Interserve, the international support services and construction group, has announced a 12% growth in revenues to to £2,192.6m and a record £6.4bn future order book with the publication this morning of its annual results for the year ended 31 December 2013, as well as announcing the proposed acquisition of Initial Facilities for £250 million.

Chief Executive Adrian Ringrose commented:

"2013 has been another good year for the business, and despite challenging conditions in many of our markets, we delivered substantial growth in both revenue and headline profit, and made important strategic progress. Our focus on delivering the best possible service to our clients has resulted in strong work-winning in the year, from both new and existing customers, maintaining our record future workload at £6.4 billion.”

 "In our UK Support Services business we delivered our medium term objective of finishing the year with margins of five per cent. Our Construction division remained resilient and Equipment Services delivered strong results, while continuing to expand into new markets.”

 "We also completed a number of important acquisitions, further extending our capabilities in key areas for growth, both in the UK and the Middle East.

 "We have confidence in the continued growth potential of the business, which is reflected by our proposed acquisition of Initial Facilities. The acquisition of such a complementary business allows us to deliver further against our growth strategy."

UK construction – continued resilience in difficult economic conditions

Interserve said its construction businesses, in both the UK and the Middle East, had performed well, showing continued resilience in the face of difficult economic conditions. Construction contributed £802.2m to group revenue, up 9% from £737.2m the previous year.

“Against a backdrop of subdued major infrastructure activity, our strategy of nurturing repeat business on key accounts and selectively diversifying into new sectors yielded increased revenue, up by 8.8 per cent to £802.2 million, with operating profit 0.6% ahead of 2012 at £14.7 million.  Margins remained within our expected range at 1.8 per cent. Future workload remained broadly stable at £1.0 billion (FY2012: £0.9 billion), benefitting from our successful targeting of a mixture of new and existing frameworks, and from selective opportunities in the private sector.”

Sustainability “becoming a powerful differentiator”

Interserve also flagged up sustainability as high on its agenda – the firm said it is “becoming a powerful differentiator” with a growing number of clients.  Renewable technology is incorporated into schemes more and more often, including the use of photovoltaics, solar collectors and grey water recycling.

As part of design development the firm now regularly provides feasibility reports and business cases to help clients' consideration of sustainable options.

Interserve also highlighted its added value as a main contractor is to provide coordination of the many trades, skills and suppliers involved in delivering construction projects.

In August 2013 the Cabinet Office published details of the UK Government's main construction contractors spend with SMEs across central government projects. Interserve topped the list of companies, with 70 % of its supply chain spend channelled to SMEs when delivering work for central government clients. The firm also actively focuses spend on suppliers that are local to its projects.

In its Middle East construction division, contract wins included civil engineering work in connection with a new desalination plant at the Ras Abu Fontas power and water station.  In Oman, work was completed for Daewoo Engineering and Construction on the Sur Independent Power Project, including civil engineering works on the largest seawater intake structure in the Sultanate. 

Well-placed to take advantage of UK market improvements in 2014

Interserve said it was well-placed to take advantage of market improvements that may begin to emerge in the UK during 2014. The firm also said it maintained a selective approach to reviewing potential acquisition opportunities and seeking out “strategically attractive assets” in growth markets. Interserve’s expanded debt capacity and facilities mean it remains able to take advantage of further appropriate acquisition opportunities as they are identified.

The Group has also separately today announced the proposed acquisition and associated financing of Initial Facilities for £250 million. The acquisition is conditional upon shareholder approval and with a shareholders vote on the proposal  scheduled for  17 March. The Board believes the acquisition will further strengthen the ability of the Group to take advantage of future market opportunities.

The combination will position Interserve as one of the largest providers (top three by turnover) of facilities management services in the UK and drive future growth

 The acquisition is expected to be significantly earnings enhancing in the first full year – Interserve’s growing support services business  is set to grow by another £500m a year as a result.