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(Alliance News) - Serco Group PLC said Wednesday it expects a sharp rise in interim revenue with strong growth in underlying trading profit.
Shares in the outsourcer were 17% higher in London on Wednesday morning at 154.96 pence each, making it the top performer in the FTSE 250.
In the first half, ending June 30, Serco expects to report underlying trading profit between GBP75 million and GBP80 million, about 50% higher year-on-year.
Serco said the growth was driven primarily by its overseas businesses including the impact of the acquisition in August 2019 of the Naval Systems Business Unit of Alion in North America.
Revenue in the period is expected to grow by about 23%, with organic growth of 14%.
Serco said it experienced "significant" operational challenges in the first half, but it did not hurt its financial performance.
Chief Executive Rupert Soames said: "The impact of this virus is very real to us as seven of our colleagues have died as a consequence of the disease and many others have lost friends and relatives. Notwithstanding this, people are working day-in-day-out, many in challenging environments such as prisons, hospitals, trains and asylum-seeker accommodation, serving their fellow citizens and governments.
"Thanks to the significant investments we have made in the last few years in people and systems, the business has shown itself capable of remarkable agility and effectiveness in response to governments' needs."
Serco's order intake in the half was GBP1.8 billion and the company reinstated its full year guidance due to its "resilience".
"Being able to reinstate guidance for the full year reflects the resilience of our business, which depends for its revenues on governments rather than businesses or consumers, our strong order book, and growing confidence that our people and systems can adapt effectively to the challenges of Covid-19. Clearly, there is a more than normal degree of risk in our guidance, but we feel it better that we give some indication rather than none," Soames added.
Serco is now guiding for full year revenue of GBP3.7 billion, up from previous guidance of between GBP3.4 billion to GBP3.5 billion.
Organic sales growth is now guided for about 9% from about 4% previously.
Underlying trading profit will land between GBP135 million to GBP150 million, similar to previous guidance of about GBP145 million.
Serco expects its June 30 net debt to be about GBP200 million, with committed facilities of about GBP300 million.
By Paul McGowan; paulmcgowan@alliancenews.com
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