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Outsourcer Serco resumes dividend, raises 2021 outlook on NHS boost

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Outsourcer Serco resumes dividend, raises 2021 outlook on NHS boost 1

(Reuters) – Serco Group Plc reinstated a dividend and raised its 2021 forecasts on Thursday, after the British outsourcer posted a 20% jump in annual revenue, bolstered by its services to the country’s COVID-19 test and trace programme and U.S. acquisitions.

Revenue is now expected to be about 4.2 billion pounds ($5.95 billion) for this year, while underlying trading profit is forecast to be around 175 million pounds, the company said, roughly 10 million pounds higher than its forecast in December.

Serco announced a shareholder payout of 1.4 pence for last year, after suspending them in 2014 as part of a restructuring drive to overcome a string of contract failures and profit warnings that ramped up debt and hurt its reputation.

Chief Executive Officer Rupert Soames said that one of the key factors in deciding to restart paying a dividend was that “any concerns we had about liquidity have proved groundless,” adding that the company has re-entered the debt market and has been cash positive.

Sales in 2020 rose to 3.88 billion pounds from 3.25 billion pounds in the 12 months ended Dec. 31, while underlying trading profit rose 36% to 163.1 million pounds.

($1 = 0.7064 pounds)

(Reporting by Pushkala Aripaka in Bengaluru; Editing by Rashmi Aich)

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