Serco reiterates 2017 outlook, wins contract with Barts Health NHS

FTSE 250 service company Serco reiterated its outlook for next year as it said it should move into the ‘growth’ phase of its transformation plan in 2018 and announced a £600m contract with Barts Health NHS Trust for the provision of soft facilities management services.

Serco expects to report revenue of around £3.1bn and underlying trading profit of between £65m and £70m in 2017. However, it pointed out that the range of potential outcomes is significantly wider due to its low margins and the sensitivity of its profits to small changes in revenue or costs.

As far as the group’s strategy is concerned, Serco said the ‘transformation’ phase is progressing to plan, and, depending on the timing and profile of new business won and subject to the prevailing market conditions, it expects to begin to move into the ‘growth' phase at some point in 2018.

Chief executive Rupert Soames said: "2016 has seen a lot of hard work and the successful resolution of a number of commercial issues which will result in underlying trading Profit materially better than we expected at the start of the year, and which will be in line with the increased guidance we gave in August.

“Our view of the underlying outlook for 2017 remains unchanged, which means that we are continuing to make good progress with the execution of our strategy for the long-term turnaround of Serco."

Also on Thursday, the company said it has signed a contract with an estimated total value of around £600 over a 10-year term with England’s largest NHS trust, Barts Health, which could be extended a further three years.

Under the terms of the contract, Serco will be responsible for the provision of cleaning and domestic services, linen and laundry, patient catering, portering services, car parking, reception and helpdesk, and other non-clinical general management and support services.