Serco reports fall in profits and vows to work with government over overcharging allegations

Outsourcing group Serco has reported a 2.6 per cent fall in pre-tax profits and an 11.2 per cent fall in earnings per share in the first half of the yar.

Pre-tax profits fell to £106.1m from £108.9m, while basic earnings per share fell to 17.19p from 19.35p.

Serco, which makes around 45 per cent of its revenue from UK public sector work, said it is working with the government to rectify any wrongdoing relating to allegations it overcharged for the delivery of electronic tagging and prisoner escort services.

The group enjoyed organic revenue growth of seven per cent in the UK and Europe, 19 per cent in Australasia, the Middle East, Asia and Africa and 18 per cent in global services. However, a challenging federal contracting market in the US resulted in a three per cent decline of organic revenue growth in this region.

Chief executive Christopher Hyman said:

The strong financial performance over the first six months of 2013 has met expectations, our overall guidance for the full year is unchanged and the outlook remains positive. We have seen further excellent revenue growth in Australia and in our BPO business, the UK has seen good growth from the contracts won in 2012 and the Americas division has won significant new business despite the material challenges in the US federal contracting market.

We are working closely with UK government customers on their ongoing reviews of our contracts and have agreed to a series of actions with the MoJ regarding our PECS contract. Serco prides itself on being a values-led organisation, delivering essential services that matter to people around the world. We will act with integrity to deliver the standards expected of a service business such as ours and will put right any issues that arise from these reviews.

The group kept its overall full-year outlook unchanged, with the two per cent boost from previous acquisitions likely to be offset by previous disposals.

The interim dividend was increased by 17 per cent of 3.1p.