Serco strong in H2 boosted by Sandwell contract

SUPPORT services group Serco has continued its strong performance into the second half of the year bolstered by major contracts such as its £650m agreement with Sandwell Borough Council.

The group announced earlier this month it had secured the massive deal with the local authority which will see the group take control of the borough’s waste services for a period of 25 years.

In an interim management statement today, the group said its second half performance to date was strong and it was on track to meet financial guidance laid down for 2010.

“The strong performance has been driven by high levels of operational delivery, continued organic growth and good free cash flow. Our financial position remains strong,” said the statement.

Across the group, operational highlights include the Dubai Metro delivering more than 30 million journeys in its first year of operation and the launch of the Barclays London Cycle Hire scheme.

At the half year, Serco had an order book of £16.7bn and was optimistic of eventually securing business worth £28bn across the UK and internationally. Since then, it has been awarded £2.3bn of contracts, bringing the total for the year to date to £4.5bn.

“Notable contract wins so far in the second half of the year include, in the UK, a £650m, 25-year, environmental services contract with Sandwell Borough Council and the addition of King’s College Hospital NHS Foundation Trust to our pathology joint venture with a 10-year contract valued at £110m,” it said.

In the United States, it has been selected by the US Navy to provide logistics support and hazardous materials management. The two contracts are worth $130m.

Christopher Hyman, Serco chief executive, said: “Our broad and deep skills in service transformation enable us to support governments around the world as they reform public services, address deficits and improve their national infrastructures.

“Having signed our MoU with the UK Government, we look forward to continuing to support our customer in the delivery of essential public services. Internationally, I am also delighted at the progress we are making in building home markets in the US, Australia and the Middle East. These geographies offer significant potential for sustained growth in the medium and long term.”