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Interserve's specialist services hit by downturn

Services, maintenance and building group Interserve has said the impact of the downturn in the private sector has hit its facilities management and specialist services operations.

The company said “cost reductions” had already taken place in response to the drop in expected revenues compared to last year.

The trading update released on Friday added: “The Group is continuing to review closely the appropriate size of the cost base in the affected segments given a continuing challenging demand outlook.”

The specialist services division provides a variety of specialised outsourced services which are usually delivered separately but can form part of a bundled package to customers of the group’s facilities management or project services divisions.
These services include mechanical and electrical (M&E) design, installation and maintenance and technical services  - including asbestos surveying and remediation, and heating, ventilation and air conditioning (HVAC)). Around two-thirds of its revenues are generated from the private sector.

Despite the setback within the facilities managerment and specialist services sectors the update was upbeat about the group’s prospects overall.

Interserve has already secured 60 per cent of its targeted turnover for 2010 and trading in the first half has continued in line with expectations, delivering progress overall versus the previous year’s operating performance.

During the first half of the year Interserve won significant contracts  in key UK sectors such as custodial, education, health, local government and infrastructure.

Interserve’s Middle East operations won work across the region worth over £200 million to the group.

Strong cash generation has also ed to an improvement in the net debt position of the group since the publication of the results for the 12 months ended 31 December 2008, reflecting the focus on reducing capital expenditure and working capital, complemented by the cash realised from the PFI portfolio.

The firm said: “Given the record future workload, balanced and complementary operations in long-term growth markets and the ability to explore and develop new markets, the board remains confident in the group’s ability to maintain robust near-term performance and sustained long-term growth.”