Or as chief executive Adrian Ringrose put it: 鈥淲e have commenced a strategic review of our Equipment Services business.鈥�
Interserve鈥檚 UK construction business had a difficult year in 2015, only managing to break even thanks to loss-making power plant contracts. However, RMD Kwikform performed well, both at home and overseas.
The UK construction business suffered from price increases eroding margins on contracts, as well as what Mr Ringrose described as 鈥渟ome specific supply-chain failures, significantly impacting three of our energy-from-waste projects鈥�.
However, these issues were partially offset by strong performance in the building and fit-out businesses, he said.
Overall, Interserve鈥檚 UK construction division generated 拢1,040.8m revenue in 2015, up 7% from 拢970.7m in 2014. It contributed just 拢100,000 to total group operating profit.
Equipment Services (RMD Kwikform) grew revenue 8% from 拢195.5m in 2014 to 拢211.0m in 2015. It contributed 拢41.9m to total operating profit, a 58% increase on 2014鈥檚 拢26.6m.
RMD Kwikform opened new branches in India and the USA, grew in the Middle East, but downsized in weaker markets, such as Australia.
At group level, Interserve reported 10% growth in annual revenues to 拢3,204.6m (2014: 拢2,913.0m).and a 28% rise in pre-tax profit to 拢79.5m (2014: 61.9m).
Interserve鈥檚 support services operation is heading towards twice the size of its construction business, generating 拢1,834.4m in the UK and a further 拢224.3m overseas, making an operating profit of 拢100.4m.
With an operating margin of 5.0% in support services compared to zero percent in construction, it is little surprise that Interserve鈥檚 board continues to grow its focus on this part of the business.
Chief executive Adrian Ringrose said of the 2015 performance: 鈥淥ver the last five years we have made substantial strategic progress creating a broader, stronger business. Our performance in 2015 was good, resulting in 12% 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).鈥�
He added: 鈥淥verall, we expect 2016 to be broadly steady compared to 2015 as underlying growth is restrained by the impact of a slower order intake following an election year and the impact of the National Living Wage. However, we expect to return to growth in 2017, underpinned by our strong positions in attractive markets."
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