Interim Results
Issued: Thursday 5 September 2002
Release: Thursday 5 September 2002
Contact: See below
Serco Group plc
Interim results for the period ended 30 June 2002
6 Months to Restated
30.6.02
6 Months to
30.6.01
Turnover £625.9m £525.9m up 19.0%
Profit before tax - pre goodwill £28.4m £24.4m up 16.4%
Earnings per share - pre goodwill 4.84p 4.36p up 11.0%
Dividend per share 0.64p 0.57p up 12.3%
Underlying pre-tax profit - pre £27.3m £22.7m up 20.5%
goodwill*
* Underlying pre-tax profit is calculated after adjusting for the effect of
acquisitions and non-recurring items. A reconciliation together with more
information on our financial performance and accounting policies is in the
Financial Review included in this announcement.
Serco on track for 15th year of growth:
* Strong organic growth
*
+ 42% of first half growth from existing contract base
* Record value of bids submitted at £4.7bn
* Continued success in winning contracts
*
+ Contracts signed totalling £400m
+ 62 new contracts awarded
+ Further 56 contracts successfully rebid or extended, maintaining 90%
success rate
+ Appointed preferred bidder for contracts totalling a further £250m,
including Skynet 5 for global military satellite communications for UK
armed forces
* International growth continues
*
+ Awarded one of the Middle East's first multi-activity outsourcing
contracts from Dubai Ports, Customs and Free Zone Corporation
* Continuing visibility of earnings
*
+ 98% of 2002 forecast revenues already secured
* Forward order book of £6bn
Kevin Beeston, Executive Chairman, said:
'We are on track for a 15th successive year of strong growth. At £6 billion our
forward order book remains buoyant and our future earnings are highly visible.
During the first half we submitted a record level of bids valued at £4.7
billion and are currently addressing a further
£12 billion of opportunities.
In the UK, the additional spending announced by the government in its
Comprehensive Spending Review will further enhance our growth prospects; while
our existing portfolio of international markets will generate a continuing flow
of new opportunities. We are confident
of achieving strong growth for the remainder of 2002, and for the longer term
we anticipate sustained double-digit organic growth.'
- Ends -
The Serco Group plc Interim Report 2002 is available from today on our website
at www.serco.com. This contains a full business review and supplementary
graphs.
An interview with Kevin Beeston, Executive Chairman of Serco Group plc in video
/audio and text will be available from 7am on www.serco.com and www.cantos.com
.
A webcast of the analyst briefing is available on www.serco.com from 4.30pm.
Notes to editors
Serco is an international provider of management services to government and
industry. The company covers a wide range of activities, from controlling
satellites and operating computer networks for the European Space Agency, to
managing and operating the Docklands Light Railway where Serco was recently
voted National Rail Operator of the year. The Company employs some 34,000 staff
in 36 countries.
For further information please contact Serco Group plc: T: +44 (0) 1932 755900
Kevin Beeston - Executive Chairman
Ben Woodford - Corporate Communications Director
A message from the Board
Serco is on track for a 15th successive year of strong organic growth. Our
forward order book remains buoyant and our future earnings are highly visible.
Our resilience and growth are founded on reliable contracts with quality
customers, predominantly national and local governments. Our continuing high
success rate in winning contract rebids and extensions reflects our ability to
deliver real improvements in efficiency and value for money. We have an
ever-widening portfolio of contracts and markets, with a strong pipeline of new
business opportunities going forward.
The UK government is strongly committed to involving the private sector in
delivering public services, and a growing number of overseas governments are
following similar paths. Serco has been at the forefront of this trend, working
with governments to develop public private partnership (PPP) models such as
private finance initiatives (PFIs). Our addressable market in PPPs continues to
grow, both in the UK and internationally.
