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Serco's profits buoyed by temporary effects

The beleaguered support services group's profits are looking rosier due to some temporary effects
May 26, 2016

Following on from broadly positive full-year figures in February, Serco (SRP) has delivered more glad tidings for its long-suffering shareholders. Management revealed that first-half profitability would come in ahead of expectations due to temporary effects, namely that contracts for Virginia transport and US Army transition assistance have run on longer than expected, while final settlement on some completed contracts, most notably Northern Rail, have been more favourable than originally expected.

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There are also several contracts where current trading is better than expected, so management felt able to bump up guidance on 2016 revenue to £2.9bn and underlying trading profit to not less than £65m, representing increases of 4 per cent and 30 per cent, respectively.