Compound Income
  • Blog
  • Scores
    • Subscribers Scores Access
  • Portfolio
    • Table of Returns
  • Resources
    • Check list
  • About
  • Contact



Interserve Final Results

24/2/2016

1 Comment

 
Interserve (IRV) which I wrote up recently and talked about on a Podcast, served up their final results today which were mixed against the consensus. This was because the turnover was slightly light at £3204.6m v £3321 (F) although the earnings did come in ahead at 67.9p v 63.8p which they said represented 15% growth and suggested that margins may have been slightly better than expected. While on the income side we saw 6% increase in their full year dividend to 24.3p which was 0.1p behind the consensus.
In the statement they highlighted that they have a future workload of £7.7 billion which offers some good visibility as it represents more than two years turnover at the current rate. While in their viability statement they also highlighted the the long-term secured nature of the Group's work with £4.6 billion of work already secured in the order book until the end of 2018.

They did however flag a post election slowdown in domestic business and while they did acknowledge more difficult conditions in the Middle East on the back of current weak oil prices. Aside from that current trading and orders in that region remained strong and they seemed sanguine about the medium term outlook there too.

In addition against a backdrop of substantial strategic progress and the changing shape of their business towards more service and facilities management, they announced a strategic review of their Equipment Services business (RMD Kwikform) which is one of their smaller but more profitable businesses. This suggests to me that they will look to dispose of this business which doesn't fit so well now (apart perhaps with their construction business) and the proceeds could be quite useful in paying down some or all of the debt they currently have which they took on in acquiring Initial Services. However since it made 32% of the groups operating profits this year on the back of a bumper year and operational gearing, then if this is sold and used to pay down debt then I think it could be quite dilutive in the short term until or unless they reinvest the proceeds more productively.

Aside from that on the back of the detail in the statement and the previously announced effects of the living wage this year they also said that they expected this year to be flat or broadly steady compared to 2015 as they described it. Current forecasts for the coming year already factored in a small fall in earnings and further 4% growth in the dividend which seems reasonable given good (2.8x) level of cover and their progressive policy which has grown the dividend steadily over the last 10 years+. Given they beat this years numbers I guess it is open to question whether we could therefore see some upgrades for this year, but if we take the current forecasts of 62.6p of earnings and a 25.4p dividend then at this mornings largely unchanged price of around 400p puts it on a no growth rating of 6.4x with a 6.4% yield.

Summary & Conclusion
A decent set of numbers and a reasonably realistic outlook statement from Interserve with nothing in it which seems to justify the recent dramatic sell off and de-rating of the shares. Indeed on a yield of 6.4% and assuming they can continue to grow the dividend at the historic rate of 4 to 5% this would suggest potential for double digit returns in the medium term, even without a re-rating, which seems to be a decent equity risk premium to me.

However, the only slight caveat for me, introduced by today's announcement, is the suggestion that they are doing a strategic review of the Equipment Services business. If this does lead to a disposal then that looks to me that it could be dilutive but I guess we should await the outcome of the review and see what happens in the longer term as a result, before getting too concerned about it in the short term. So given the outlook, probably not enough here to get the market excited short term, but the rating and longer term prospects mean it looks like a hold for me for income and growth in the medium term.
Picture
1 Comment
Rose Crawford link
16/4/2021 09:18:21 pm

Hi nice reaading your post

Reply



Leave a Reply.

    RSS Feed

    Archives

    May 2022
    April 2022
    March 2022
    February 2022
    January 2022
    December 2021
    November 2021
    October 2021
    September 2021
    August 2021
    July 2021
    June 2021
    May 2021
    April 2021
    March 2021
    February 2021
    January 2021
    December 2020
    November 2020
    October 2020
    August 2020
    July 2020
    June 2020
    May 2020
    April 2020
    March 2020
    February 2020
    January 2020
    December 2019
    November 2019
    October 2019
    August 2019
    June 2019
    April 2019
    March 2019
    February 2019
    January 2019
    December 2018
    November 2018
    October 2018
    September 2018
    August 2018
    July 2018
    June 2018
    May 2018
    April 2018
    March 2018
    February 2018
    January 2018
    December 2017
    November 2017
    October 2017
    September 2017
    August 2017
    July 2017
    May 2017
    April 2017
    March 2017
    February 2017
    January 2017
    December 2016
    November 2016
    October 2016
    September 2016
    August 2016
    July 2016
    June 2016
    May 2016
    April 2016
    March 2016
    February 2016
    January 2016
    December 2015
    November 2015
    October 2015
    September 2015
    August 2015
    July 2015
    June 2015
    May 2015
    April 2015
    March 2015
    February 2015
    January 2015
    December 2014
    November 2014
    October 2014
    September 2014
    August 2014
    July 2014
    June 2014
    May 2014
    April 2014
    March 2014
    February 2014
    January 2014

