(Alliance News) - Serco Group PLC on Friday updated its annual revenue guidance following strong growth in the third quarter of 2020 in conjunction with what it called good cost control.
The Hook, Hampshire-based public services provider set its new full-year revenue guidance at around GBP3.9 billion, up from the previously set GBP3.7 billion, with an organic growth rate in revenue of around 15% year-on-year. Revenue in 2019 totalled GBP3.25 billion.
Underlying trading profit is expected to be between GBP160 million and GBP165 million, up from GBP120.2 million in 2019.
All regions are performing better than expected, the company said.
In the US, Serco saw strong performances across a number of contracts, including with Center for Medicare & Medicaid Services, the US Federal Emergency Management Agency, and the Anti-Terrorism & Force Protection, the last being a framework contract for US Naval Facilities.
In the UK, Serco was awarded extensions to its contracts which provide test sites and call handlers for NHS Test & Trace, saw increases in the number of asylum seekers for which the company is responsible on behalf of the Home Office, and successfully mobilised a new prisoner escorting contract.
In Australia, restrictions on movement as a result of Covid-19 has meant additional work for both Serco's immigration services and Citizens Services businesses. In the Middle East, there has been an increase in project-related work on rail and facilities management contracts, the company said.
Serco has caught up on delays in processing billings for its FEMA contract in the US, which held back cash generation in the first half.
Serco now expects adjusted net debt to be between GBP100 million and GBP150 million at the end of December, down from GBP214.5 million in 2019.
Going forward, Serco said: "We expect the uncertainties of 2020 will persist into 2021 as the world grapples with recurring outbreaks of infection. We have only just started our budget review process, and we would not have a view concerning 2021 today which is materially different from that which we had at the time of our half year results in August."
Serco shares were up 13% at 134.14 pence each in London on Friday morning.
By Greg Roxburgh; gregroxburgh@alliancenews.com
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Serco (SRP)