13th Dec 2018 09:18
LONDON (Alliance News) - FTSE 250-listed public services provider Serco Group PLC said on Thursday it expects a double-digit increase in trading profit for 2018, and profit to rise in line with consensus expectations for 2019.
Underlying trading profit for 2018 is expected to rise by 30% to 40% to the range of GBP90 million to GBP95 million, from GBP69.8 million the year before, and above the GBP80 million Serco had guided for 2018 at the start of the year.
Revenue for 2018 is expected to be GBP2.8 billion, down 4% from GBP2.95 billion the prior year.
For 2019, Serco expects trading profit to be in the range of GBP95 million to GBP100 million, in line with market consensus, as a decline in the Middle East is offset by better performances elsewhere.
Revenue for 2019 is expected in the range of GBP2.8 billion to GBP2.9 billion, due to contributions from Carillion health facilities management contracts, recently acquired by Serco.
In addition, Serco said it has completed the refinancing of its revolving credit facility, providing GBP250 million of committed funding for the next five years. The previous GBP368 million facility was due to mature in April 2020. Net debt at year-end is expected to be GBP200 million, lower than previously expected.
"With revenues no longer reducing, cash generation turning positive and the benefit of a strong balance sheet, we are pleased with progress, and we expect further improvement in 2019. We expect to deliver another year of strong order intake in 2018, driven in particular by our international businesses, and our operations and transformation plans continue to deliver an organisation which is leaner, fitter and much stronger," said Chief Executive Rupert Soames.
Shares in Serco were up 7.6% at 96.20 pence on Thursday, the second best performer in the FTSE 250 index after fellow outsourcer G4S.
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