WET News

22 LEADERS 2017 Interserve ConstruCtIon 395 George road erdington Birmingham B23 7rZ www.interserve.com the LeADeRS 2017 Interserve strong presence in the utilities sector was reinforced with new contract wins worth more than £200M. These included the Birmingham Resilience 'Treated Water' contract for Severn Trent (in joint venture with Kier), and (in joint venture with Doosan Enpure), a contract with Northumbrian Water to upgrade the Horsley water treatment works in the Tyne Valley. It was also selected by South West Water to deliver a new water-treatment plant, which will serve Plymouth and the surrounding area. However, all has not been well with the Severn Trent deal and the joint venture walked away earlier this year with reports suggesting there had been a dispute over budgets. This contract has subsequently been awarded to a DNM Alliance, a collaboration between Doosan Enpure and NM Group. Interserve's UK Interserve continues strong utilities presence Construction business, excluding the Exited Business delivered a disappointing performance. The continuation of a long period of challenging market conditions, coupled with pockets of underperformance in operational delivery in a number of contracts, offset strong performances in most of our regional businesses, resulting in a net loss result for the division. These results, allied to the difficulties around the Exited Business, have led to a series of senior management, procedural and other organisational changes across the division, which will continue this year. Interserve is also investing in new management information systems to improve scrutiny of and risk assessment in our operations. Strategically, it has narrowed its focus for work winning to core sectors and activities and have refined the risk profile of work that it takes on. tHe nuMBers 2013 2014 2015 % CHanGe Sales £M 770.7 941.0 1,006.0 7 Gross profit £M 51.8 53.3 51.7 -3 Operating profit £M 11.4 5.4 0.4 -93 Pre-tax profit £M 16.9 10.6 4.2 -60 Staff 1,998 2,164 2,258 4 Net assets £M 49.9 50.6 55.0 9 tHe ratIos 2013 2014 2015 % CHanGe 5yr ave. Return on capital % 33.9 21.0 7.7 -63 26.1 Gross margin % 6.7 5.7 5.1 -9 6.1 Operating margin % 1.5 0.6 0.0 -94 0.9 Net margin % 2.2 1.1 0.4 -63 1.5 Sales/employee £K 385.7 434.9 445.5 2 374.5 KIer tempsford Hall sandy Bedfordshire sG19 2BD t: 01767 35500 www.kier.co.uk Kier has seen strong performance with existing and new clients over the past year, adding there are plenty of opportunities to enhance performance further as clients get to grips with outcome delivery incentives (ODIs) and an outcome based environment. The company told The Leaders that activity levels remain very strong. "There hasn't been a noticeable dip in mid-AMP activity as in some previous AMPs and we are already noticing additional activities as clients prepare implementation of their AMP7 strategies," it says. The skills gap remains among the main challenges for the company in the coming year, as well as developing talent from within its business. "As an industry, we're o›en working with the same pool of talent, so this focus is vital is we're going to continue to attract and retain skilled people to our Strong activity levels for Kier business," the company emphasises. Kier adds that an "obvious shi›" has been brought about as result of the retail separation with the opening up of the non-domestic market to competition last April, adding that "it's interesting to see how different areas of the industry are interpreting and approaching AMP7 challenges". With regulators remaining focused on efficiency, ever-improving customer service and demonstrable value for money, facilitating innovation across the industry is going to be key. "We'd also expect closer, more collaborative working and alliances to be a feature of AMP7." On the subject of Brexit, Kier believes there may be some change as the UK moves away from European legislation. In addition, government and water companies will need to consider if schemes previously funded by European investment will require alternative financing. tHe nuMBers 13/14 14/15 15/16 % CHanGe Sales £M 2,906.9 3,275.9 4,112.3 26 Gross profit £M 250.4 282.9 410.3 45 Operating profit £M 34.3 60.9 11.7 -81 Pre-tax profit £M 15.4 39.5 -15.4 n/a Staff 15,335 17,931 20,685 15 Net assets £M 306.7 583.6 573.9 -2 tHe ratIos 13/14 14/15 15/16 % CHanGe 5yr ave. Return on capital % 5.0 6.8 -2.7 n/a 15.6 Gross margin % 8.6 8.6 10.0 16 9.5 Operating margin % 1.2 1.9 0.3 -85 1.8 Net margin % 0.5 1.2 -0.4 n/a 1.3 Sales/employee £K 189.6 182.7 198.8 9 189.1

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