This company seems to be getting good size orders, pays dividend and sp climbing.
Financial report 2010
0.5bn OF CONTRACT WINS
Interserve, the international support services and construction group, today
provides an update on trading in advance of its annual results announcement on
9 March 2011, including contract wins worth around 0.5 billion.
* Strong second half, trading in line with expectations
* Further contract wins across key sectors and geographies
* Strong cash performance
Overall, trading is in line with the Board's expectations, delivering a
stronger performance in the second half of the year as compared to the first
half. Despite the near-term public sector spending environment the Group
benefitted from good progress achieved in the Support Services margin
enhancement programme and excellent trading in Project Services.
The Group secured over 1.5 billion of new work in 2010, contributing to a
future workload of over 5 billion, of which around 1.5 billion relates to
In recent months Interserve has won a number of contracts in the UK and across
the Middle East with a combined value of around 0.5 billion, including:
- School construction and facilities management contracts with St Helens
Council and Sandwell Metropolitan Borough Council, with a combined
whole-life value of around 170 million;
- Two major hospital development contracts in Birmingham and Cardiff worth
- Selection as one of the contractors on the 1.5 billion Northumbrian Water
- Private sector support services contracts across the commercial, industrial
and power sectors worth around 36 million (including contracts with
William Hill, BNY Mellon and Alstom);
* Middle East:
- Construction contracts in Doha in the education and commercial sectors
worth around 68 million;
- Three multi-year petrochemical services contracts in Qatar with RasGas,
Total and QVC, with a combined whole-life value of over 30 million;
- A fit-out contract at the Sofitel Resort Palm Jumeirah hotel in Dubai worth
around 30 million;
- Road improvement contracts in the northern emirates of the UAE worth around
- Construction contracts in Oman in the power and petrochemical sectors worth
- A three-year services contract with the UK Ministry of Defence at Musanah
air base near Muscat.
Support Services has advanced significantly in the second half as compared to
the first half due in large part to the good progress made in improving
profitability in our outsourcing operations. Consequently, there has been a
marked improvement in the division's operating margin during the second half.
We continue to engage in constructive discussions with the UK government on how
we can support its cost-savings programme. As previously anticipated, whilst
this process may result in some near-term volume pressure it is leading to a
streamlining of procurement processes which, given the division's substantial
future workload of around 4 billion (with 0.7 billion relating to 2011) and a
healthy opportunity pipeline, is expected to drive growth in the coming years.
The division has delivered excellent above-trend results, both in the UK and
Middle East, as we executed the significant contract portfolio developed in
International future workload remains robust and recent contract awards in
Qatar, the UAE and Oman help provide solid revenue visibility for 2011. Future
workload in the UK amounts to some 1 billion, of which over 0.5 billion
relates to 2011. We are continuing to target new sectors, such as energy and
retail, in order to mitigate to some extent challenging near-term market
The division has continued to experience cyclical weakness in infrastructure
spending in most of its markets. In particular, there was a pronounced slowdown
in work in the UAE as compared to the buoyant activity levels we experienced in
2009, although in recent weeks there have been encouraging signs of a pick-up
in market activity in Abu Dhabi. Our Australian business has continued to trade
well during 2010 and our new operation in Saudi Arabia, where the market
opportunity remains exciting, is gaining momentum.
Following the financial close of the St Helen's schools programme in December
the Group now manages a portfolio of 21 financially-closed projects, of which
13 are operational. These assets represent a significant investment commitment
of more than 50 million, around half of which has already been paid.
Cash conversion in the second half has been strong, resulting in a net debt
position similar to 30 June 2010 (net debt: 53.1 million). This has been
achieved even after allowing for acquisitions in the US and India in the second
half, totalling some 27 million.
With committed facilities in place until late 2013 of 250 million, the Group
has a strong financial position with significant capacity to drive further
We anticipate that trading conditions in 2011 will be stable compared with
2010. We expect our margin enhancement programme in Support Services to
continue to deliver improving performance which, in combination with a
resumption of growth in Equipment Services, should mitigate our expectations of
tougher trading conditions for Project Services following its strong
performance in 2010.
During 2010 the Group extended its already significant international reach, via
investments in a construction business in India, a services company in Oman and
an equipment services business in the USA and we now have operations in 30
countries. In the UK we expect substantial opportunities in the coming years as
the government seeks to effect structural changes in public service delivery
and social infrastructure investment.
Accordingly, despite the uncertainties around the near-term impact of changes
to UK public expenditure plans, our substantial future workload; our
international footprint and opportunities in UK outsourcing, continue to
provide a platform for long-term growth at attractive margins.