Recognising the increasing complexity of these emerging procurement models, we
have increased the level of disclosure in our Annual Report and have now added
a Financial Review to this Interim Report: this includes commentary on our cash
flow and our accounting policies for bid costs and PFI joint ventures. We have
also expanded and updated `Our approach to PFIs', a document which we
originally published in September 2001 to help readers understand and analyse
our performance in this area. Copies are available on request, or from our
website at www.serco.com .
Financial performance
In the six months to 30 June 2002, turnover was £625.9m (2001: £525.9m) - an
increase
of 19% on the first half of 2001. Pre-tax profit grew 16.4% to £28.4m (2001: £
24.4m) before goodwill amortisation. As explained in the Financial Review, this
measure is not directly comparable year-on-year. An alternative comparison
shows underlying profit growth of 20.5% before goodwill. Earnings per share
(EPS) before goodwill grew 11% to 4.84p. Operating cash flow, before one-off
items, was 69% (2001: 56%) and 41% (2001: 33%)
of operating profit and EBITDA respectively.
Further details of our financial performance are given in the Financial Review
included in this announcement.
Dividend
In recognition of continued strong performance, we have increased the interim
dividend by 12.3% to 0.64p per Ordinary Share (2001: 0.57p). It will be paid on
11 October 2002 to shareholders on the register at close of business on 13
September 2002.
Operational performance
Our goal is to continue strengthening our position as a leading global
outsourcing company, focusing primarily on the public sector: we aim to
capitalise on the worldwide trend for governments to seek private-sector
support in improving the quality and efficiency of public services. Our growth
strategy is to focus primarily on organic expansion, while using acquisitions,
joint ventures and strategic alliances to build platforms in new or emerging
markets with good long-term organic growth potential.
During the first half of the year we submitted bids totalling £4.7bn - a record
level. We anticipate news of these during the second half. Excluding any
success from these and excluding some £250m of bids where we have already been
appointed preferred bidder, the forward order book is £6bn, equivalent to over
five times our 2001 turnover with consequent high visibility of future sales.
During the half-year we won business totalling £400m. New awards accounted for
26%
of this; 36% came from rebids; and 38% from extensions in duration and scope of
existing contracts. Running our contracts as businesses helps us to develop new
opportunities
at contract level, and we have maintained our success rate of over 90% on
rebids. We increasingly target long-term contracts - which give higher levels
of visibility to our future earnings - and we continue to win over half the
contracts we bid for. But our success is not predicated on winning large new
contracts: as in the past, almost half of our turnover growth in the first half
came from add-ons and extensions to existing contracts.
Major successes included appointment as preferred bidder for the new Skynet 5
satellite system, and on a three-year contract from the BBC to provide travel
news on all UK road, rail, air and sea services. We won our first contract from
the European Parliament, to provide IT support. And in the Middle East we won
one of the region's first multi-activity outsourcing contracts from the Dubai
Ports, Customs and Free Zone Corporation.
UK
The UK continues to offer abundant opportunities and remains our most
significant market. First-half sales rose 23% compared with the first half of
last year and market conditions favour continued healthy growth, demonstrated
by our submission of over £4bn of new bids to UK customers. The government is
intent on achieving significant improvement in public services with private
sector support; and we expect significant new opportunities to flow from its
recent Comprehensive Spending Review, which will provide an additional £125bn
public spend over the next three years.
The UK has been a leader in PFIs, and Serco has been actively involved in this
market as
it has developed. Extensive experience in PFIs convinces us of their value in
acquiring the sophisticated, long-term, multi-service contracts that we seek,
both in the UK and internationally. Long-term success in this market depends on
recognising and understanding the associated cash flows and risks: we have
developed appropriate techniques for carefully assessing and selecting the
contracts we bid, controlling bid costs and managing risk as contracts
progress.
International
A distinctive feature of Serco's business is its international portfolio. Our
presence in overseas markets extends the range of addressable opportunities and
helps to spread risk. By enhancing our reach and scale, it also helps us to bid
for larger and more sophisticated multi-service opportunities and capitalise on
the UK's recognised leadership in outsourcing models.
