Interim Management Statement
Interim Management Statement
Further growth despite challenging conditions; £1.6bn of contract awards;
continued visibility of substantial opportunities
9 May 2011
Ahead of its Annual General Meeting today, Serco Group plc (Serco), the
international service company, is issuing the following Interim Management
Statement covering the Group's performance since 1 January 2011.
Serco remains on track to deliver our expectations for 2011 and our financial
position remains strong, supported by good free cash flow. We remain encouraged
by the developments in our markets which underpin our guidance for 2012* and
sustained growth beyond.
Serco's order book was £16.6bn at 31 December 2010 and our pipeline of
identified opportunities across our markets amounted to £29bn. Since the
beginning of the financial year, we have been awarded £1.6bn of contracts,
comprising signed contracts valued at £1.4bn and preferred bidder appointments
valued at £0.2bn. Notable contract awards so far in the first half of the year
are highlighted below. Winning or expanding smaller contracts continues to play
an important role in our growth and a selection of these is published today in
a Contract News Update on www.serco.com.
In the UK, we were successful in our rebids for the operation of HMP Doncaster
and for prisoner escort and custody services for London and the East of
England. We have also been awarded two new contracts to support the Work
Programme in the West Midlands and South Yorkshire. Our Leisure Services
division was awarded a major contract to operate two elite training centres for
England's national sports teams and our contract for naval helicopter support
with AgustaWestland has been rebid successfully. Our joint venture with Glasgow
City Council has been extended to include Information, Communications and
Technology (ICT) support for schools. We have been awarded a range of support
services contracts to institutions in Continental Europe including the CERN
research facility. Awards in AMEAA included the signing of the Mt Eden Prison
contract in New Zealand and the recent award of a court security and custodial
services contract in Western Australia. The Americas have remained resilient,
with examples of additional task orders and contract awards across logistics,
fleet support, procurement, HR services, technology installation, medical and
other support services.
We remain encouraged by the developments in our markets across the world.
In the UK, although we are facing short-term headwinds resulting from the
Government's austerity measures, we expect that this will change based on the
Government's intention for greater involvement of the private and voluntary
sectors in the delivery of public services. We believe that the Government is
demonstrating determination and pace in implementing its policies which will
result in more opportunities in the medium term. We see further significant
opportunities in Home Affairs (such as probation, immigration services and
police operational support), healthcare and transport. In addition we see
opportunities in Local Authority transformation and those arising from
developments in the defence, science and nuclear sectors.
In the Americas, we assume that the US federal Government's budgetary
negotiations will be completed successfully and without significant impact or
disruption to the industry. We continue to be encouraged by the opportunities
in areas such as IT infrastructure, cybersecurity, federal health and energy
efficient IT.
In AMEAA, growth continues apace and there is a particularly strong pipeline in
areas such as health, justice and defence in the Asia Pacific region. Demand
for new services in the Middle East and India includes public transport
systems, facilities management, BPO, education, healthcare and national
security.
While organic growth remains our primary focus, we constantly review our skills
and capabilities to capitalise on opportunities for expansion into new markets
and sectors. Reflecting this, the acquisition of The Listening Company, though
quite small, builds on our capabilities, particularly in our work for local
government. The Listening Company is a UK-based provider of outsourced customer
contact centre services to both private and public sector organisations, which
strengthens our ability to deliver front-line customer services.
Christopher Hyman, Chief Executive of Serco Group, said: "I am pleased with the
resilience the Group has shown in the year to date. Despite headwinds, we
expect to achieve a good financial performance and to develop the many
opportunities within our £29bn pipeline. This significant pipeline and our high
revenue visibility underpin our confidence in sustained growth into the long
term. We are well-placed to support our customers in the UK and across the
world to build, improve, protect and drive efficiencies in essential services."
* As reported on 2 March 2011, for 2011, we expect good organic revenue growth
and progress towards our 2012 margin guidance. Prospects beyond the current
year are encouraging and we continue to expect, by the end of 2012, an increase
in revenue to approximately £5bn and in Adjusted operating profit margin to
approximately 6.3%, excluding material acquisitions, disposals, and currency
effects, based on 2008 exchange rates.
Ends
For further information please contact Serco:
Stuart Ford, Head of Investor Relations T +44 (0) 208 334 4122
Dominic Cheetham, Director of Corporate Communications T +44 (0) 208 334 4334
Marcus De Ville, Head of Media Relations T +44 (0) 208 334 4388
About Serco
Serco is a FTSE 100 international service company, which combines commercial
know-how with a deep public service ethos.
Around the world, we improve essential services by managing people, processes,
technology and assets more effectively. We advise policy makers, design
innovative solutions, integrate systems and - most of all - deliver to the
public.
Serco supports governments, agencies and companies who seek a trusted partner
with a solid track record of providing assured service excellence. Our people
offer operational, management and consulting expertise in the aviation, BPO,
defence, education, environmental services, facilities management, health, home
affairs, information and communications technology, knowledge services, local
government, science and nuclear, transport, welfare to work and the commercial
sectors.
More information can be found at www.serco.com