Interserve is still in talks over the £900m One Nine Elms scheme but chief executive Adrian Ringrose has admitted that completing the deal has taken “longer than anyone had thought”.
The firm, which this week unveiled a 10 per cent revenue increase for 2015, was named preferred bidder on Dalian Wanda’s luxury residential project last April, in a joint venture with China State Construction Engineering Corporation.
“The longer questions around price remain open, the greater the risk things will change. That’s the same whether you’re buying shoes or you’re buying skyscrapers”
Adrian Ringrose, Interserve
But a contract has yet to be inked, with negotiations around price thought to be a sticking point.
Speaking to Construction News, Mr Ringrose said: “As a project, I’m sure it will happen. It’s taking rather longer than perhaps anybody had thought and we’re still talking about the role that we could perform in our consortium to build the thing out.”
Asked whether he believed a contract between the Chinese developer and the JV would be signed, he added: “I don’t see any reason to think not at this stage, but until contracts are signed nothing is certain.”
Mr Ringrose would not be drawn on whether costs were an issue in the ongoing talks, but speaking about the market in general, he said: “Demand is growing and inflation is a feature.
“We’re in a rising market; the longer questions around price remain open, the greater the risk that things will change. That’s the same whether you’re buying shoes or you’re buying skyscrapers in Hong Kong.”
Adrian Ringrose chief executive Interserve
While profit for the group as a whole was up in 2015, Interserve’s UK construction arm saw operating profit shrink from £15.4m to just £0.1m. The company put this division’s lower profit down to pressures on the supply chain as well as a trio of loss-making projects in the energy-from-waste sector.
Mr Ringrose said the company’s exposure to that sector was diminishing, but added: “We’ve got some lessons to learn in that sector and we are learning them.”
He also told Construction News that the business would start to record bigger profits this year, but that it would not be a quick process.
“It’ll be gradual,” he said. “It won’t bounce back in one leap but it will head in the right direction and we’ll start to see these problems more and more in the rear-view mirror.”
In its results, Interserve revealed that it had launched a strategic review of its equipment services business, RMD Kwikform.
Mr Ringrose admitted that a sale of the business, which produced an operating profit of £41.9m in 2015 on turnover of £211m, was an option under consideration.
“It’s a capital-hungry business but it can throw off great returns on that capital,” he said. “We’re putting into the melting pot all the options around how [its] opportunity to develop can best be served, whether with ourselves as owner or whether another owner might be better placed.”
He said a decision on the future of the business is likely to be made before the end of the year.