Executive Chairman Kevin Beeston said:

“In another excellent year for Serco we have maintained our consistent record of strong growth in sales and profits. Total turnover was up 17% to £1.6bn. Profit before tax and goodwill amortisation was up 17% to £67m. Free cash flow increased significantly to £47m. Contracts awarded in the year totalled a record £4.6bn and we enter 2004 with our largest-ever forward order book of £10.3bn. 

The opportunities in our markets continue to grow, driven by unremitting pressure on governments to deliver value for taxpayers’ money. Our proven track record of delivering both value and quality improvement in public services makes us confident that we can sustain continuing strong earnings growth.”

Strong sales and profits growth for 16^thconsecutive year
- 57% of incremental sales from existing contract base, with success rate in rebids and extensions continuing above 90%
- 26% of incremental sales from new contract wins, with new bid success rate continuing above 50%
- 27% underlying profit growth (before goodwill, exceptional items and incremental pension cost of £9m)

Significantly enhanced cash generation
-Free cash flow increased to £47m (2002 – £9.7m)
- 81% of group EBITDA converted into operating cash (2002 – 45%)
- £9.9m cash from Great Southern Railway sale and leaseback and Norfolk and Norwich University Hospital refinancing

Succession of sales records broken
- Total contracts awarded in 2003 – £4.6bn
- Largest new contract – 25-year Merseyrail Electrics contract – Serco share valued at £1.8bn
- Significant rebids and extensions awarded – new 10-year National Physical Laboratory contract valued at £500m, 11-year contract at Goose Bay, Canada, valued at over C$440m and 15-year extension to the Atomic Weapons Establishment contract valued at over £1bn
- Largest North American contract – 10-year Ontario driver examination services contract valued at C$600m
- Largest Middle East contract and first PFI in the region – preferred bidder for 30-year Oman Joint Technical College valued at approximately US$1.4bn – Serco’s share of the consortium is 50%

Continued high visibility of earnings
- Forward order book stands at £10.3bn
- 93% of 2004, 77% of 2005 and 70% of 2006 planned turnover already secured

Substantial range of future opportunities
- Bids worth £5bn submitted and under evaluation
- Over £14bn of further opportunities identified

Note: Profit before tax - pre goodwill is stated before the impact of FRS10 Goodwill Amortisation,(£14.1m).  Full detail is provided in section one of the Finance review. Free cash flow is reconciled in section four of the Finance review. EBITDA is defined in the Chairman’s statement.

View a webcast of the presentation given to analysts and investors on 2 March 2004   

Read the presentationtranscript

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