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The head of Serco has warned of a short-term hiatus in UK outsourcing contracts while the civil service faces its “biggest peace time challenge since the war” with Brexit.
But Rupert Soames, chief executive, said that the UK’s exit from the EU provided a “threat as well as an opportunity” for the group, one of the government’s biggest contractors.
Once the negotiations are resolved, there will be more opportunities because there’s “a whole lot of work coming on”, he said.
“The government has out of necessity been focused on what is going to be happening in Brexit and on delivering the department cuts. That’s the threat,” he said.
“But there’s also the opportunity. There’s 34 regulatory agencies whose functions need to be moved to the UK and surely that’s going to produce opportunities sometime down the track.”
The comments came as Serco, which runs everything from immigration detention centres to defence services for the government, said that underlying trading profit for 2017 would be around the top end of a guidance range of between £65m and £70m. Revenues will be just under £3bn, short of previous expectations, but it expects profits to grow in 2018 and 2019.
The company is in the midst of a turnround programme after a succession of profit warnings and an investigation by the Serious Fraud Office for charging the government for tagging dead criminals.
“We were early adopters of financial carnage and now we’ve got that sorted out,” said Mr Soames.
Shares in the company, which had fallen nearly 16 per cent in the past three months, were up 6.8 per cent to 101.9p in afternoon trade.
The company said it was planning to expand its healthcare business worldwide after buying some hospital facilities management contracts from its struggling rival Carillion for about £47.7m.