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Profit in Interserve鈥檚 construction arm fell 6% over the first half of the year, despite a strong performance from the business in the UK.

In its half-year results, announced to the City this morning, Interserve said its construction division made an operating profit of 拢12.3m in the six months to 30 June 2014, down from 拢13.1m over the same period of 2013.

The construction division also posted a 10% jump in revenue to 拢532m, up from 拢484m over the same period last year.

However, UK construction faired well, reporting an 8% rise in operating profit to 拢8m, up from 拢7.4m over the same period last year.

It also posted a 12% rise in revenue to 拢433m in the first half of 2014, up from 拢388m in the first half of 2013.

In its accounts the firm said: 鈥淒emand is beginning to improve, although margins remain tight as supply chain pressures feed through.鈥�

Interserve鈥檚 international construction division reported a 3% rise in revenue to 拢99m in the first half of 2014, but its operating profit fell 25% to 拢4.3m.

It said that there were 鈥渟igns of recovery鈥� in the Middle East construction market but added 鈥渢his activity has yet to generate profit growth due, in part, to timing and to continued competitive trading conditions鈥�.

However, Interserve group reported an operating profit, before exceptional items, of 拢53.7m, up from 拢39.5m.

Once the exceptional items, which included 拢10.2m of amortisation of acquired intangibles and  拢11.7m of acquisition costs 鈥� mainly related to the purchase of facilities management firm Initial Facilities in February 2014 - were included the results showed that group鈥檚 operating profit actually fell to 拢31.8m, down from 拢33.4m.

Group revenue rose 33% to  拢1.57bn, up from 拢1.24bn, but the firm posted a fall in pre-tax profit, including the exceptional items, to 拢28.3m, down from 拢30.7m

It said its highlights for the first six months of 2014 included winning a 拢150m PF2 contract to build a batch of schools through the Priority Schools 黑洞社区 Programme; winning a 拢55m sports centre for the University of Birmingham; and the completion of the Endeavour Centre, part of HMS Drake鈥檚 Naval Service Recovery Centre in Portsmouth.