After several years of organic decline in the UK and Europe division, the facilities services company Serco saw encouraging organic growth in the second half, according to the firm’s trading update.
Rupert Soames, Serco Group Chief Executive, said: “The results that we expect to report for 2019 will represent the second successive year of strong growth in revenue and profits, while our positive outlook for 2020 means that we expect to double our Underlying Trading Profit from the £69m achieved in 2017 to the £145m we plan to deliver in 2020.
“Once again, we see the advantage of having a broad international footprint, with excellent growth in both our North America and Asia Pacific divisions, and the ability to successfully execute acquisitions such as NSBU in the US. The UK also delivered a good performance, returning to organic growth in the second half, which is the first time since 2013. Perhaps the most notable aspect of 2019, however, is the record order intake of over £5bn, representing over 150 per cent of annual revenues, which demonstrates the confidence our customers have in us to deliver critical, sensitive and complex public services. Between the start of 2017 and the end of 2019, our order book will have increased by more than 40pc from £10bn to over £14bn.”
The organic growth for the year is expected to be about 7pc, comprising the 4pc reported for the first half, and around 10pc in the second half. The firm said that its UK profitability improvement has been driven in particular by the improved performance of the healthcare business, enhanced by the Carillion acquisition. The FM firm also pointed to large new contract wins such as AASC (asylum accommodation and support) in the UK. In the second half of 2019, the largest award was £0.8bn for the Prisoner Escort and Custody Services (PECS) contract covering London and the southern region.
Revenue in 2020 is expected to be £3.4-3.5bn, which would represent total growth of 7pc to 8pc; this assumes organic growth of around 4pc. Visit https://www.serco.com/investors/results-reports-events.
