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Interserve's UK construction profits down 27 per cent

Interserve’s UK construction business has posted a profit hit of 27 per cent, bringing the arm’s contribution to total operating profit to £7.3m in the first half of 2012.

The figure is down from the £10m posted in the first half of 2011, while UK revenue increased by 0.4 per cent to £366.2m.

The international construction business saw a reduction in profit of 19.5 per cent to £7m, and a revenue of £103.8m – down from £107.3m in the same period last year.

Construction workloads was up slightly to £1.1bn, from £0.9m last year.

Interserve stated in its half-yearly report that “the UK business performed well against a challenging set of market conditions, maintaining revenues in the period”.

“As expected, margins eased slightly. We are addressing a broadening range of sectors including production industries, energy waste and nuclear in addition to our more traditional government and utilities arenas.”

Chairman Lord Blackwell said that “given the general backdrop of the UK construction market it is particularly pleasing that our UK business has maintained its revenue and continues to be successful in winning new work”.

“The business is pursuing a clear strategy to broaden its sector base in order to take best advantage of future revenue opportunities.”

There was better news in other areas, with revenue across all arms up 2.8 per cent to £1.2bn in the first six months to the end of June.

The equipment business grew revenue by 10.2 per cent to £81.9m, with profits rising 15.3 per cent to £6.8m.

Overall profits before tax were up 8.3 per cent to £32.6m, and the firm had an optimistic outlook with an order book of £6bn and a £1.1bn workload for 2013.

Debts were also up to £39.9m, from £35.8m in the same period last year, while free cash flow generation was up almost £10m to £53.9m.

2012 has also seen £15m in new investment in the firms PFI portfolio, and the acquisition of an £18.25m welfare-to-work business, Interserve Working Futures, as part of the future growth strategy.

The firm also disposed of £35m of PFI assets in the early part of the second half of the year.

Chief executive Adrian Ringrose commented: “We have delivered a good set of results against a backdrop of continuing mixed market conditions. Our ability to offer our clients intelligent solutions is reflected in growing revenues and profits together with an increasing future workload”.

“Support Services generated strong growth accompanied by a robust performance from Construction and a continuing recovery in Equipment Services. Our confidence is demonstrated by the board’s announcement of a further increase in dividend and reiteration of our guidance for stable performance in 2012 compared with 2011.”

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