Annual Report 2018
Total Page:16
File Type:pdf, Size:1020Kb
Overview Strategic Report Governance ANNUALFinancial StatementsREPORT 2018 A INTERSERVE IS ONE OF THE WORLD’S FOREMOST SUPPORT SERVICES, CONSTRUCTION AND EQUIPMENT COMPANIES. WE OFFER ADVICE, DESIGN, CONSTRUCTION, EQUIPMENT, FACILITIES MANAGEMENT AND FRONTLINE SERVICES TO PUBLIC AND PRIVATE-SECTOR CLIENTS IN MORE THAN 40 COUNTRIES. WE ARE A LEADER IN DEVELOPING AND DELIVERING DESIRABLE OUTCOMES FOR OUR CLIENTS AND A GREAT PLACE TO WORK FOR OUR PEOPLE. HEADQUARTERED IN THE UK AND FTSE LISTED, WE HAVE CONSOLIDATED REVENUES OF £2.9 BILLION AND A WORKFORCE OF MORE THAN 68,000 PEOPLE WORLDWIDE. Overview Strategic Report Governance Financial Statements Contents Overview Strategic Report Governance Financial Statements Who we are 02 Strategic objectives 16 Board of directors 42 Independent auditor’s report 88 Our proud history 04 Fit for Growth 17 Advisers 43 Consolidated financial statements 100 Chairman’s statement 06 Divisional strategies 18 Corporate governance 44 Notes to the consolidated financial statements 106 Chief Executive Officer’s statement 08 Business model 19 Audit Committee report 52 Company financial statements 159 Results in summary 12 What we have achieved 20 Directors’ remuneration report 58 Notes to the Company Our markets 13 Performance 22 Directors’ report 80 financial statements 161 Operational review 24 Directors’ responsibility statement 87 Related undertakings 175 Principal risks and uncertainties 31 Five-year analysis 181 Financial review 35 Shareholder information 183 The purpose of this report This Annual Report and Accounts provides shareholders and interested parties with an insight into how we create value. It contains details on our Company, strategy, markets and how we manage risk, as well as a comprehensive report on the Company’s activities this financial year. FOR FURTHER INVESTOR INFORMATION: www.interserve.com/investors 01 OVERVIEW Who we are 7,500 230 Clients Offices worldwide BUSINESSES BY OPERATING PROFIT* 3 SUPPORT % SERVICES 51 Core business lines: EQUIPMENT % SERVICES 35 SUPPORT SERVICES, CONSTRUCTION & EQUIPMENT SERVICES CONSTRUCTION 14% * Excluding non-underlying 02 Overview Strategic Report Governance Financial Statements 150 Services 68,380 Employees 03 OVERVIEW Our proud history OUR HISTORY Interserve’s origins date back to 1884 when brothers Edmund and Augustus Hughes formed London and Tilbury Lighterage Company Limited, which specialised in transferring cargo between vessels. At the beginning of the 20th century the Company launched a successful dredging business, securing a contract from the Port of London. Between 1930 and 1950, the business diversified by moving into waste disposal and purchasing a civil engineering firm. Further growth occurred after the Company bought a construction and engineering arm following the acquisition of RM Douglas Holdings, which included expansion into the Middle East in the 1990s. A further acquisition involved Kwikform, a UK market leader in non-industrial access scaffolding, which was merged with RMD to create RMD Kwikform. In 2001 the Tilbury Group was renamed Interserve Plc and entered the FTSE 250, transferring from the construction sector to Support Services. Interserve now employs 68,380 people worldwide who provide a wide range of services to more than 7,500 clients. 04 Overview Strategic Report Governance Financial Statements THE CHRISTIE PROTON BEAM THERAPY CENTRE CASE STUDY Interserve has delivered the UK’s first NHS high-energy PBT is an advanced form of radiotherapy used for the Proton Beam Therapy Centre in the North West on time and treatment of complex and hard-to-treat cancers in children under budget. and adults. It uses a high-energy beam of protons rather than high-energy X-rays to deliver a dose of radiotherapy. It directs The Christie NHS Foundation Trust was selected by the the radiation treatment to precisely where it is needed with Department of Health as one of two providers of the Proton minimal damage to surrounding tissue. Beam Therapy (PBT) service. They worked in partnership with Interserve, together with University College London Hospitals To contain the radiation, the concrete walls are up to six NHS Trust to successfully deliver this scheme. metres thick. The building incorporates 20,000m³ of concrete and 1,700 tonnes of reinforcement, including steel bars up to The state of the art 15,000m2 five-storey building includes: 100mm in diameter. Through this, 10km of services pipework three treatment rooms; a patient reception; consultation has been carefully threaded. The concrete itself weighs rooms and public space. The building is designed to be future 48,000 tonnes, the equivalent of two aircraft carriers. proof with additional space for the Trust to grow into, along with