Austerity in the UK, but Serco sees growth abroad

The company, whose work includes running prisons, schools and nuclear facilities for the Government, said pre-tax profits grew 10 per cent to £111.8m in the six months to June 30, on revenues up five per cent to £2.2bn.

Serco, which employs 100,000 people and also runs the bike hire scheme in London and transports prisoners in parts of the UK, said its divisions in the UK and US were facing “challenging conditions” in the face of central and local government cutbacks.

UK revenues were down three per cent to £1.3bn in the period, but the Africa, Middle East, Asia and Australasia division saw “exceptionally strong” revenues growth of 44 per cent after it won a string of contracts, including for the Australian Defence Force in the Middle East.

As a result, some 43 per cent of its revenues are now generated outside of the UK compared to 38 per cent a year ago.

Serco said its performance in the UK had been “varied”, particularly as local government work “felt a sharper impact from austerity measures”.

Its first-half performance was helped by the signing of £2.4bn of contracts, including prisoner transport for London and the East of England, Doncaster prison and young offenders’ institution, and a 15-year deal to provide support services for two of Sport England’s national centres.

It also won a contract to manage the UK Border Agency’s e-borders system, which will track the details of everyone leaving the UK, valued at £29m over two years.

Serco hit the headlines in December when it wrote to its biggest 193 suppliers demanding rebates in the face of Government spending cuts.