Interim Management Statement - trading in line with expectations

Interserve, the international support services and construction group, today issues its Interim Management Statement covering the period from 1 July 2011 to date.

Highlights

• Trading during the period in line with expectations; 2011 guidance maintained
• Contract wins totalling over £600 million since June
• 2012 revenue visibility comparable to the position at this stage last year (c. £1.4 billion¹)

Chief Executive Adrian Ringrose commented,

“Interserve continues to trade well in challenging market conditions. We are introducing a number of innovations to help both the public and private sectors meet these challenges, including our revolutionary PodSolve school design and PassivHaus schools and offices.

“The balance of opportunities presented by our global markets, together with our proven ability to develop sustainable client relationships, underpins our belief that Interserve is well placed to make significant advances over the medium term.”

Trading Performance
The Group continues to perform in line with the Board’s expectations and we maintain our outlook for 2011 trading characterised by:

• Support Services delivering strong profit growth through margin enhancement on broadly stable revenues.
• Construction margins softening in line with expectations on stable volumes.
• Equipment Services beginning to recover from the depressed market conditions experienced in the first half of the year.

Contract wins
We have won contracts worth an aggregate of over £600 million since June, maintaining our future workload at £5.3 billion. These include:

• The Prime Contract with the Defence Infrastructure Organisation covering the Falklands, Ascension Island, Cyprus and Gibraltar. The contract runs for five years with a possible two-year extension and is worth a potential £420 million over the full term.
• Two projects at Ras Laffan, one for JGC and the other for Nakilat, in connection with the ongoing development of Qatar’s huge natural gas reserves; Interserve’s share of these is £35 million.
• Several education contracts, including a PassivHaus school and the first implementation of our groundbreaking PodSolve school concept, both in Leeds, totalling £37 million.
• Two local authority outsourcing contracts, with Lewisham and Croydon, totalling £36 million.
• Two framework agreements with CE Electric involving the installation of extra-high-voltage lines and associated work, with a total estimated value of £40 million.
• A place on the NHS energy- and carbon-reduction framework, worth an estimated £10 million over four years, advising on and implementing technical infrastructure upgrades for NHS Trusts.
• Two waste projects, one constructing a mechanical biological treatment plant for Hills Waste and the other supplying various services in the creation of one of Europe’s largest energy-from waste plants at Runcorn, Cheshire, together worth £18 million.
• The design and construction of a new air-despatch facility at RAF Brize Norton worth £22 million.
• A four-year framework agreement with Magnox, estimated to be worth £15 million, covering the design and construction of facilities to store intermediate-level nuclear waste.

Financial position
Continuing control of capital expenditure and working capital has enabled the Group to maintain a strong financial position and to reiterate our existing guidance for year-end net debt.

Further progress has been made in agreeing the tax treatment of cash flows from our Middle East operations. This, combined with the agreements reached in the first half of the year, underpins the low effective tax rate incorporated in current guidance.

Outlook
The breadth of our service offerings, together with our expanding geographic reach, position us well to continue to develop in spite of the challenging conditions in a number of our markets.

The primary drivers for our future growth will be the increasing requirements for the UK public sector to outsource services in order to deliver efficiency gains, together with expanding demand for infrastructure investment in the world’s faster growing economies – particularly Qatar looking out to 2013/14 and beyond.

An electronic copy of this Interim Management Statement is available to download from the Company’s website, www.interserve.com.

- Ends -

For further information please contact:
Adrian Ringrose, Chief Executive 0118 932 0123
Tim Haywood, Group Finance Director 0118 932 0123
Giles Scott, Head of Corporate Communications 0118 960 2307
Elizabeth Morley / Tom Eckersley, Maitland 020 7379 5151

About Interserve
Interserve's vision is to be the Trusted Partner of all our stakeholders. We are one of the world’s foremost support services and construction companies, operating in the public and private sectors in the UK and internationally. We offer advice, design, construction, equipment and facilities management services for society's infrastructure. Interserve is based in the UK and is a FTSE 250 company. We have revenue of £1.9 billion and a workforce of nearly 50,000 people worldwide. Website: www.interserve.com

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¹Including our share of associates