Results at Interserve will be impacted by three loss-making energy process contracts within its infrastructure business, according to its third quarter update on trading published today ahead of its full-year results announcement on February 24, 2016.
The international support services and construction group, which operates across a broad range of segments and geographies, said it has experienced “mixed market conditions” since the publication of its half-year results in August.
However, outlook for the full-year remains unchanged with expectations for continued growth reflecting the robustness of its portfolio of businesses, Interserve said.
The Group’s Support Services division has continued to perform well, including in UK frontline public services through the successful mobilisation of the Transforming Rehabilitation programme. Internationally, despite the pressures of low oil prices, Interserve said that demand for critical operational support functions continues to be strong with resilient margin performance.
In its Construction division, the Group has continued to strengthen in the Middle East, reflecting a focus on key clients in retail, leisure and infrastructure. Accordingly Interserve expects results in the International Construction segment to show positive progress over 2014. However, in the UK, while the performance of its building and fit-out businesses is described as encouraging, this year's segmental result will be impacted by three loss-making energy process contracts within the infrastructure business. The company commented:
“This is due in large part to sub-contractor insolvencies and the consequential impacts on project timing and costs. Our involvement in the delivery of these contracts is substantially complete. Expectations for the full year are for a break-even performance in the UK Construction segment.”
In contrast, Interserve’s Equipment Services has continued to deliver outstanding growth, fuelled by strong demand and benefitting from the increased scale of the hire fleet in which we have invested significantly in recent years. Trading is particularly strong in parts of the Middle East, the Far East and the UK, more than off-setting volume reductions from the cyclical downturn in Australia.
The Group said that visibility of future workload remains encouraging, with 60 per cent of 2016 revenues secured as at the end of Q3 (Q3 2014: 60 per cent). Interserve’s full-year results will be announced on February 24, 2016.
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