Interserve Regulatory News (IRV)

14 Jan 2009 07:00

TRADING UPDATE * Continued strong trading * Improved revenue coverage for current year

Interserve Plc, the services, maintenance and building group, today provides an update on trading in advance of announcing preliminary results on 11 March 2009.

Trading performance

The Group has continued to trade well overall, in line with expectations.

We continue to win new business in the UK in strong defensive sectors such as central and local government, education and health, though trading conditions in some private sector markets are becoming more challenging. Significantly, 67 per cent of our revenues come from the public and privatised sectors, and we have already secured work amounting to 66 per cent of anticipated 2009 revenues (compared to a corresponding figure last year of 61 per cent).

Our international businesses, which generate c. 45 per cent of the Group's profits, remain on track and in the Middle East our well-established local businesses continue to deliver excellent results.

We have also announced today a number of new contracts:

* a position as one of four participants on a framework contract for Mapeley, worth c. £70 million to Interserve; * in Qatar, our largest market in the Middle East, Gulf Contracting, our associate, secured a c. £65 million contract to build facilities associated with tanker-maintenance infrastructure; * the financial close of the Derry schools PFI contract in Northern Ireland, adding c. £20 million in facilities management revenues; and * a contract to construct a specialist arts college at Kingswood in the East Midlands worth c. £21 million.

These contracts, plus the major Defra support contract that we announced on 5 December 2008 estimated at £500 million, contribute significantly to our record future workload which stood at c. £6.2 billion at 31 December 2008 (versus £6.1 billion at 30 June 2008).

Financial Position

The Group retains a resilient balance sheet, with committed facilities in place of £250 million expiring in or after 2011. Net debt at the year end was at a similar level to 30 June 2008.

Following decreases in pension fund asset values, 2009 results will reflect reduced assumed returns from scheme investments, resulting in an increased non-cash interest cost. The next triennial review of the group pension fund will be undertaken based on the position of the scheme as at the end of 2008.

Outlook

The Group expects to continue to benefit from its diversified and balanced portfolio of businesses, capable of delivering high quality services at every stage of an asset's life cycle. Positive market trends in outsourcing and long-term structural requirements for public-sector facilities such as schools, hospitals and prisons underpin our confidence in our UK businesses, where we are well placed to help customers deliver value for money services in today's challenging economic environment. In the Middle East there are exciting opportunities in Abu Dhabi, where our presence is growing which, together with our excellent position across other strong growth economies in the Gulf, most notably Qatar, Oman and Bahrain, means our prospects in the region remain highly attractive.

Given the excellent visibility of our revenues, the broad range of high quality opportunities in our markets and our robust balance sheet the Board remains encouraged by the Group's long-term prospects and is confident of demonstrating further progress in 2009.

Chief Executive Adrian Ringrose and Group Finance Director Tim Jones will host a conference call for analysts and investors at 9.00am today; for details please contact Maitland on 020 7379 5151.

An electronic copy of this Trading Update will be available to download from the Company's website, www.interserve.com.

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For further information please contact:

Adrian Ringrose, Chief Executive 0118 932 0123Tim Jones, Group Finance Director 0118 932 0123Elizabeth Morley / Tom Roberts 020 7379 5151MaitlandAbout Interserve

Interserve's vision is to be the Trusted Partner of all our stakeholders. We are s a services, maintenance and building group operating in the public and private sectors in the UK and internationally. We offer advice, design, construction and facilities management services for society's infrastructure and provide a range of plant and equipment in specialist fields. Interserve is based in the UK and is a FTSE 250 company. It has revenue of £1.7 billion and a workforce of 50,000 people worldwide.