Serco sees profits rise boosted on new contracts

SUPPORT services group Serco, which has operations around the Midlands, has seen pre-tax profits rise by 21.6% to £101.4m in the first six months of the year. Revenue grew by £9.8% during the period.

The group, which has recently secured a £650m contract to take on Sandwell’s waste management service, has also reported a strong balance sheet and cash flow support with a planned £60m contribution to group pension scheme.

Serco, which has operations worldwide said it had seen substantial UK and international activity during the period, resulting in major contract wins of £2.2bn to frontline services.

As of the end of June, the group’s order book stood at £16.7bn, down slightly on the £17.1bn reported at the end of 2009.

However, it has said that it is remaining cautious about the likely impact on business as a result of changes proposed by the new coalition Government, especially the axing of regional development agencies and their replacement with Local Enterprise Partnerships (LEPs).

“Although there may be new opportunities with LEPs, it is not yet clear when these will start to emerge,” it said in a statement.

Christopher Hyman, group chief executive, said: “Many of our government and commercial customers are seeking to reduce costs. We have the necessary skills to help them, given our broad portfolio of markets and capabilities, and our close customer relationships, as existing markets continue to develop and new markets open up.”

The Sandwell contract, set for a 25-year duration, will see the group provide refuse collection, recycling, and street cleaning services, and deliver waste processing and disposal, including the construction of a new waste transfer station.

It said it anticipated opportunities elsewhere in the UK, in particular with the market-testing of three public sector-operated prisons – Birmingham, Wellingborough and Buckley Hall.

“We also see potential for further opportunities arising from the drive to manage the existing prison estate more effectively, reduce reoffending and improve the efficiency of probation and immigration services,” it said.