a dedicated research room for the University The building is the first PBT Centre to target BREEAM excellent of Manchester. rating. The contract built on our pre-existing relationship with The Christie which dates back a decade. We are committed to Patients have already begun receiving treatment at the PBT, further collaborative working to deliver the new multi-tiered and once fully operational it will treat around 750 people carpark and fit-out of the PBT Outpatient facility. a year. This life-changing facility will also prevent families from enduring expensive, stressful and potentially dangerous George Franks, Managing Director of Interserve Construction, travel abroad for treatment. said, “Our work on the Proton Beam Therapy Centre underscores the close partnership we have established with Though there are other centres internationally which offer The Christie and our track record for delivering award-winning this treatment, the facility is the first high-energy NHS and life-changing healthcare facilities across the UK. facility in the UK. As such, we had no blueprint to follow, so our team travelled extensively to learn from foreign “Our strategic focus is to create a sustainable, manageable expertise so that the world-class facility could be delivered. and profitable business based on construction, engineering and infrastructure work and this project underscores that commitment, particularly in the UK health sector.” 05 OVERVIEW Chairman’s statement Glyn Barker Chairman My comments will cover the previous fiscal year and the first few FINANCIAL PERFORMANCE months of 2019 in view of the significant events which have taken The business has traded robustly in some challenging markets place in that period. The period has been the most difficult in and continued to win significant new contracts. This has been Interserve’s history since the Group was established in 1884. achieved in an environment which is challenging for the sector and The resulting stress and uncertainty have led to anxiety amongst particularly so for Interserve. The Fit for Growth programme is our staff, suppliers and customers and significant loss of value for delivering material cost savings and a simpler and more effective our shareholders from the fall in our share price. I would like to business structure. thank them for their support during this challenging period. The Board remains focused on positioning the Group for long- Interserve remains one of the world’s foremost support services, term, sustainable success. This means continuing the operational construction and equipment companies delivering a range of progress we are making to put legacy issues behind us, particularly services for our clients, helping them to improve their efficiency in closing out and exiting the Energy from Waste business. and productivity. It is a business with a strong purpose, providing It also means reducing debt and putting a strong long-term important and valued services that enhance people’s lives on a capital structure in place through the proposed Deleveraging Plan. daily basis. MANAGEMENT CHANGES However, over the years, the business lost its operating and There were three senior management changes in the year, with financial discipline, became too federated and inefficient, lacked the departure of Robin O’Kelly, Director of Communications, a coherent approach and entered some businesses it shouldn’t Yvonne Thomas, Managing Director Citizen Services and have done. Gordon Kew, UK Construction Director. Debbie White and her management team have made excellent BOARD AND GOVERNANCE progress over the last eighteen months addressing the problems. The proposed Deleveraging Plan and the continuing progress of the The Company now runs through clear business structures and Fit for Growth programme are significant steps towards restoring accountabilities in its three operating divisions: Support Services, stability, future financial success and underlying resilience in Construction and Equipment Services. Interserve and to rebuilding trust with all our stakeholders. Following the departure of Keith Ludeman from the Board in May, I comment on each of these points in more detail below. Nick Salmon has taken on the chairmanship of the Remuneration Committee. We also welcomed Nicholas Pollard as a non-executive DELEVERAGING PLAN director to the Board in June. Dougie Sutherland also left the The Board believes the Deleveraging Plan will provide Interserve Board in February 2019. with a strong balance sheet and the platform to deliver on its strategy. Agreeing the key commercial terms of the Deleveraging OUR PEOPLE Plan with our lenders, bonding providers and Pension Trustee was I have highlighted the challenges that the leadership team have a significant step forward in our plans to strengthen