Driven by strong performances in the Americas and Asia Pacific, Serco's (SRP) revenue rose by 6.5 per cent at constant currencies in the six months to 30 June. Crucially organic growth made up the lion's share of that figure at a rate of 4.2 per cent, marking the first time the group has reported organic expansion since 2013. That rate is expected to accelerate to around 5 per cent in 2020 as a number of large contracts become operational.
With the award of the £1.9bn asylum accommodation and support services contracts in the UK, the order intake was boosted to £3.3bn. This reflects a 60:40 split between new work and existing work being rebid or extended. With £2.9bn of revenue already delivered or secured in the order book for 2019, the group has more than 90 per cent visibility for its full year £3bn revenue guidance.
Statutory earnings were adversely impacted by a £19.5m increase in exceptional charges to £31.1m. This included £22.9m relating to the conclusion of the long-running Serious Fraud Office investigation into the electronic monitoring contract.
Peel Hunt expects adjusted pre-tax profits of £84.9m and EPS of 5.3p for the full year, rising to £123.2m and 7.8p in 2020.
| SERCO (SRP) | ||||
| ORD PRICE: | 144p | MARKET VALUE: | £ 1.76bn | |
| TOUCH: | 143.3-144p | 12-MONTH HIGH: | 147p | LOW: 84p |
| DIVIDEND YIELD: | NIL | PE RATIO: | 30 | |
| NET ASSET VALUE: | 43p* | NET DEBT: | 39% | |
| Half-year to 30 Jun | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2018 | 1.37 | 25.6 | 1.32 | nil |
| 2019 | 1.48 | 6.7 | -0.15 | nil |
| % change | +8 | -74 | - | - |
| Ex-div: | na | |||
| Payment: | na | |||
| *Includes intangible assets of £640m or 52p a share | ||||
