line with expectations, delivering progress overall versus the prior year's operating performance.
The Group continues to have good forward visibility, with 60 per cent of anticipated 2010 revenues (2008 H1: 60 per cent of anticipated 2009 revenues) included within a future workload that has shown further progress from the record £6.5 billion level reported at 31 December 2008 (including our share of the Middle East associates). During the first half of the year the Group continued to win significant business in key UK sectors such as custodial, education, health, local government and infrastructure. Middle East operations won work across the region worth over £200 million to the Group.
Public and privatised sectors' contribution increased to approximately 75 per cent of 2009 H1 revenues (2008 H1: 65 per cent). Trading remains encouraging in these sectors and is benefiting from secure work streams emanating from the long-term contracts and framework agreements that are a feature of these sectors.
The private sector environment in the UK, however, continues to be weak and has impacted trading within facilities management and specialist services relative to last year's level. Cost reduction actions have already been taken, and the Group is continuing to review closely the appropriate size of the cost base in the affected segments given a continuing challenging demand outlook.
Our international operations, which now generate more than half of the Group's profits, continue to deliver good results. In particular the Middle East construction and equipment services businesses are performing strongly. As previously highlighted, the Group is benefiting from the impact that weakness in sterling is having on the reporting of overseas earnings.
Net debt
Strong cash generation has led to an improvement in the net debt position of the Group since the publication of the results for the 12 months ended 31 December 2008, reflecting the focus on reducing capital expenditure and working capital, complemented by the cash realised from the PFI portfolio.
Pension scheme
The triennial review of the group pension fund, based on the position of the scheme as at the end of 2008, is well underway. Various options are being reviewed with respect to the structure of benefits and, together with the trustees of the scheme, asset allocation strategy and financing of the deficit. An update on these discussions will be provided when half-year results are published on 11 August 2009, though the entire process is unlikely to be completed before the end of the year.
Outlook
Given the record future workload, balanced and complementary operations in long-term growth markets and the ability to explore and develop new markets, the Board remains confident in the Group's ability to maintain robust near-term performance and sustained long-term growth.
Chief Executive Adrian Ringrose and Group Finance Director Tim Jones will host a conference call for analysts and investors at 8:30am today; for details please contact Maitland on 020 7379 5151.
An electronic copy of this Trading Update will be available to download from the Company's website, www.interserve.com.
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For further information please contact:
Adrian Ringrose, Chief Executive 0118 932 0123 Tim Jones, Group Finance Director 0118 932 0123 Matt Jones, Head of Investor Relations 0118 960 2280
Elizabeth Morley / Tom Roberts 020 7379 5151 Maitland
About Interserve
Interserve's vision is to be the Trusted Partner of all our stakeholders. We are a services, maintenance and building group operating in the public and private sectors in the UK and internationally. We offer advice, design, construction and facilities management services for society's infrastructure and provide a range of plant and equipment in specialist fields. Interserve is based in the UK and is a FTSE 250 company. It has revenue of £1.8 billion and a workforce of 50,000 people worldwide. Website: www.interserve.com.
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