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2011 Full Year Results

Published: 28 Feb 2012

Solid operational performance delivers strong financial result; global markets support confidence in future growth

Serco Group plc - 2011 results

12 months to 31 December









Adjusted operating profit




Operating profit 




Adjusted Profit before tax




Profit before tax




Adjusted earnings per share




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Dividend per share




Group free cash flow




Solid operational performance and contract awards across the portfolio

  • Robust service delivery metrics and customer relationships
  • New business models and service lines developed, including middle and back office support
  • Continue to win 90% of rebids and extensions and one in two new bids
  • £5.1bn of awards in 2011; £4.7bn signed contracts and £0.4bn preferred bidder appointments
  • Order book of £17.9bn at 31 December 2011 (£16.6bn at 31 December 2010)
  • 92% revenue visibility for 2012, 80% for 2013 and 70% for 2014

Strong financial result for 2011

  • Strong total revenue growth of 7.4%; good organic growth of 3.5%
  • Exceptional growth in AMEAA of 37% organic
  • Highest ever international mix, with 44% of total Group revenue now generated outside the UK
  • Adjusted operating profit growth of 12.1%, representing a margin increase to 6.2%
  • Group free cash flow of £168.3m, representing the return to a more usual conversion rate of profits
  • Total dividend up 14.3% to 8.40p, reflecting growth in adjusted earnings

Market developments and identified opportunities provide an extensive pipeline

  • Ongoing demand for efficient, high quality and innovative service provision from public and private sector customers
  • UK markets showing some signs of improvement; US federal outsourcing industry still faces uncertainties and short-term pressure; strongest growth opportunities in fast-developing AMEAA region and global BPO market
  • £30bn pipeline of identified opportunities across the Group

Successful entry into global BPO market and organisational changes

  • Creation of significant global capability in the fast growing, higher margin, Business Process Outsourcing (BPO) market via Intelenet, smaller acquisitions and recent contract wins
  • Organisational changes to reflect customers seeking more integrated and end-to-end services, to increase efficiency and deliver better services
  • Proactive contract and portfolio management to position the Group for the best future opportunities

Outlook supports continued resilience and encouraging future growth prospects

  • Breadth of portfolio provides resilience and enhances overall growth potential
  • For 2012, expect another year of strong total revenue growth, including further good organic growth, together with an Adjusted operating margin increase similar to 2011
  • In the medium term, anticipate improvements in the rate of organic revenue growth, supporting the continued delivery of strong financial performance

Christopher Hyman, Chief Executive of Serco Group plc, said: "I am pleased with our solid operational performance and the number of contracts wins which have underpinned our strong financial result for 2011. Whilst challenges remain in the US and some UK markets, the breadth of our portfolio around the world and in the AMEAA region in particular, continues to present many new prospects. Our order book has grown, our pipeline of opportunities is large and we are now preparing for the next stage of  growth which includes our entry into the global BPO market. This gives us confidence for the future."

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Adjusted operating profit, Adjusted profit before tax and Adjusted earnings per share are before amortisation of acquired intangibles and acquisition-related costs, as shown on the face of the Group's consolidated income statement and the accompanying notes. Group free cash flow is free cash flow from subsidiaries and dividends received from joint ventures, and is reconciled to movements in cash and cash equivalents in Section 3 of the Finance Review.

Performance at constant currency has been calculated by translating non-Sterling revenue and earnings for the year to 31 December 2011 into Sterling at the average exchange rates for 2010.

The order book is the value of future revenues based on all existing signed contracts. It excludes contracts at the preferred bidder stage and excludes Indefinite Delivery, Indefinite Quantity (IDIQ) contract vehicles where we are one of a number of companies able to bid for specific task orders within the IDIQ.

The pipeline is the estimated value of all future potential opportunities that are clearly defined and identifiable.


A presentation for investors and analysts will be held at J.P. Morgan Cazenove, 20 Moorgate, London EC2R 6DA at 9.30 a.m. today. The presentation will be webcast live on www.serco.com and subsequently available on demand.


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