(Alliance News) - Serco Group PLC on Thursday increased its guidance and restarted dividends after a steep profit rise for 2020, with both organic growth and an acquisition boost.
Shares in Serco were up 4.9% at 135.50 pence in London in morning trading.
Serco is a Hampshire-based company that provides outsourcing services to government. For 2020, its pretax profit was GBP153.3 million, up 90% from GBP80.7 million the year before.
Revenue climbed 19% to GBP3.88 billion from GBP3.25 billion, with organic growth as well as an uplift from its August 2019 acquisition in the US of the Naval Systems business unit of Alion Science & Technology Corp - which added GBP151 million to revenue growth.
Underlying trading profit rose 36% to GBP153 million in 2020, with Naval Systems adding 8%.
For 2021, Serco is expecting revenue and trading profit to keep growing, though at a slower pace than in recent years.
The company has increased its profit guidance for 2021 by 6%, equating to 10% year-on-year growth at constant currency. This excludes the effect of Serco's WBB Inc acquisition, with guidance to be updated when this completes.
Serco said it is ready to restart dividends, last paid in 2014, declaring a 1.4p per share dividend in respect of 2020.
Chief Executive Rupert Soames said: "After the dramatic growth of the last three years - with 33% compound annual growth in underlying trading profit - we see 2021 as being a year of more normal rates of growth in revenues and profits; we will have some 'drags' on our profitability, notably only having six months of the [AWE Management Ltd] contract, and we expect revenues related to Covid-19 services to be much stronger in the first half than in the second. However, we have had a strong start to the year, and we are therefore increasing our profit guidance for 2021, with the revised guidance equating to 10% constant currency growth in the year."
By Anna Farley; annafarley@alliancenews.com
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Serco (SRP)