Serco profits swell

Government services firm Serco announced tasty half year results today.

Compared to last year, revenues were up 15 per cent to £1.236bn. Bigger margins meant profits outperformed revenue growth. Pre-tax profits climbed to £44.3m, 20.1 per cent up on the same period in 2005. The figures deliver earnings per share of £0.0669 and a dividend of £0.0105.

Executive chairman Kevin Beeston said: "The unrelenting rise in citizens' expectations, together with an ever-increasing requirement for value-for-money public services, leaves Serco confident of continued double-digit growth.

"Favourable markets allow us to bid selectively, which together with improvements in operating efficiencies means margins will continue to rise."

Regarding its security business, the firm said in a statement: "The events which have dominated the news since the beginning of August this year have done nothing to reduce that awareness, and not just in the UK...We expect more market growth in the UK (already approaching £3bn per annum) and overseas, particularly in the US."

Bosses said widespread public spending squeezes were opening new opportunites for the firm. The UK government's outsourcing projects are being used as "an example" overseas, they reckon, putting a UK firm like Serco in a strong bidding position.

The firm said it would be targeting new market opportunities worldwide totalling £22bn. In the UK, it's eyeing up the services slice of the £70bn it cost the government to decommission ageing nuclear power infrastructure.

Serco's full report is here. ®