4th Jul 2014 06:28
LONDON (Alliance News) - Serco PLC said Friday it has been unsuccessful in its rebid for the franchise to manage, operate and maintain the Docklands Light Railway in London.
The support services company said it has been informed by Transport for London that it was unsuccessful in its rebid after operating the DLR since 1997 under two franchises.
The current franchise, which was due to end on September 14, has been extended to December 7, 2014, at which point the service will transfer to the new franchisee.
Serco said that the DLR contract generated revenue of approximately GBP90 million, or 2% of the group's overall revenues in 2013, at a margin that was significantly below the average level the group achieves on its contracts.
The Docklands Light Railway is an automated light metro system opened in 1987 to serve the redeveloped Docklands area of London.
Serco said in a trading update Thursday that the company's expectations remain unchanged from the lowered guidance it set out in late April, with first-half organic revenue set to be about flat on the year but margins to fall significantly, but it also expects to book new provisions on poorly-performing contracts. Guidance was lowered in April this year, blaming the restructuring it was having to carry out in the wake of the fallout of its well-publicised difficulties with some UK government contracts, as well as a margin hit from some other poorly-performing contracts that it was having to invest in.
The company Thursday reiterated that it expects to report adjusted revenue of about GBP2.4 billion for the six months to end-June, broadly flat on the year-earlier period excluding the impact of acquisitions and disposals and currency movements. However, as flagged, it expects margins to be "significantly" down on the year.
By Alice Attwood; [email protected]; @AliceAtAlliance
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