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Serco posts ‘strong’ first-half year results

In its first-half year results 2020, support services business, Serco, has reported financially its performance has been “exceptionally strong”, with Covid-19 having “little effect” on profits.

Revenue grew by 24% to £1.8 billion,  largely due to contract wins in 2019 and the acquisition of the Naval Systems Business Unit of Alion last August.

Underlying trading profit increased by 35% and group margin increased from 3.4% to 4.3%.

Reported operating profit increased by £72 million to £89 million as a result of the strong increase in underlying profit and exceptional items.

Commenting on the financial results, Rupert Soames, Serco Group Chief Executive, said: “Operationally, the first half has been dominated by the rapid adjustments which have had to be made in the way we deliver our services as a consequence of Covid-19. The response of colleagues has been exemplary and they have worked throughout with the same courage, dedication and commitment as their public-sector co-workers on the front line in prisons, hospitals, trains, ferries, defence establishments and immigration facilities.  As a result of the significant investments we have made in recent years, our management teams, business processes and systems have shown themselves to be capable of responding at great speed and effectiveness to governments’ needs.  

“We commissioned the UK’s first drive-through test centre in two days; in Australia accommodation was provided for more than 1,300 quarantined travellers on one week’s notice; and as part of the NHS Test & Trace programme we mobilised 10,500 contact tracers in a four-week period.  Worldwide, we have mustered over 15,000 full and part-time people to help governments respond to the crisis.  We think that these and other examples will reinforce in our customers’ minds the value Serco can bring and the need more generally of governments to have vibrant, resilient and secure supply chains that can support public services in good times and bad.  

“Covid-19 has had little effect on profits; although there have been some dramatic impacts, positive and negative, on individual contracts, in aggregate the “ups” on profits have balanced the “downs”. 

“We re-instated guidance for 2020 in our trading update on 17th June, saying that we expected revenue to be around £3.7bn (2019: £3.2bn), and Underlying Trading Profit of £135-£150m (2019: £120m).  Nothing in recent weeks has changed our view, although, Covid-19 has introduced a greater degree of risk around our guidance than would normally be the case.”

 

 

 

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