17th Dec 2020 11:03
(Alliance News) - Serco Group PLC on Thursday said it expects to report a stronger performance in 2020, fostering confidence in continued growth in 2021.
Shares in the Hampshire-based outsourcer were up 3.4% at 124.10 pence on Thursday in London.
For 2020, underlying trading profit is expected to rise by around 35% to between GBP160 million and GBP165 million, compared to GBP120.2 million in 2019.
This is on revenue that is anticipated to grow by 19% year-on-year to GBP3.9 billion from GBP3.25 billion, driven by a contribution from the NSBU naval business in North America, the provision of Covid-19 related services in the UK and strong demand from Services Australia and Serco's Immigration Services units. Organic revenue growth is seen at 16%.
Serco expressed confidence in its performance beyond 2020, with underlying trading profit for 2021 expected to be similar to 2020's figure of USD165 million, while revenue is anticipated to be around GBP4.1 billion, a 6% increase from the GBP3.9 billion expected outturn for 2020.
The revenue increase for 2021 is set to be driven by an ongoing contribution from several of Serco's contracts that have supported growth during the second half of 2020.
"In what will be remembered as one of the most challenging periods for businesses since the Second World War, Serco's people have proved themselves to be resilient, flexible and dedicated to ensuring the delivery of public services. Our 'loose-tight' business model and core processes and systems have also proved to be robust and have responded extremely well to the demands placed upon them," said Chief Executive Rupert Soames.
Also on Thursday, Serco announced that Group Director of Finance Nigel Crossley will be promoted to the role of chief financial officer with effect at the annual general meeting in April next year.
He will be replacing Angus Cockburn, who is retiring from the role after six years, to focus on his portfolio of non-executive posts. Crossley has been part of Serco since 2014 and prior to that held a senior finance role at record label EMI Group Ltd.
Serco also announced the signing of a contract to deliver prison services at Acacia prison for the government of Western Australia for up to 15 years.
The initial five-year period had an estimated value of AUD445 million, around GBP250 million, and there are provisions for two further five-year extensions, bringing the total potential value of AUD1.45 billion. The contract will start in May 2021.
Finally on Thursday, Serco said it has agreed to acquire Facilities First Australia Holdings Pty Ltd, a provider of cleaning, facility maintenance and management services, for an enterprise value of AUD76.5 million, around GBP43 million.
The acquisition is expected to be accretive to earnings in 2021, and is expected to be completed on January 4.
"This acquisition adds expertise and heft to our facilities management operations in Australia, while retaining our government focus. The combination of Serco and Facilities First will enable Serco Australia to target a significant pipeline of new opportunities which we expect to mature in the next few years," Soames added.
By Dayo Laniyan; [email protected]
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