Maintenance and building group expects stronger second half of the year and boasts £5.5bn future workloads

Interserve has said it expects performance to be stronger in the second half of this year compared with the first half despite uncertainties over public sector spending.

In an interim statement to the City the maintenance and building group said it was in a strong financial position, with a stable net debt of £53.1m and facilities of £250m in place till late 2013.

The firm said it expected margin improvement in its support services business and growth from international markets.

It said: “While there continue to be uncertainties around the near-term impact of changes to public sector expenditure plans, our substantial future workload of around £5.5bn, of which approximately £1.4bn relates to 2011, provides a platform for long-term growth at attractive margins.”

Future workload in the support services business is around £4bn, with the whole-life value of contract opportunities in the UK estimated to be more than £6bn (of which around £3.5bn is at bid stage).

On the question of public spending cuts the company is optimistic, saying: “We continue to engage in constructive discussions with the UK government on how we can support its public sector cost savings programme.

“Whilst this process may result in some near-term volume pressure it is, encouragingly, also leading to a streamlining of procurement processes which we expect will be to our benefit.”

In its projects division international future workload is £0.3bn and customer payments in Dubai “continue to show progress”.

Future workload in the UK remains stable compared with the strong half-year position of £1.2bn, benefitting from the partial reinstatement of the St Helens programme and further contract wins.

The division is targeting new sectors, such as waste and retail, to mitigate the impact of the spending review.

Interserve’s equipment division has experienced weak infrastructure spending in most markets, particulary the UAE, where the anticipated pick-up in construction activity in Abu Dhabi is yet to materialize.

The group’s PFI portfolio contains 13 operational projects. These assets represent a significant investment commitment of over £50m, around half of which has already been paid. There are also a further two projects at preferred bidder stage and an encouraging pipeline of opportunities with a whole-life value of £1bn, notably in the health sector.

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