Interior Services warns on profit

Construction services company Interior Services warned group profits for the year to 30 June 2012 will now be below expectations after a further deterioration in UK trading conditions, particularly among food retail and retail banking sectors.

"We have seen a number of our key clients in the UK food retail and retail banking sectors reassess their strategies, which has led to the cancelling or deferring of projects due to be undertaken in the second half of our financial year," it explained.

Interior said reduced volumes and continuing pressure on margins is likely to result in its UK retail businesses delivering profits £3m less than previously expected.

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Elsewhere its London Fit Out and UK Construction businesses continue to trade in line with company expectations, despite continued pressure on margins.

Its overseas businesses continue to outperform compared to last year as key clients lift their investment plans overseas.

While overall trading for the first half of the current financial year is in line with company expectations, profits for the year to 30 June 2012 will now be below expectations after particular weakness from its UK retail clients.

Chief executive David Lawther said, "While we maintain our market leading positions in UK retail and fit out, we will continue to diversify the group's earnings base away from the UK and expect our overseas businesses to contribute around 35% of group trading operating profits in the current year.

"We continue to pursue overseas organic and acquisition opportunities that will provide us with wider service lines, emerging market positions and scale in key developed markets," he added.

Interior Services' order book remains in line with its last trading update at £700m compared to £797m in December 2010.

Net cash balances at 31 December 2011 fell to £30m from £37m the same time a year earlier.

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