    Categories

    All
    32Red
    Aberdeen Am
    Admin
    A G Barr
    Airtel Africa
    Alliance Pharma
    Alternative Telecoms
    AMEC
    Amino Technologies
    Amlin
    Anglo Pacific
    Ashtead
    Asset Allocation
    Auto Trader Group
    Barclays
    BA Systems
    BATS
    Behavioural Finance
    Bellway
    Berendsen
    BHP Billiton
    Bloomsbury Publishing
    Bodycote
    Books
    Bovis Homes
    BREXIT
    Britvic
    Caledonia Mining
    Capital Ltd.
    Catlin-group
    Central Asia Metals
    Centrica
    Character Group
    Churchill China
    Cineworld
    City Of London Investment Group
    Clarkson
    CMC Markets
    Commercial Property
    Compound
    Computacenter
    Connect Group
    Croda
    Currencies
    Demographics
    Diageo
    Diploma
    Directors Dealings
    Dividends
    DotDigital
    Easyjet
    Economics
    Emerging Markets
    Emis
    Empiric Student Property
    Etfs
    Fairpoint
    Ferguson
    Ferrexpo
    Finsbury Foods
    Food Retailers
    Forterra
    Games Workshop
    Gateley
    Go Compare
    Goid
    Greene King
    GSK
    Hargreaves Services
    Hays
    Headlam
    Hedge Funds
    Hikma Pharmaceuticals
    Hill & Smith
    House Builders
    Howden
    HSBC
    IG Group
    IMI
    Imperial Tobacco
    Indivor
    Inflation
    Insurance
    Intermediate Capital
    Interserve
    Investec
    Investment Trusts
    It
    ITV
    James Halstead
    Jarvis Investment Management
    JLT
    Jupiter Fund Management
    KCOM
    Kingfisher
    Legal & General
    Lloyds Bank
    Luceco
    Macfarlane
    Maintel
    Man Group
    Market Timing Indicator
    Market Valuation
    Marston's
    Matchtec
    Media
    Merlin Entertainment
    Micro Focus
    Mining
    Mitie
    Miton Group
    Moenysupermarket
    Mondi
    Moneysupermaket.com
    Morgan Sindall
    Music
    National Grid
    N.Brown
    News
    Next
    Nichols
    Norcros
    Oil
    Page Group
    Paypoint
    Pennon
    Persimmon
    Personal Finance
    Pharmaceuticals
    Phoenix Group
    Photo Me
    Photo-Me
    Plus500
    Podcasts
    Polar Capital
    Politics
    Polymetal
    Portfolio
    Portmeirion
    Provident Financial
    PZC
    Qinetiq
    Ramsdens Holdings
    Rank Group
    Reckitt Benckiser
    Renewable Energy
    Renew Holdings
    Renishaw
    Research Papers
    Restaurant Group
    Retailers
    RIO
    RM Group
    Rolls Royce
    RPC
    RPS
    Safestore
    Sage
    Sainsburys
    Savills
    Schroders
    Scores
    SCS Group
    Sell Discipline
    Shareholder Yield
    Share Picks
    Short Interest
    Somero
    Spectris
    Sprue Aegis
    SSE
    Stock Spirits
    Strix Group
    S & U Plc
    Sureserve
    Sylvania Platinum
    TalkTalk
    Taptica
    Tax
    Technology
    Telecoms
    Tobacco
    Trading Ideas
    TSB
    TUI
    UK Market Update
    Ultra Electronics
    Unilever
    Utilitywise
    Value
    Victrex
    Vodafone
    VP.
    Water Utilities
    Watkins Jones
    WH Smiths
    William Hill
    Wynstay
    XL Media
    XP Power
    Yield
    Zytronic

    googleda4a17cac6d02bb9.html
    File Size: 0 kb
    File Type: html
    Download File

Powered by Create your own unique website with customizable templates.
  • Blog
  • Scores
    • Subscribers Scores Access
  • Portfolio
    • Table of Returns
  • Resources
    • Check list
  • About
  • Contact