Business services company Serco Group plc (SRP.L) Wednesday reported higher first-half profit, driven by revenue growth across all its business segments, reflecting contract wins and strong financial performance. The company boosted its interim dividend, and said it is on track to deliver its 2009 outlook.
For the six-month period ended on June 30, the company reported a profit of GBP 61.4 million, up 33.8% from GBP 45.9 million in the prior year. Earnings per share were 12.62 pence, an increase of 35% from 9.35 pence in the previous year period. Adjusted earnings per share rose 37.7% to 14.02 pence from 10.18 pence a year ago.
The company also reported first-half pre-tax profit of GBP 83.4 million, up 32.8% from GBP 62.8 million in the same period last year. Adjusted profit before tax increased 37.1% to GBP 92.3 million from GBP 67.3 million in the same period of fiscal 2008.
Serco Group's six-month revenue rose 30.8% to GBP 1.95 billion from last year's GBP 1.49 billion. Excluding currency, total revenue grew 21.2% to GBP 1.81 billion. The company's revenue growth was 10.8% excluding currency and SI International, which was acquired at the end of 2008. SI's revenue rose 11.4% for the period to US$308.9 million.
Based on business segments, Civil Government revenue grew 49.1% to GBP 809 million, representing 41% of the Group revenue Defence revenue totaled GBP 499 million, up 33.2% from the previous year. It represented 26% of the group revenue.
Transport revenue, representing 18% of the group revenue, reached GBP 346 million, an increase of 13.2% year-over-year. Science revenue grew 10.5% in the first half to GBP 295 million, representing 15% of the group revenue.
According to the company, during the period, it signed contracts worth GBP 2.1 billion and was appointed as preferred bidder for GBP 1.4 billion of contracts. The company also received a further GBP 0.5 billion of contract awards in the second half.
Serco Group said that its board has declared an interim dividend of 1.85 pence per share, representing an increase of 25% on the 2008 interim dividend. The interim dividend will be paid on October 16 to shareholders on the register on September 4.
The company also said that its strong performance in the first half of the year and the good start to the second half support its expectation in achieving the financial guidance for 2009 and beyond.
For 2009, the company continues to expect double-digit revenue growth and a 30bps increase in its adjusted PBT margin, excluding SI International. The addition of SI International is anticipated to increase the company's 2009 revenue growth by approximately 10%. Including the benefit of SI International, adjusted operating profit margin is projected to increase by approximately 40bps in 2009 from 5.3% in 2008. The 2009 guidance excludes material currency effects, the company noted.
Further, the company still expects that its revenue will increase to approximately GBP 5 billion and its adjusted operating profit margin to about 6.3% by the end of 2012, excluding material acquisitions, disposals and currency effects.
SRP.L is trading at 480 pence on the LSE, up 25 pence, on a volume of 1.57 million shares.
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