Interserve maintains guidance after MoD award

Support services and construction group Interserve has maintained its guidance for 2011 after revealing trading in the second half of the year has been in line with expectations.

The company, which is projected to achieve revenue of £1.86bn in 2011, said revenue visibility for 2012 is around £1.4bn. This does not necessarily mean next year's revenues will be lower than this year's, as revenue visibility for 2011 at this time last year was also around £1.4bn, and there is is still plenty of time for contract wins to roll in.

Indeed, the company announced another contract win alongside its results, with the UK Ministry of Defence awarding the group new five-year contracts, worth a potential £420m, in Cyprus, the Falkland Islands, Ascension Island and Gibraltar.

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Interserve currently holds the contracts for Cyprus, the Falklands Islands and the Ascension Island, so the Gibraltar contract represents a new win for the group.

The work will run until at least 2017 in the islands and until 2018 in Gibraltar, following the expiry of the current contracts in 2012 and 2013 respectively.

The contract award added wait to the group's claim that "the breadth of our service offerings, together with our expanding geographic reach, position us well to continue to develop in spite of the challenging conditions in a number of our markets."

The group said the primary drivers for future growth will be the increasing requirements for the UK public sector to outsource services in order to deliver efficiency gains, together with expanding demand for infrastructure investment in the world's faster growing economies - particularly Qatar.

Further progress has been made in agreeing the tax treatment of cash flows from Interserve's Middle East operations, the group revealed. This, combined with the agreements reached in the

first half of the year, underpins the low effective tax rate incorporated in current guidance.

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