It is a case of steady as she goes at services and construction group Interserve after a solid first half that was ahead of some market expectations.
Headline profit before tax in the first six months of 2012 rose 8.2% to £35.7m from £33.0m the year before, while reported profit before tax of £32.6m was up 8.3% from £30.1m in the first half of 2011.
Broker Peel Hunt had forecast profit of £33.5m, while Panmure Gordon had pencilled in £33m.
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Group revenue rose 2.8% to £1,210.1m from £1,176.9m a year earlier.
Underlying headline earnings per share improved by 3.9% to 21.3p from 20.5p in the first half of 2011, while the board's confidence in its prospects was demonstrated by the interim dividend rising faster than earnings - up 6.7% to 6.4p from 6.0p. That will please income investors, attracted by the stock's near 6% dividend yield.
"Support Services generated strong growth accompanied by a robust performance from Construction and a continuing recovery in Equipment Services. Our confidence is demonstrated by the board's announcement of a further increase in dividend and reiteration of our guidance for stable performance in 2012 compared with 2011," said Interserve's Chief Executive, Adrian Ringrose.
The Support Services division saw UK revenue rise 11.5% to £572.1m and overseas revenue jump 29.2% to £15.5m. The division's contribution to operating profit rose 24.0% to £21.2m.
The division derives around two-thirds of its revenues from the public sector, with major customers such as the Ministry of Defence, DEFRA and the Foreign and Commonwealth Office.
Future workload for the division increased from £4.5bn at the end of 2011 to £4.7bn at the end of June.
UK revenue in the Construction division edged up 0.4% to £366.2m but overseas revenue slipped 3.3% to £103.8m. Operating profit slumped 23.5% to £14.3m, but this was in line with management expectations and the group's Chairman, Lord Blackwell, said the Construction division had "held up well in difficult market conditions".
The UK business's future workload was relatively stable year on year at £1.1bn (end-2011: £0.9bn).
"We expect both UK and international construction revenues to remain subdued in the near term with growth potentially resuming in 2014. Our margin expectations remain unchanged," Interserve said.
The Equipment Services division saw revenue rise 10.2% to £81.9m, with operating profit up 15.3% to £6.8m. Revenue growth was led by the Far East and the Middle East with continued strong trading in Australasia. Europe and North America remained muted in the period.
The group is budgeting for a continued recovery in revenues in this division, and progressive margin improvement, driven by growing demand for infrastructure.
Net debt at the end of June stood at £39.9m, up 11.5% from £35.8m a year earlier, but down from £44.2m at the end of 2011.
JH
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