Serco returns to UK growth as outsourcer puts woes behind it
Public services outsourcer Serco’s UK revenues have returned to growth for the first time since 2013.
Six years ago, revelations emerged that the company had charged taxpayers to monitor released prisoners who were actually dead or still in jail with electronic tags.
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It became part of a wider decline at the company which saw it sink to losses for the next five years.
However, shareholders were cheered by the news that Serco will likely turn a profit of £129m and revenue of £3.2bn, both up year-on-year.
Shares spiked this morning, to as much as five per cent up, before settling at one per cent higher than the previous close.
Serco is run by Rupert Soames, the grandson of Winston Churchill, and it carries out jobs ranging from helping build Britain’s nuclear warheads to running immigration centre.
It also raised its full-year outlook for revenue and underlying trading profit and said it expects to top them in 2020, driven by new contract wins and better performance at its U.S. and Asian businesses.
Soames told City A.M.: “We think this business can generate margins of five per cent. And it should be growing its top line around five per cent as well. That was a stall we set out five years ago and we’re part way along that road.
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“But still, while we have got 20 per cent revenue growth in the second half, that’s take us to £3.3bn of revenues, and when I arrived they were nearly £5bn. So we’ve had to sort of step back a bit before we even start marching forward.
“More pleasing than the revenue growth is the growth in the order book, which has gone from £10bn to £14bn in two years. That’s a lot of additional future value that we have tucked into our larder.”