Britain's Serco rebounds, serves up first dividend since 2014

By Kate Holton

LONDON (Reuters) - Serco <SRP.L> will resume paying dividends for the first time in six years after the outsourcing firm posted a 25% jump in 2019 and said it had shaken off the "gravitational pull of past mis-steps".

The British provider of defence, security, immigration, health and transport services for governments around the world said underlying trading profit rose to 120 million pounds and forecast a rise to 145 million this year.

Serco, which has grown its international business after weathering problems and a slowdown at home, said it would pay a "prudent" dividend of 1 pence per share for 2019.

"We want to keep a balance sheet at the lower end of the range between 1 and 2 times (net debt to EBITDA), in part to leave ourselves with a bit of dry ammunition should a stray rabbit come lolloping down the path towards us," CEO Rupert Soames said regarding possible acquisitions.

Soames said around 40% of Serco's revenue came from Britain while Australia and North America remained its fastest growing markets.

Serco shares rose 1.5% in early trading, taking the increase over the last year to 18%.

"We have finally achieved escape velocity, leaving behind the gravitational pull of past mis-steps," the company said in a statement which described the return to dividends for the first time since 2014 as "an important milestone".

Serco, which purchased a U.S. naval systems unit in 2019, employs 50,000 people globally.

Its revenue and profit guidance for 2020 was unchanged from that given in December. It expects 2020 revenue of 3.4-3.5 billion pounds driven by organic growth of around 4%.

(Reporting by Kate Holton, editing by Sarah Young and Jason Neely)