Interserve to keep equipment services business

Support services and construction group Interserve has decided to keep its equipment services business RMDK following a strategic review kicked off in February.

Interserve concluded that it remains the best owner of RMDK and that retaining it as a core part of the group with an updated strategy best maximises value creation for its shareholders.

The company said the business, which contributed 32% of total operating profit in 2015, provides an important element of diversification to the rest of the group's predominantly UK-based earnings profile.

“Whilst some of our end markets face some near term uncertainty, the structural drivers for global infrastructure remain strong. This, together with our proven ability to identify and respond as market demand shifts globally, underpins our confidence in the medium-term outlook and in the business's ability to deliver sustainable margins above 20%, as we have previously guided.”

Interserve said its strategy for the business will focus around strengthening its positions where it has market leadership, through disciplined investment and operational excellence and driving its use of digital technology to differentiate further its engineering-led customer value proposition.

In addition, the group said it will restructure operations in a number of smaller, less attractive markets.

Non-recurring charges associated with the actions will be around £17m, of which the cash outflow in the next 12 months will be approximately £5m.

RMDK solves complex engineering problems for its customers through the application of design and logistics capabilities, backed up by an extensive fleet of specialist equipment.