4th Aug 2016

StockMarketWire.com
Serco has swung to an H1 pretax profit of £58.1m, from a year-earlier loss of £16.0m due mostly to exceptional finance costs of £32.8m. Revenue slipped to £1.5bn, from £1.6bn.

CEO Rupert Soames said the H1 performance was better than we expected.

"Although much of the improvement came from items that will not recur, it reflects the result of a lot of hard work and successful resolution of a number of commercial issues,2 he said in a statement.

"Since our last update in May, our trading performance and cost savings are tracking slightly ahead of plan, and recent foreign exchange movements have increased the value in sterling of our overseas earnings.

"Accordingly, we are increasing our profit guidance for 2016, although it is important to note that our view of the outlook for 2017 is not materially changed, other than adjusting for foreign currency movements.

"Whilst we expect to see potholes on the way, we are making good progress on the implementation of our strategy, underlined by our growing pipeline of new bids.

"We have removed some £550m from our operating costs, and at the same time we have been investing in our infrastructure, processes and capability and have recently rolled out significant improvements in our HR, finance and purchasing systems."