26 February 2016 | Jamie Harris
Serco has reported a trading profit of £137.6 million for the year to 31 December 2015.
In its full-year results, the outsourcing firm rectified a £632.1 million loss it experienced in 2014. Full-year revenues in 2015 were reported to be £3.18 billion, down from £3.60 billion in 2014.
Serco's UK central government division, which includes a number of contracts with the Ministry of Defence, Ministry of Justice, and the immigration and transport sectors, saw revenues of £742.1 million, a 22 per cent fall on the previous year (£961.4 million).
Operating profit in this division was £60.2 million. The company noted the end of contracts with Docklands Light Railway in London, the National Physical Laboratory, and the Colnbrook immigration removal centre as key drivers in the revenue reduction.
Serco expects further revenue reductions in 2016 in this division, citing the transfer of services from the Defence Science and Technology Laboratory and the end of its current defence business services arrangement, as well as the end of the Northern Rail franchise it operates.
Its UK and Europe local and regional government division, which covers services in healthcare and other business support services, reported revenues of £905.8 million, down 6 per cent from 2014 (£959.8 million). Its operating loss in this division was £15.6 million.
Anticipated contract losses and revenue reductions in 2016 in this division are expected to have an impact of approximately £200 million. Serco attributes the end of its Suffolk Community Healthcare and National Citizen Services contracts to these anticipated losses.
Rupert Soames, group chief executive of Serco, said: “Looking ahead, and in line with our plan, we expect revenues and profits to decline in 2016, as a result of the disposal of our private sector BPO business and contract attrition. We have four priorities this year: further improve the operational and financial performance of our contracts; build our new business pipeline; reduce our costs; and improve and embed our new management information systems.”