Interserve to get lift from UK contracts

City A.M. Reporter
INTERSERVE said yesterday it had won support contracts worth a potential £420m from the Ministry of Defence, bringing its total contract wins since June to more than 600m.

The construction and outsourcing firm said it would provide mechanical, electrical and building services to the Falklands, Ascension Island, Cyprus and Gibraltar for at least five years.

In a statement Interserve maintained its guidance for 2011 and said the contracts it had won since June gave it a future workload of £5.3bn.

“The order book encouragingly remains stable against a challenging market backdrop,” said Brewin Dolphin analysts Michael Parkinson and James Woodrow.

Chief executive Adrian Ringrose said the increasing need for Britain’s public sector to outsource services was likely to drive growth but said this market was taking time to develop.

“There is a lot of talk in the market that this sector is about to take off immediately, which we do not particularly subscribe to but I do not think it is right to write the sector off either – it has got potential,” he said.

Asked whether Interserve was interested in bidding again for troubled British peer Mouchel Group, Ringrose said he would never rule out mergers and acquisitions but added there was nothing to rule them in either.

Interserve bid for Mouchel earlier this year in a deal which valued the crisis-hit firm’s stock at 135p, but talks broke down over a valuation.

The company is expected to post full-year pre-tax profit of £69.5m, according to a Reuters poll of 14 analysts.