12 Jan 2006

Interserve Plc, the infrastructure and facilities management group, today provides an update on 2005 trading in advance of announcing preliminary results on 13 March 2006.

The Group remains confident of delivering strong overall growth in the year with the majority of our businesses performing better than anticipated.  Trading has benefited from our additional investment in overseas activities and from growth in UK public sector outsourcing and social infrastructure activities.  

Facilities Services has made strong progress, fuelled by volume and work-scope increases on existing contracts and the ramp-up of activity on recently-won business. We are also encouraged by new contract wins in the health and education sectors.   Ongoing business efficiency programmes, set against a healthy demand environment, have yielded margin improvements to augment underlying volume growth.

Whilst we have been successful in winning several new term maintenance contracts, overall performance in Industrial Services has been weaker than anticipated.  The continued transition from heritage contracts, together with investment in management resources and systems, is impacting current volume and profitability.  We remain confident, however, that this investment will position us to take advantage of this attractive outsourcing market in the medium term.

Project Services has performed very well. In the UK the healthy flow of work through our various framework arrangements has continued, supplemented by a number of project completions. Trading in the Middle East has been excellent, buoyed by high volumes of activity, particularly in Qatar.

Equipment Services has delivered an excellent performance driven by recent investment in core fleet, systems and business infrastructure, and based on outstanding trading in the Middle East, supplemented by growth in Spain, Hong Kong and Chile. 

We have continued to be successful in winning new business from relationships with customers such as BT, Barclays, Dorset County Council, the Highways Agency, the MOD, Mapeley and the NHS. Secured future workload in the UK is expected to be slightly lower although the flow of new business opportunities remains strong and the demand environment is encouraging, particularly overseas. Accordingly, the Board believes that the Group is well-placed to deliver continued progress through 2006 and beyond.