Serco reports poor H1 trading but cuts debt

12th Aug 2014 07:54

Troubled support services group Serco reported "poor" first half trading and predicted challenges ahead, but said it had reduced net debt and appointed a new finance chief.Serco won less work during the period and said previously higher-than-average margin work fell in volume or was lost on re-bid.The group also faced extra costs as it tried to improve performance on contracts facing operational difficulties.It said the expected fall in earnings was likely to affect its debt position and it decided to boost its balance sheet through an equity placing, The placing resulted in a fall in net debt for the six months to 30 June to £559.3m from £731.5m previously.Serco has lost its contract to run London's Docklands Light Railway and has been embroiled in a controversy over alleged overcharging for prisoner tagging, which led to a temporary loss of UK government work.New chief executive Rupert Soames said it was making good progress with a strategy review launched in the wake of the problems and with efforts to rebuild trust and confidence with the government."As expected, trading was poor in the first half. Profits were in line with our revised expectations, and cash flow and net debt were better."Many challenges remain, and we have a lot of work to do, but I am confident that, in time, we can restore the company's fortunes," he said.Adjusted revenue rose 1% to £2.4bn and adjusted operating profit fell 59% to £50.7m at constant currency while adjusted pre-tax profit on the same basis dipped 66% to £33.3m.Adjusted earnings per share fell 68% at constant currencies to 4.96p and the interim dividend per share was unchanged at 3.1p.Serco also said it had appointed Angus Cockburn, the temporary chief executive of power generator rental group Aggreko, as its finance chief from the end of October, replacing Andrew Jenner.PW