We are focused on four overseas regions where increasingly sophisticated
outsourcing opportunities are emerging - North America, Continental Europe, the
Middle East and Asia Pacific.
The US is the world's largest outsourcing market. Today, the federal government
purchases over US$80bn in services, including information technology, base
operations and engineering services, growing by an anticipated 12% annually.
The market is developing in a way that plays to our strengths, with rising
investment in infrastructure and IT accompanied by an enthusiasm for innovative
solutions and contract models. Our US and Canadian business is still relatively
small. To make an impact in such a large market we will need to increase the
scale of our operation and we continue to review the opportunities for
acquisition, joint venture or strategic alliance.
In Continental Europe, where our first-half sales rose 10%, we see particular
promise in
Italy and Germany. Both countries are substantially increasing private sector
involvement
in public services. Building on our experience in the UK, we intend to continue
broadening our range of services from its original focus on IT and facilities
management. In Italy we submitted seven bids during the first half, and in
Germany we made our largest bid yet, to operate the army's tank training
school.
In Asia Pacific we continue to focus on enhancing the operational returns from
the business, while preparing to address a range of emerging opportunities in
New Zealand and Australia, where we await the outcome of our largest bid so far
- to undertake warehousing, distribution and maintenance of defence supplies
and equipment.
Managing the business
In pursuing strong long-term growth, we take care to sustain the distinctive,
highly devolved Serco culture. Our ability to enter new sectors or geographic
markets successfully owes much to the resilience of this culture and to the
continuing development of the Serco Management System, our methodical approach
to managing both people and processes.
We replicate the group management system in all our businesses and are adapting
it for managing individual contracts - which we aim to run as businesses in
their own right, with individual strategic development plans. Larger contracts
have management boards including non-executive directors, usually drawn from
other parts of Serco. In this way, we can plan organic business growth,
empowering local management to develop their businesses while maintaining
effective controls.
To ensure effective governance across a diverse and devolved business, our
Corporate Assurance Group provides continuous, integrated assessment of
business risk and ensures that our controls remain relevant and adequate. It
reports formally to the Board quarterly.
People
Whatever the strengths of our strategy and systems, we know that our success
depends ultimately on the dedication and hard work of our people. We thank them
for their continuing support and enthusiasm.
We remain committed to developing skills at all levels and continue to provide
a broad range of management training through the Serco Best Practice Centre.
During the first half, nearly 1,000 of our people attended internal workshops.
We have also built strong links with relevant awarding bodies, including the
UK's Institute of Directors (IoD) and the first IoD/Serco Certificates in
Company Direction were achieved in April 2002.
Recognising the need to engage with employees and their representatives who may
fear the impact of outsourcing on their own prospects, we continue to build
constructive relationships with trade unions. In the UK we have been supporting
the TUC Partnership Initiative, which aims to foster partnership between
employers and trade unions: we have formed several `working partnership'
relationships with unions at contract level and will look at others in the
future.
Outlook
Looking ahead, revenue visibility is excellent: assuming a continuing 90%
renewal rate on rebids, we already have contracts in place to provide 98% of
forecast revenue this year, 84% in 2003 and 71% in 2004.
We continue to increase our contract bid pipeline. After submitting bids worth
some £4.7bn in the first half, we are currently addressing a further £12bn of
opportunities. As always, we will be bidding for a well-balanced mix of
business, including add-ons and extensions to existing contracts, new contracts
across a broad spectrum of sectors, and a few carefully selected large
contracts with annual values to Serco of between £50m and £100m.
In the UK, the additional spending announced by the government in its
Comprehensive Spending Review will further enhance our growth prospects; while
our existing portfolio of international markets will generate a continuing flow
of new opportunities. We are confident of achieving strong growth for the
remainder of 2002, and for the longer term we anticipate sustained double-digit
organic growth.
Financial review
Financial performance
Sales
Total sales increased by 19% to £625.9m. This includes a contribution of £22.8m
from Serco Assurance (formerly the consulting division of AEA Technology),
which was acquired in September 2001.
