Interserve posted a strong set of results today with headline pre-tax profit up 7.7% to £78.4m on turnover up 6% to £1,958.4m for the year to December 31 2012.

Support services was the star performer with a 21.7% rise in UK operating profits to £44.3m as margins improved to 4% and turnover ticked up to £1,118.1m from £1,007.3m last time.

UK construction had to cope with “challenging conditions” during the year which saw UK operating margins pushed down to 2% from 2.5% as operating profit fell to £14.6m from £18m on turnover which stayed steady at £737.2m.

Interserve said it expects construction margins to “trend between 1.5 to 2.0 per cent over the medium term.”

The firm said: “We expect the UK construction market to continue to remain challenging during 2013, before a resumption of gradual growth from 2014, stimulated by increased government spending on infrastructure and some recovery in private sector investment.

“However, we have a strong order book and continue to diversify the business to position ourselves for growth across an expanding set of market segments.”

Interserve confirmed it has £250m available “to fund strategic growth opportunities.”

It added: “We maintain a disciplined approach to reviewing potential acquisition opportunities, rejecting those which do not meet our strict valuation and other selection criteria but with a strong balance sheet, and significant available debt capacity and facilities, we remain well placed to take advantage of further appropriate acquisition opportunities as they are identified.”

Profits were up 17.6% to £16m at Interserve’s Equipment Services division which specialises in formwork and falsework.

Chief Executive Adrian Ringrose said: “2012 was a very good year for Interserve, in mixed market conditions. We grew earnings, generated strong cash flow and made good strategic progress.

“We won over £2.7 billion of work during the year, expanding our future workload to £6.3 billion.

“We have confidence in our ability to make further progress in 2013, with further improvements in Support Services’ margins, and continued recovery in Equipment Services offsetting soft Construction markets.

“Looking further ahead, with good potential in our existing sectors, expansion into new markets and our strong balance sheet, our medium-term growth prospects remain strong.”