(adds detail and comments from finance director about rail franchises)
LONDON (AFX) - Support services group Serco said interim pretax profits rose 21.5 pct to 37.3 mln stg as recent acquisitions made contributions in line with expectations.
The group said the purchases of ITNET and RCI added 134.4 mln stg to revenue and 9.3 mln to profits before tax and amortisation, which lifted 27 pct to 43.7 mln stg.
It added that its Northern Rail franchise delivered a strong operational performance in its first few months, consistently exceeding service performance targets.
Executive chairman Kevin Beeston said the six months to June 30 had been "another excellent period for Serco".
"Our service delivery record has enabled us to deliver organic revenue growth of 21 pct and our acquisitions have made the expected contribution in their first few months," he said.
Serco said earnings per share before goodwill amortisation lifted 22.6 pct to 6.78 pence while the interim dividend was increased by 12.3 pct to 0.91 p.
The group said it had a forward order book of 12.9 bln stg at June 30 and it had secured 99 pct of planned revenues in 2005, 85 pct for 2006 and 74 pct for 2007.
It has submitted 4.5 bln worth of bids which are being evaluated, including 1.7 bln that have reached preferred bidder status.
Serco said the first few weeks of the second half had seen further strong performance and it had been appointed preferred bidder on contracts including a strategic partnership with the Defence Science and Technology Laboratory worth about 400 mln stg.
It said it is also close to securing more than 180 mln stg of opportunities in the homeland security and offender management markets.
IT services supplier ITNET, now renamed Serco Solutions, contributed 83.9 mln stg in revenue and 6.1 mln in profit from operations.
"Although as anticipated its first half revenue was below the corresponding period last year, Serco Solutions continues to receive positive feedback from customers," the interim results statement from the group said.
Serco added that under the new International Financial Reporting Standards, full year pretax profit for 2004 rose by 11.5 pct to 64 mln stg while H1 pretax profit lifted 9.3 pct to 30.7 mln. Net assets at December 31 declined by 44.4 pct to 169.2 mln stg.
Mr Beeston said: "We look forward to further strong performance in the second half and are confident of achieving double digit growth for the foreseeable future."
Serco, which runs Northern Rail, Merseyrail and the Docklands Light Railway (DLR), said the proposed break-up of the Central Trains franchise in the Midlands may benefit the group and it would consider bidding for other franchises as they come up for renewal.
Northern Rail, which started in December 2004 as a joint venture with Dutch state railways NedRailways, is worth about 2 bln stg to Serco over its eight year nine month duration.
Finance director Andrew Jenner said Serco's share of the revenue delivered by the franchise during the first half was about 110 mln stg, but declined to give details of profits from the operation.
Serco said Merseyrail achieved punctuality of 94.7 pct in the first half - better than any other UK rail franchise - and boosted passenger numbers by 5.5 pct in the past year.
Serco is one of two bidders shortlisted to run the DLR for a further seven or nine years and expects to hear the outcome of the bid competition towards the end of this year.
The group's share price lifted more than 4 pct or 10.25 p to 263 p by 8.45 am.
paw/ec
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The copying, republication or redistribution of AFX News content, including by framing or similar means, is expressly prohibited without the prior written consent of AFX News.
AFX News and the AFX Financial News logo are registered trademarks of AFX News Limited
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LONDON (AFX) - Support services group Serco said interim pretax profits rose 21.5 pct to 37.3 mln stg as recent acquisitions made contributions in line with expectations.
The group said the purchases of ITNET and RCI added 134.4 mln stg to revenue and 9.3 mln to profits before tax and amortisation, which lifted 27 pct to 43.7 mln stg.
It added that its Northern Rail franchise delivered a strong operational performance in its first few months, consistently exceeding service performance targets.
Executive chairman Kevin Beeston said the six months to June 30 had been "another excellent period for Serco".
"Our service delivery record has enabled us to deliver organic revenue growth of 21 pct and our acquisitions have made the expected contribution in their first few months," he said.
Serco said earnings per share before goodwill amortisation lifted 22.6 pct to 6.78 pence while the interim dividend was increased by 12.3 pct to 0.91 p.
The group said it had a forward order book of 12.9 bln stg at June 30 and it had secured 99 pct of planned revenues in 2005, 85 pct for 2006 and 74 pct for 2007.
It has submitted 4.5 bln worth of bids which are being evaluated, including 1.7 bln that have reached preferred bidder status.
Serco said the first few weeks of the second half had seen further strong performance and it had been appointed preferred bidder on contracts including a strategic partnership with the Defence Science and Technology Laboratory worth about 400 mln stg.
It said it is also close to securing more than 180 mln stg of opportunities in the homeland security and offender management markets.
IT services supplier ITNET, now renamed Serco Solutions, contributed 83.9 mln stg in revenue and 6.1 mln in profit from operations.
"Although as anticipated its first half revenue was below the corresponding period last year, Serco Solutions continues to receive positive feedback from customers," the interim results statement from the group said.
Serco added that under the new International Financial Reporting Standards, full year pretax profit for 2004 rose by 11.5 pct to 64 mln stg while H1 pretax profit lifted 9.3 pct to 30.7 mln. Net assets at December 31 declined by 44.4 pct to 169.2 mln stg.
Mr Beeston said: "We look forward to further strong performance in the second half and are confident of achieving double digit growth for the foreseeable future."
Serco, which runs Northern Rail, Merseyrail and the Docklands Light Railway (DLR), said the proposed break-up of the Central Trains franchise in the Midlands may benefit the group and it would consider bidding for other franchises as they come up for renewal.
Northern Rail, which started in December 2004 as a joint venture with Dutch state railways NedRailways, is worth about 2 bln stg to Serco over its eight year nine month duration.
Finance director Andrew Jenner said Serco's share of the revenue delivered by the franchise during the first half was about 110 mln stg, but declined to give details of profits from the operation.
Serco said Merseyrail achieved punctuality of 94.7 pct in the first half - better than any other UK rail franchise - and boosted passenger numbers by 5.5 pct in the past year.
Serco is one of two bidders shortlisted to run the DLR for a further seven or nine years and expects to hear the outcome of the bid competition towards the end of this year.
The group's share price lifted more than 4 pct or 10.25 p to 263 p by 8.45 am.
paw/ec
COPYRIGHT
Copyright AFX News Limited 2005. All rights reserved.
The copying, republication or redistribution of AFX News content, including by framing or similar means, is expressly prohibited without the prior written consent of AFX News.
AFX News and the AFX Financial News logo are registered trademarks of AFX News Limited
For more information and to contact AFX: www.afxnews.com and www.afxpress.com
© 2005 AFX News
