Serco, the government outsourcing group, reported lower full-year profits for 2017, hit by a "difficult" market that ultimately led to the collapse of rival Carillion earlier this year.
The company said reported revenue fell 2% to £2.95bn, comprising a 6% decline from net contract attrition, but was confident it would emerge stronger from the turmoil that has hit the outsourcing sector in recent years.
While underlying profit was at the top end of the company's guidance given at the start of the year, it ended the year 15% below that seen in 2016.
Full-year financial highlights
- Underlying trading profit £69.8m - down from £82.1m in 2016
- Reported operating profit £30m - down from £42.2m in 2016
- Underlying earnings per share 3.42p - down from 4.13p in 2016
- Free cash flow of £6.7m - down from £33m in 2016
- Net debt increased to £141.1m from £109.3m in 2016
Serco said its profit guidance for 2018 was unchanged, expecting revenues of between £2.8bn-£2.9bn and underlying trading profit of around £80m.
Rupert Soames, chief executive (left), said: "With profits at the top end of the expectations we set out some 15 months ago, net debt lower than we expected, fully funded pension schemes, and strong order intake, we delivered a solid performance in 2017 in a difficult market. Most importantly, we expect profits to grow in both 2018 and 2019."
The shares were volatile in early trade: after 15 minutes of trade, the shares were up 1.1%, having opened more than 3% lower.