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Close period update

Published: 30 Jun 2017

Serco Group plc (‘Serco’, or ‘the Group’), the international service company, will be in a close period between 1 July 2017 and publication of the results for the first half of the financial year on Thursday 3 August 2017.  Serco will be holding meetings with analysts today, during which no additional material information will be disclosed.

For the first half, we expect to report revenue of approximately £1.5bn and Underlying Trading Profit of around £35m.  Order intake to date has been very strong at around £2.4bn, which includes our recently-signed contract worth £1.5bn to operate Grafton prison.  With £1.6bn booked in the second half of 2016, which included £450m for Barts NHS Trust, order intake for the 12 months to 30 June 2017 will be around £4bn.  This would be the largest 12-month order intake for Serco since 2012, and represents a book-to-bill ratio of approximately 130%.

In terms of comparative performance against the first half of 2016, reported revenue will, as expected, be broadly flat, with an organic decline of approximately 8% being offset by a currency translation benefit.  As we said when we reported our results for the first half of 2016, Underlying Trading Profit of £51m in the first half of last year benefited from a number of non-recurring trading items, and the first half profit of 2017 will be not dissimilar to the £31m reported in the second half of 2016.

Our 2017 full year guidance for Revenue of approximately £3.1bn and Underlying Trading Profit of between £65m and £70m is unchanged, although the movement in currency since our last statement in February may, if sustained, have a small negative effect.  We do however reiterate that the potential outcomes for the year remain wider than the stated profit range, both to the upside and the downside, due to the sensitivity of our profits to even small percentage changes in either revenues or costs, as well as movements in currency.

Our previous estimate of closing net debt of between £150m and £200m at the end of 2017 is similarly unchanged, and is equivalent to leverage for covenant purposes of between 1.2 and 1.7x EBITDA.  Net debt at the half year is expected to be towards the lower end of the range.

Commenting on today’s update, Rupert Soames, Serco Group Chief Executive, said: “The business has performed well in the first half, which keeps us on track for the full year.  The most striking element is the order intake, which for two successive periods has been very strong, totalling some £4bn in the last twelve months.  However, over the last six months the environment in several of our markets has become markedly more unpredictable, so we remain sensibly cautious.

“Our views are unchanged for 2017.  We are working hard to deliver our planned ‘Transformation’ phase, and although much still remains to be done to execute the long-term turnaround of Serco, we continue to track to plan and make good progress.”