Gross profit
Gross profit of £71.1m represents a return on sales of 13.6%, up from 13.3% for
the six months to 30 June 2001.
Pre-tax profit
Pre-tax profit increased 16.4% to £28.4m before goodwill amortisation.
Underlying pre-tax profit
Underlying pre-tax profit before goodwill grew 20.5% to £27.3m. This is stated
after adjusting for a £1.1m contribution from Serco Assurance, which is
included in the half-year results for the first time. This contribution is
before goodwill and after financing and phase-in costs.
Underlying profit for the first six months of 2001 is stated after adjusting
for a net contribution of £1.7m from three non-recurring items: £10.2m cost of
the unsuccessful National Air Traffic Services (NATS) acquisition, £3.4m
investment in the People and Technology programme and £15.3m profit from
refinancing the rolling stock of Great Southern Railway (GSR).
6 Months 6 Months Increase
to 30.6.02 to 30.6.01
£'m £'m
Reported pre-tax profit 28.4 24.4 16.4%
before
goodwill amortisation
Net one-off items - (1.7)
Acquisition: Serco Assurance (1.1) -
Underlying pre-tax profit 27.3 22.7 20.5%
before
goodwill amortisation
Tax
The tax charge was £8.3m (2001: £7.3m), representing an effective tax rate of
34% (2001: 32.5%).
Earnings per share
Taking into account the above and the new equity issued in March, earnings per
share before goodwill amortisation grew by 11% to 4.84p (2001: 4.36p).
Dividends
The proposed interim dividend of 0.64p per share is a 12.3% increase on 2001.
Cash flow
During the six months to 30 June 2002 there was a net cash inflow of £95.9m.
This was after making a one-off payment of £15.5m into the Serco Pension and
Life Assurance Scheme in February and receiving £118m from the equity issue in
March. These items are explained in greater detail below.
Operating cash flow, before one-off items, was £11.7m, which converts 69%
(2001: 56%) of our operating profit into cash.
We believe that, as operating profit is calculated after deducting goodwill and
depreciation, the appropriate measure for operating cash flow performance is
the conversion of Group EBITDA (Earnings Before Interest, Tax, Depreciation,
Goodwill Amortisation) before one-off items into cash. For the six months to 30
June 2002 this was 41% (2001: 33%).
Dividends from joint ventures increased from £2.4m in the six months to 30 June
2001 to £6.2m in the six months to 30 June 2002.
Capital expenditure, excluding investment in PFI Special Purpose Companies
(SPCs), for the six months to 30 June 2002 was £8.2m; as a proportion of
turnover this expenditure has remained at a similar level to previous years.
Share placement
In March £118m, net of fees, was successfully raised through an international
bookbuilt placing of 39.5m new shares representing 9.9% of Serco's issued share
capital. This enabled the Serco Assurance acquisition finance to be repaid and
the balance sheet to be strengthened to finance future growth.
Private Finance Initiatives (PFIs)
The document `Our Approach to PFIs', which was originally issued in September
2001, has been updated and provides a summary of our accounting for PFIs. It is
available on our website www.serco.com or in printed form on request.
PFI profile
For the six months to 30 June 2002 PFIs contributed £51.5m to turnover and £
7.1m to profit for the year, of which £46.3m of the turnover and £3.7m of the
profit related to the operating contracts, and £5.2m of the turnover and £3.4m
of the profit to Serco's share of the SPCs.
SPC funding and accounting
SPC funding is provided by long-term loans which are non-recourse to Serco.
• Our share of non-recourse debt of joint venture SPCs at 30 June 2002 is £
211.1m. This is included within investments in joint ventures shown on the
Summary Balance Sheet.
• Traffic Information Services (TiS) Limited is the first SPC where Serco has
chosen to own 100% of the equity. This SPC has the contract to deliver the
Traffic Control Centre contract.
