26th Feb 2020 08:04
(Alliance News) - Outsourcer Serco Group PLC achieved its first revenue growth in over five years, the company said Wednesday, with the dividend also returning.
Shares were 1.7% higher in early trade in London on Wednesday at a price of 153.22 pence each.
Serco posted revenue of GBP3.25 billion in 2019, 15% higher than the year before. Organic revenue growth was 8%. Chief Executive Rupert Soames said this was the first revenue growth since 2013.
Hook, Hampshire-based Serco achieved "very strong" growth in the Americas, with organic revenue up 19% and the total figure rising 35%, while Asia Pacific revenue was 16% higher. In the UK & Europe, Serco's revenue rose 5%, the first revenue growth since 2013, while Middle East fell 2%, but Serco said this was a good result in a tough market.
The company's pretax profit increased by 8.9% to GBP80.7 million, with the figure before exceptional items up 5.7% to GBP104.1 million.
Serco has decided to pay a 1.0p per share dividend for the year, the first time it has paid a dividend since 2014, an "important milestone" for the company.
"All this indicates we have finally achieved escape velocity, leaving behind the gravitational pull of past missteps, and gives the board confidence to recommend paying a dividend for the first time since 2014, which is an important milestone," said CEO Soames.
Serco also said the order intake for 2019 hit a record GBP5.4 billion, meaning the order book stands at GBP14.1 billion, around 40% higher than where it was three years ago.
"This is the third successive year our order intake has exceeded our revenue, and underlines the confidence governments have in Serco's ability to deliver critical, sensitive and complex public services," commented Soames.
The three largest contract winds for Serco was for asylum accommodation in the UK, prisoner escort and custody, also in the UK, and a defence healthcare contract in Australia.
Looking ahead to 2020, Serco is guiding for revenue of between GBP3.4 billion to GBP3.5 billion, which would mean growth of 6% to 8%. This also assumes organic growth of 4%, Serco added. Underlying trading profit is seen rising by around 20% to GBP145 million.
This guidance is unchanged from a trading update provided in mid-December.
By George Collard; [email protected]
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