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2011 Half Year Results

Date: 24 Aug 2011

International portfolio drives good financial performance; UK and US headwinds continue; strong future growth opportunities remain across the Group

Serco Group plc - 2011 Half Year Results

6 months to 30 June

% change
+ 4.9%
Adjusted operating profit
+ 7.6%
Operating profit 
+ 5.5%
Adjusted Profit before tax
+ 12.2%
Profit before tax
+ 10.3%
Adjusted earnings per share
+ 13.4%
Earnings per share
+ 10.6%
Dividend per share
+ 13.6%
Group free cash flow

International portfolio drives good financial performance

  • Total revenue growth of 4.9%; 5.4% excluding currency; 4.2% organic
  • AMEAA exceptionally strong growth of 44% (37% excluding currency)
  • 43% of total Group revenue now generated outside the UK
  • Adjusted operating profit growth of 7.6%, representing a margin increase of 15bps to 6.0%
  • Group free cash flow of £51.8m; reduction reflecting the anticipated increase in net capital expenditure and the return to a more usual operating cash conversion rate
  • Total dividend up 13.6% to 2.50p, reflecting growth in adjusted earnings

Contract awards across the portfolio

  • £2.5bn of rebids, extensions and new contract awards in the period
  • Continue to win one in two new bids and 90% of rebids and extensions
  • Further £1.0bn of major contract awards in the second half to date

High revenue visibility and substantial pipeline of opportunities

  • Order book of £16.7bn at 30 June 2011 (£16.6bn at 31 December 2010)
  • 98% visibility of planned revenue for 2011, 82% for 2012 and 69% for 2013
  • Substantial £29bn pipeline of identified opportunities around the world

UK and US headwinds continue

  • For 2011, still expect good organic revenue growth and further progress on operating margin
  • US federal market faces new risk of further delays and cancellations to bids and awards; impact of austerity measures in the UK may also continue
  • Assuming the impact of ongoing economic challenges is manageable, our guidance remains that by the end of 2012 we expect increases in revenue to approximately £5bn and in Adjusted operating profit margin to approximately 6.3% (excluding material acquisitions, disposals and currency effects)

Strong future growth opportunities remain across the Group

  • Efficiencies and improvements in essential services continue to be sought by customers around the world
  • Potential for increased opportunities through ongoing public service reform
  • Intelenet acquisition adds significant global capability in the fast growing, higher margin, private sector Business Process Outsourcing (BPO) market
  • The breadth of our portfolio across different markets and economies provides resilience and enhances our overall growth potential

Christopher Hyman, Chief Executive of Serco Group plc, said:  "Our international portfolio has delivered a good performance in the first half of the year through the commitment of our people to providing high-quality and cost-effective essential services.  Without doubt our markets in the UK and US are facing challenging conditions.  However, the breadth of our portfolio, our presence in fast-growing international markets, our significant new BPO capabilities, and the flexibility and innovation of our 100,000 people underpin our strong growth opportunities into the future."

For further information please contact Serco:

Stuart Ford, Head of Investor Relations T +44 (0) 20 8334 4122
Dominic Cheetham, Director of Corporate Communications T +44 (0) 20 8334 4334
Marcus De Ville, Head of Media Relations T +44 (0) 20 8334 4388

A presentation for investors and analysts will be held at J.P. Morgan Cazenove, 20 Moorgate, London EC2R 6DA at 9.45 a.m. today. The presentation will be webcast live on www.serco.com.

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Last Updated: 24 Aug 2011