Serco insists it will grow despite cuts

Marion Dakers
OUTSOURCING group Serco posted a 21 per cent rise in full-year profit yesterday, helped by strong revenue growth in the Americas, as the firm insisted that UK government spending cuts will not damage the firm.

Chief executive Chris Hyman told analysts yesterday that “if we’ve got the skills and capabilities, we will see the growth” in both the UK and US as the governments overhaul public services.

Serco, which runs London’s bike hire scheme and the Docklands Light Railway as well as prisons, Ofsted inspections and immigration control, said yesterday that pre-tax profit rose to £214m, while revenues climbed nine per cent to £4.33bn.

It reported a year-end order book of £16.6bn and said it had identified a further £29bn pipeline of opportunities.

Serco came under fire last November for asking suppliers for a 2.5 per cent rebate to make up for the UK government’s spending squeeze.

Hyman refused to comment on reports last month that Serco was interested in buying security and technology firm SRA International, and told analysts: “We have been an organic growth story and we don’t plan to change that.” Serco lacks capability in US federal defence and business process outsourcing, he said, adding that “when we see opportunities that will take us into these areas, that’s what I’m interested in”.

Robert Morton at Investec said the results were good and that international growth should be strong, but added: “[T]he group had a relatively difficult political environment to contend with in the second half of the year and revenue growth in 2011 will clearly be much less than we are usually accustomed to.”

Serco shares closed 4.6 per cent higher yesterday at 579.5p.