Economic

In the 125 years of our history we have constantly adapted to market conditions, and despite a challenging few years, we delivered a strong financial performance with confidence in the Group’s prospects. This performance is underpinned by our commitment to high standards of corporate governance and risk management.

• First-half of 2011 headline profit up 10.0 per cent
• First-half of 2011 free cash flow generation of £44.1 million
• Interim 2011 dividend up 7.1 per cent

Interserve has performed well, delivering headline profit growth despite challenging market conditions. Encouraged by the progress achieved in the first six months of the year and a growing bid portfolio, we maintain our guidance for 2011 and reiterate our belief that we have the capability to double earnings per share over five years. This confidence, underpinned by strong cash conversion, is reflected in the Board's announcement of an increase in the interim dividend in line with our progressive dividend policy.

• Net debt reduced to £35.8 million at 30 June 2011 (H1 2010: £53.1 million)
• Further marked reduction in pension deficit (net of taxation) to £22.1 million (H1 2010: £75.8 million)

The Work Programme

Interserve has entered a partnership with Rehab Group, called JobFit, to be part of delivering the government’s new Work Programme. The partnership has been awarded two regional contracts to deliver the ‘Work Programme’ and another two to deliver the ‘Mandatory Work Activity Programme’; the two regions cover the South West of England and the whole of Wales. After the first two months of trading, JobFit has accrued and is working with over 6,500 customers and that figure continues to increase by, on average, 150 customers per day.

Working with a number of specialist support providers and end-to-end delivery partners, JobFit provides a tailored package of support, training, qualifications and advice to help individuals get back to work; work placements are also a significant part of the programme. Through a range of local and national initiatives, JobFit is developing relationships with employers to facilitate crucial candidate placement and employment opportunities. Once in employment, JobFit continues to offer up to two years in work support to both the employees and the employers.

The Rehab Group is an independent, not-for-profit organisation providing health, social care, training and employment services to 56,000 people each year in the UK, Ireland, Netherlands and Poland.

View our contract wins and our financial results.

We continue to expand the range of our international operations. During 2010 we acquired the formwork and shoring assets of US based CMC and are now trading as RMD Kwikform North America. In India we formed a joint venture with SSPDL, a construction company based in Chennai. SIPL, in which Interserve holds a 49 per cent stake, will continue to execute construction works for SSPDL on a preferred-contractor basis. In Oman, Douglas OHI acquired a training company, Occupational Training Institute.

We advocate a sustainable procurement approach and we endeavour to influence clients by offering best practical, economical and environmental options when we procure on their behalf.

Having a local sustainable supply chain adds value to our business and local economy. We actively encourage local third-sector enterprises, including social enterprises, charities and supported businesses to become our suppliers. We also support local initiatives to utilise local resources as it benefits the local economy and local enterprise. It has a positive environmental impact, promotes job creation and skill development, creates a sustainable supply chain and makes a difference to people in need.

Recent developments

• We are monitoring our performance against the Flexible Framework. In some areas we have reached level 5 (the highest level) and we are currently in discussions to determine possible criteria for level 6, central government's matrix for measurement of sustainable procurement performance.
• A tool kit with iSE, the Social Development Agency, will help Social Enterprise Companies meet our quality standards, policies, procedures and criteria.
• In the West Midlands we have signed the Shop for Change pledge, which is a commitment to use Social Enterprise companies as part of the supply chain. We have adopted a tried and trusted programme to ensure that we use and maintain as many local firms, SMEs and third-sector enterprises as possible.
• Participation in the World Resources Institute road test of a draft Scope 3 accounting and reporting standard, investigating the ability of our supply chain to provide data on the greenhouse-gas emissions associated with their services.
• A range of sustainable procurement tools including:
  • Supplier
  • Product and commodity risk assessments
  • Supply chain and supplier process risk mappings
  • Enhanced requisition forms for ordering

Through the Sandwell Local Education Partnership we are committed to offering 145 apprenticeships over the life of the contract. The Interserve-led consortium E4L identified FutureSkills Sandwell / Think Local Construction as a potential supplier of local apprentices and we currently have 33 apprentices engaged throughout our supply chain.

Working with Sandwell Metropolitan Borough Council we have also helped local businesses through a fast-growing online business network ‘finditinsandwell’. We offered advice at regular breakfast club meetings, helping the up-skilling of local small and medium-sized enterprises to enable them to comply with project prequalification standards.

Success story

ECITB First Year Apprentice Craig Lannon, an Interserve welder in Falkirk, was one of only five apprentices in the central region of Scotland nominated for Achiever of the Year Award at the Backing Falkirk’s Future Awards 2010. The nominations were made in recognition of the significant progress made by apprentices in skills progression and employment via mainstream training. At present Craig is completing an ECITB Craft Apprenticeship in welding, in which the first year is spent in an off-the-job training scheme at MetTECH UK.