Record contract wins boost Serco revenue

29th Aug 2013 07:52

Serco Group reported a 'strong financial performance' for the first half of the year, but dampened spirits after the same day admitting to misreporting data on one of its contracts with the Ministry of Justice. The group posted a 10.5% rise in half year adjusted pre-tax profit to £127.1m (2012 H1: £114.5m) on adjusted revenue of £2,113.3m (2012 H1: £1,905.5m), which was driven by last year's record level of contract wins together with volume-related and project-based work during the period.Adjusted revenue growth from ongoing activities at constant currency was 11.8%, which included strong organic revenue growth of 8.8%. The interim dividend per share was increased by 17% from 2.65p to 3.10p, reflecting the group's policy of accelerated growth to move to a higher payout ratio. The results came as the group was forced to admit the police had been called over the misreporting of data by 'a small number of employees' associated with Serco's Prisoner Escort and Custody Services (PECS) contract. As a result, Serco said it would forgo all previous and future earnings associated with the contract, which was awarded in March 2011 and valued at approximately £285m over seven years.Christopher Hyman, Group Chief Executive, said: "The strong financial performance over the first six months of 2013 has met expectations, our overall guidance for the full year is unchanged and the outlook remains positive. "We have seen further excellent revenue growth in Australia and in our BPO business, the UK has seen good growth from the contracts won in 2012 and the Americas division has won significant new business despite the material challenges in the US federal contracting market. "We are working closely with UK government customers on their ongoing reviews of our contracts, and have agreed to a series of actions with the MoJ regarding our PECS contract. Serco prides itself on being a values-led organisation, delivering essential services that matter to people around the world. We will act with integrity to deliver the standards expected of a service business such as ours and will put right any issues that arise from these reviews."NR