Interserve Press Office | Oct 10, 2016
Interserve, the international support services and construction group, today announces the conclusion of the strategic review of its Equipment Services business (which trades as RMD Kwikform (“RMDK”)).
In February 2016 we announced that following several years of substantial growth across the Group, we would conduct a strategic review of RMDK to assess the full range of options to maximise value for shareholders.
Through the strategic review, the Board has concluded that we remain the best owner for RMDK and that retaining RMDK as a core part of the Group, with an updated strategy, best maximises value creation for shareholders.
RMDK is a global market leader solving complex engineering problems for its customers, through the application of world-class design and logistics capabilities, backed up by an extensive fleet of specialist equipment. RMDK contributed 32% of Group total operating profit in 2015.
The business has a track record of attractive growth (8% CAGR over the last 15 years), is highly cash generative through the cycle and produces excellent returns on capital employed (20% in 2015). It is a global business, providing an important element of diversification to the rest of the Group’s predominantly UK-based earnings profile. Whilst some of our end markets face some near term uncertainty, the structural drivers for global infrastructure remain strong. This, together with our proven ability to identify and respond as market demand shifts globally, underpins our confidence in the medium-term outlook and in the business’s ability to deliver sustainable margins above 20%, as we have previously guided.
The strategy for RMDK will focus around the following:
- Strengthening our positions where we have market leadership, through disciplined investment and operational excellence
- Driving our use of digital technology to differentiate further our engineering-led customer value proposition
- Developing a leading position in ground shoring, initially in the UK, to complement our existing strengths in falsework and formwork
- Investing in growth markets to develop a stronger position and improved financial performance, in addition to our established core markets
- Restructuring operations in a number of smaller, less attractive markets
Non-recurring charges associated with the above actions will be approximately £17 million, of which the cash outflow in the next 12 months will be approximately £5 million. The benefits of this restructuring include a reduction in capital expenditure requirements over the next two years of £5 million (due to fleet redeployment) and an increment to annual profitability of £1 million in the first full year following implementation.
Trading and cash performance in RMDK in the first nine months of the year continues to be in line with expectations and our expectations for the full year remain unchanged.
Adrian Ringrose and Tim Haywood will be hosting a call for investors at 8.30am today. Further details of the future strategy for RMDK will be set out at a capital markets event on 19th October.
An update on the Group’s trading and cash performance for the year will be provided in mid-November.
This announcement contains inside information.
Registration details for 10/10/16 08.30 conference call:
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For further information please contact:
Robin O’Kelly, Group Director of Communications
+44 (0) 7786 702526
Richard Campbell/Michael Kinirons, CNC Communications
+44 (0) 203 219 8816
Interserve is one of the world’s foremost support services and construction companies. Our vision is to redefine the future for people and places. Everything we do is shaped by our core values. We are a successful, growing, international business: a leader in innovative and sustainable outcomes for our clients and a great place to work for our people. We offer advice, design, construction, equipment, facilities management and frontline public services. We are headquartered in the UK and listed in the FTSE. We have gross revenues of £3.6 billion and a workforce of circa 80,000 people worldwide.
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