26 November 2009
INTERSERVE TRANSFERS 13 PFI INVESTMENTS,
VALUED AT £61.5m, TO PENSION SCHEME
Interserve, the services, maintenance and building group, is pleased to
announce an agreement to dispose of its interest in a portfolio of 13 PFI
investments, valued at £61.5 million, into the Interserve Pension Scheme ("the
Scheme").
These investments are in projects across a variety of sectors in the UK,
including healthcare, defence and education, and represent a significant
proportion of the Group's total interest in a portfolio of 34 PFI projects.
Interserve will continue to manage the investments on behalf of the Scheme and
retains all current arrangements for the delivery of facilities services worth
a whole-life-value of over £1.3 billion. All future interest and dividend
income over the lifetime of these investments will be payable to the Scheme.
The agreed valuation of £61.5 million represents an effective discount rate of
6.5 per cent and a multiple of 2.6 times invested capital. Consequently the
Scheme's funding shortfall at the end of the year will be reduced by this
valuation and the Group will record an exceptional profit of c. £35 million in
the 2009 Income Statement. Profits attributable to these assets in the first
half of 2009 were £1.7 million (2008 full year: £3.3 million). The resulting
reduction in Group operating profits, arising from the loss of income from
these investments, will be largely offset in the Group Income Statement by the
corresponding increased return on assets in the Scheme, as reported within the
net interest charge.
Tim Jones, Group Finance Director of Interserve, commented, "This agreement is
very good news for all stakeholders, providing a significant contribution
towards the current pension scheme funding shortfall whilst crystallising value
from our PFI portfolio. These investments are particularly attractive to the
pension scheme, providing a stream of long-term predictable cash-flows with a
sensitivity to inflation that matches the scheme liabilities."
Tim Jones will host a conference call for analysts and investors at 9.00am on
Friday 27 November; for details please contact Maitland on 020 7379 5151.
- Ends -
For further information please contact:
Tim Jones, Group Finance Director 0118 932 0123
Elizabeth Morley / Tom Roberts, Maitland 020 7379 5151
Notes
Pension scheme information as published in the half-year results announcement
on 11 August 2009:
Progress towards agreement of the funding position and deficit recovery of the
Interserve Pension Scheme continues. Whilst the entire process is unlikely to
be completed before the end of the year, we continue to anticipate that the
funding shortfall as at the end of 2008 will be in the region of £250 million.
A number of actions have been completed during the period, designed to reduce
both the funding shortfall and the risk in accrued liabilities:
* The Board has decided to close the defined benefit scheme to future accrual
for all non-passport members from the end of this year.
* A full investment strategy review has been completed, and initial
conclusions implemented, in conjunction with the Trustee of the Scheme.
This will reduce investment risk through greater asset diversification and
matching of inflation and interest volatility with Scheme liabilities.
The actions related to the Scheme closure will be reflected as an exceptional
credit of approximately £20 million to the Group 2009 Income Statement.
During the second half of the year negotiations towards agreement of the
funding shortfall will be progressed. It is anticipated that this will include
both a revised schedule of increased company contributions into the Scheme and
the use of alternative assets in order to mitigate the current and future cash
requirement on the Group.
PFI investments transferred into the Interserve Pension Scheme
Interserve is transferring its investments in the following 13 PFI projects to
the Interserve Pension Scheme: Dudley NHS Trust, St Genevieve's School,
Southampton Schools, Hattersley (Tameside) Schools, Tyrone - Omagh College,
Tyrone - Dungannon College, Cornwall Schools, Telford & Wrekin Schools, Defence
Sixth Form College, Armada - Devonport Fleet Accommodation Centre, Cornwall
Fire Stations, Portsmouth Social Services, Health & Safety Laboratories at
Buxton.
About Interserve
Interserve's vision is to be the Trusted Partner of all our stakeholders. We
are a services, maintenance and building group operating in the public and
private sectors in the UK and internationally. We offer advice, design,
construction and facilities management services for society's infrastructure
and provide a range of plant and equipment in specialist fields. Interserve is
based in the UK and is a FTSE 250 company. It has revenue of £1.8 billion and a
workforce of 50,000 people worldwide. Website: www.interserve.com
END
INTERSERVE PLC
