Support services and construction firm Interserve posted a 12 per cent rise in half-year profit and said it was confident of future growth as demand in its main markets continued to strengthen.
Advertisement
Headline earnings per share increased 10% to 30.3p and the interim dividend of 7.9p per share is up 5%.
The group continues to perform strongly, but chief executive Adrian Ringrose admitted the premium for the new national wage announced by George Osborne in the Summer Budget would cost them between £10m and £15m extra next year in its support services division.
Mr Ringrose added that markets in UK construction remain challenging though demand continues to strengthen and the future workload looks encouraging.
Support services group Interserve (LON:IRV) flagged up lower construction margins and a potential rise in UK wage costs, knocking its shares.
It also signed a three-year contract extension with DIY retailer B&Q, including cleaning and catering, worth £35 million. The group is working to build up the business, with a focus on delivering frontline services in the healthcare, welfare-to-work, skills and justice sectors. The group said that while tender pricing is improving and the risks involved with supply chain insolvencies and pricing inflation are easing, margins are expected to remain tight in the short term.
Advertisement
Interserve, the activities of which range from the provision of care services for people in their own homes to building repairs at Britain’s historic Sandhurst military academy, said that margins in one part of its business would be squeezed by a hit of between 10 million pounds ($15.6 million) and 15 million pounds in 2016. The group said demand was stronger across the region, boosted by major projects such as Qatar’s Vision 2030 long-term development strategy and the United Arab Emirates’ plans for Expo 2020 event.
