FTSE 100 rises and Serco shares jump as it restates financial guidance

Serco can definitely count itself among the busiest companies during lockdown. The outsourcer has had to respond to rapid requests from governments, including running the first UK drive-thru testing centre and in Australia it had to house 1,500 quarantined travellers at a week's notice

However, the City was focused on what had gone before Covid - as the group said first-half revenues were up 23% helped by a US acquisition last year - and the restoration of financial guidance for the rest of the year. The forecasts - pulled in April amid the virus crisis - are now for £3.7 billion of revenues this year, against previous forecasts of £3.4 billion to £3.5 billion and profits of £145 million - estimates were previously for £135 million to £150 million. "We believe that it is better to say what we believe to be the case and give some guidance rather than none," Serco said.

Serco noted seven of its staff had died from Covid.

Chief executive Rupert Soames told the Standard his priority this year is to help the Government reboot the economy. “We do one thing which is to serve governments. Governments where we operate across Europe, the US, Australia and the Middle East have moved with remarkable pace to situations where they are dealing with unknowns. We will help them in their efforts to improve the economy over the next year.”

The outsourcer also reinstated financial guidance for the year, pleasing analysts at Peel Hunt. They said: “The reinstating of FY20 guidance reflects the resilience of the business as a supplier of critical services to the government and the strength of the order book. Serco has good headroom against both leverage covenants and facilities, and forecast leverage is low.”

The shares jumped 18% to 158p.

Also on the up was Kingfisher. The B&Q owner has spent several years as unloved stock, waiting for someone to give it a makeover. Newish chief executive Thierry Garnier today set out his vision for the DIY chain: with lower costs, a “mobile first” strategy and decisions devolved to its operating companies across Europe.

Although the future of its stores remains unclear, the Covid-19 crisis has pushed the group, which also owns Screwfix, to focus on its online operations. Its annual results looked like a wonky shelf: profits plunged 5.2% to £544 million on sales down 1.5% to £11.5 billion.

But investors decided to focus on the positives of the new strategy, as well as an improvement in recent trading —with sales up 21.8% in the quarter to June 13. B&Q stores did not legally have to shut in lockdown but were closed amid distancing concerns, and sales have surged since reopening.

Richard Hunter, head of markets at Interactive Investor, commented: “There are early signs that Kingfisher has at last grasped the nettle in reshaping a business fit for future purpose.” Shares rose 5% to 213p and Kingfisher is on track to rejoin the FTSE 100 this month after only being relegated in March.

The FTSE 100 improved for the second successive session — up a modest 52.26 points at 6295.35 as investors balanced speculation of a massive public spending plan by Donald Trump with growing concerns over the new Covid outbreak in Beijing.

Bookmaker William Hill saw shares tumble 5% to 131.5p after it raised £224 million at 128p a share to shore up its balance sheet.

Galliford Try was on the rise after it won a £85 million contract to help create hundreds of new homes at a major new Tottenham Hale development.