2nd Aug 2018 09:22
LONDON (Alliance News) - Public services provider Serco Group PLC on Thursday swung to pretax profit in the first half of its current year and reiterated its annual revenue and underlying trading profit guidance.
For the six months to June 30, the transport and prison services provider recorded pretax profit of GBP25.6 million, up from GBP13.0 million in the year-ago period, on a revenue of GBP1.37 billion and GBP1.51 billion, respectively.
Adjusted operating profit, or underlying trading profit, - a key profit measure for the company - rose to GBP37.6 million from GBP34.0 million. Reported operating profit increased to GBP31.9 million from GBP20.4 million.
The rise in profit was attributed to lower onerous contract provisions to GBP123 million from GBP168 million at start of the year. The revenue decline was blamed on contraction attrition and an adverse currency impact of GBP57 million.
"As foreseen in our five-year strategy, profits are now starting to grow, with underlying trading profit having increased by 20% at constant currency in the first half. We have also seen a continuation of the strong order intake achieved in 2017, with contract awards so far in 2018 of some £1.6bn, around 80% of which is from customers outside the UK; this order intake delivers another period during which the book-to-bill ratio has exceeded 100%, and sees our order book increase to GBP11.0 billion.
For 2018, Serco said it expects revenue in the range of GBP2.7 billion to GBP2.8 billion and underlying trading profit of around around GBP80 million. For 2019, it expects revenue to be broadly flat in constant currency, and further good growth in underlying trading profit.
The company has not declared an interim dividend for 2018 but remains committed in resuming shareholder payouts. It last paid an interim dividend of 3.10 pence per share in 2014.
Shares in Serco were trading 0.4% lower at 101.50 pence each.
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