22 February 2017 | Herpreet Kaur Grewal
Support services company Serco has reported a 13 per cent decline in revenues to £3,048 million in its latest financial results for 2016.
This decline comprised an 11 per cent decline from net contract attrition and an 8 per cent reduction from disposals, partly offset by a 6 per cent currency benefit.
Underlying trading profit declined by £14 million to £82 million and discontinued operations reduced profits by £19 million; net currency benefits were £9 million; allowing for these, the reduction was £4 million.
Operating costs reduced by more than £450 million, and in proportion to the scale of revenue reduction; this includes overheads and shared services savings of over £50 million.
Rupert Soames, Serco Group CEO, said: "These results show that the execution of our five-year plan remains on track. Trading in 2016 was better than we expected at the start of the year, although this was in large part due to the resolution of a number of commercial matters in the first half, which will not recur; trading in the second half was in line with the guidance we gave at the time of our half-year results.
"Operationally, we have had a busy year: across key contracts our service delivery has improved; we have reduced operating costs by some £450 million whilst improving employee engagement; at year-end, the value of our pipeline of new opportunities was up 30 per cent, notwithstanding a 40 per cent increase in order intake; and we have cleanly exited the private sector BPO business. These are the first fruits of the 'transformation' phase of our plan, which we are now about half way through.
"Our view of likely performance in 2017 remains unchanged from previous guidance. The road back to prosperity was always going to be long and winding, with many potholes and boulders, but we are making good progress."