Serco H1 pre-tax profits almost double to £25m
Company denies claims it will evict 300 asylum seekers in Glasgow
Government contractor Serco on Thursday almost doubled interim pre-tax profits to £25.6m, despite a fall in revenue and a weak UK contract market.
Revenue fell 5.6% to £1.37bn on a constant currency basis while underlying trading profit increased 20% to £37.6m.
The company, which provides a wide range of services to government such as immigrant detention centres, came under fire earlier this week over its plans to evict 300 asylum seekers from properties it manages in Glasgow under a contract with the Home Office.
Glasgow Council wrote to Home Secretary Sajid Javid on Tuesday demanding he stop Serco's plans to change the locks on the residences and evict the refugees within a week.
“Glasgow has always been, and will continue to be, a willing and active partner in the resettlement of asylum seekers in Scotland. We firmly believe that the dispersal programme over the past 20 years has had a positive impact on our city. However the scale of the proposed evictions will have a severe, and detrimental impact on the city,” the council stated in its letter.
Serco on Wednesday denied the claims as “simply not true". Chairman Rupert Soames said the company planned to give notice “to no more than six single adult males this week and 12 next week”.
On the results front, Serco said it was believed it could come through what “we believe is a market hiatus caused by a combination of Brexit and market dysfunction”.
“We remain broadly on track on costs and on onerous contracts, but demand in some of our markets, and in particular in the UK, which accounts for around 40% of the group's reported revenues, has weakened noticeably since 2015,” Soames said.
“We can and will partly compensate for a weaker organic revenue outlook through increased actions on the cost base, and our long term ambitions of 5-7% revenue growth and 5-6% margin remain intact, but the timing of achieving this is inevitably dependent on the timing of demand growth in our largest markets reverting to historic levels.”