Interserve is mulling the sale of its equipment services arm as its latest results reveal the UK construction business was hit by a trio of loss-making contracts in 2015.
In its financial results for the year to 31 December 2015, the group recorded a 10 per cent jump in overall revenue from £2.91bn in 2014 to £3.2bn.
|Interserve group results||2014||2015||Change|
|Profit before tax||£61.9m||£79.5m||+28.4%|
Profit before tax was up 28.4 per cent cent from £61.9m to £79.5m, while operating profit was up 12.5 per cent year on year.
Interserve’s UK construction division rose by 7.1 per cent to break through the £1bn revenue barrier, but operating profit fell from £15.4m to just £0.1m.
Commenting on the drop in profit, Interserve said: “Supply-chain pricing pressures continued to be felt and the division’s performance was adversely impacted by three loss-making energy process contracts.”
Meanwhile, the group has begun a strategic review of its equipment services arm, RMD Kwikform, with a view to a possible sale. In 2015, the division turned over £211m and produced an operating profit of £41.9m.
UK revenue across its divisions increased 9 per cent from £1.7bn to £1.83bn, while UK operating profit was up 13 per cent to just over £100m.
Interserve chief executive Adrian Ringrose said the group expected growth to be flat in 2016, with the impact of the national living wage affecting profit levels. However, he said that he expected “to return to growth in 2017, underpinned by our strong positions in attractive markets”.
Last year, Interserve said the introduction of the new national minimum wage, unveiled by George Osborne in last summer’s Budget, would cost the firm up to £15m in 2016.
Mr Ringrose added: “Over the last five years we have made substantial strategic progress creating a broader, stronger business.
“Our performance in 2015 was good, resulting in 12 per cent operating profit growth in markets that continue to offer both opportunities and challenges.
“In light of the changing shape of our portfolio over the last few years, we have started a strategic review of our equipment services business (RMD Kwikform).”