11th Aug 2015 06:24
LONDON (Alliance News) - Outsourcer Serco Group PLC on Tuesday said it swung to a pretax loss in the first half of 2015, in line with its expectations, but reiterated that overall trading in the half was better than had been anticipated.
The company, which booked a significant pretax loss for 2014 due to writedowns it booked on a large number of onerous contracts, said its pretax loss for the six months to the end of June was GBP76.2 million, versus a GBP10.9 million profit a year earlier, as it booked GBP117.4 million in exceptional costs, split between asset impairments and refinancing costs related to its recent rights issue of shares.
Serco said revenue in the half was down to GBP1.79 billion from GBP2.03 billion a year earlier, in line with the guidance the group gave in its first-half trading update, and it maintained its expectations for trading profit for the year to come at around GBP90 million, with risks now to the upside.
The group said it signed GBP1 billion in contracts in the half and said its total bid pipeline remains in excess of GBP5 billion.
Still, as it booked the pretax loss, Serco said it has scrapped its interim dividend, having paid out 3.10 pence per share a year earlier.
"This is a respectable start to what will be a long, and no doubt occasionally bumpy, road to recovery. In the period we completed some essential first steps, most notably raising the equity and refinancing our debt which has given us much a stronger balance sheet," said Chief Executive Rupert Soames.
"Trading in the period was a little better than we anticipated at the time of the rights issue, and we are maintaining our previous guidance for 2015, albeit that we now believe that the risks associated with this guidance are weighted to the upside. As previously stated, we expect that revenues and profits will continue to be under pressure in 2016," Soames added.
By Sam Unsted; [email protected]; @SamUAtAlliance
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