A non-recourse loan of £19.7m to fund the asset, currently in the course of
construction, is included in long-term creditors in the Summary Balance Sheet.
£5.6m was drawn down in the six months to 30 June 2002 and is shown separately
in the Summary Cash Flow Statement.
• In June 2002 the senior lenders and the terms of the senior debt on the Joint
Services Command and Staff College PFI were changed. This transaction had no
effect on profit but allowed £6.7m of cash to be passed from the SPC to Serco
by way of dividend and loan.
Review of joint venture accounting and controls
In March 2002, in recognition of the perceived uncertainties arising from
certain joint venture accounting practices in the US, the Board undertook a
specific review, including asking Deloitte & Touche to undertake an independent
review of our accounting procedures and internal controls over our joint
ventures. This review confirms the Board's view that all our joint ventures
exist for genuine commercial reasons, are correctly accounted for and that our
controls and disclosures are appropriate.
Bid costs
Urgent Issues Task Force (UITF) Abstract 34 `Pre-contract costs' was issued in
May 2002 for accounting periods ending on or after 22 June 2002. UITF Abstract
34 requires all bid costs to be expensed up to the point where award of a
contract is `virtually certain'. Bid costs incurred after this point may be
capitalised. At 31 December 2001 we had £1.2m of bid costs capitalised in
relation to contracts for which we had not formally reached preferred bidder
status. Applying the Abstract has resulted in a prior period adjustment to
treat these capitalised costs as expensed in 2001. There was no material impact
on the first half of 2001 or earlier accounting periods. Having made this
adjustment our accounting policies now fully comply with UITF Abstract 34.
Deferred taxation
Financial Reporting Standard (FRS) 19 `Deferred Taxation' was issued in
December 2000 for accounting periods ended on or after 23 January 2002. FRS 19
requires full provision to be made for deferred tax assets and liabilities
arising from timing differences between the recognition of gains and losses in
the financial statements and their recognition in a tax computation.
The tax charge for the six months ended 30 June 2002 is based on the tax charge
expected for the year to 31 December 2002, which has been calculated in
accordance with FRS 19.
As at 31 December 2001 the Group did not have a material level of unprovided
deferred tax liabilities or unrecognised deferred tax assets. The application
of FRS 19 will not have a material effect on the tax charge for the period.
Pensions
Two of Serco's pension schemes are defined benefit schemes. FRS 17 `Retirement
Benefits' was issued in November 2000 to replace SSAP 24 for accounting periods
ending on or after 22 June 2003. In July 2002 the Accounting Standards Board
announced it was delaying the introduction of FRS 17 until 2005, following an
announcement by the International Accounting Standards Board to also issue a
new standard.
For 2002 we will continue to apply the transitional rules and disclosures. FRS
17 requires the market value of assets and liabilities to be calculated for
defined benefit schemes and to be included on the balance sheet. At 31 December
2001 there was a small net deficit of £3.6m in relation to the defined benefit
schemes. While we are not required to undertake a full actuarial valuation of
the schemes at 30 June 2002, we estimate that the deficit has increased to £
15m. The asset base of the schemes is approximately £300m and long-term
contribution rates will address this shortfall if the deficit continues.
The pension charge under FRS 17 for the six months to 30 June 2002 would not
have been materially different from the SSAP 24 pension charge.
It is our intention to merge Serco's two defined benefit pension schemes by
early 2003 to help improve cost and investment efficiencies. To assist this
process £15.5m was injected into the Serco Pension and Life Assurance Scheme in
February 2002 to achieve a similar funding level for both schemes.
Presentation of results
As explained above, we have adopted FRS 19 and UITF Abstract 34 in this Interim
Report. The adoption of UITF Abstract 34 has resulted in the restatement of the
financial statements for the year to 31 December 2001.
In addition, results for the six months to 30 June 2001 have been restated to
allow effective comparison with the results for the six months to 30 June 2002.
These restatements have no impact on the Group's profit or cash:
• In accordance with industry practice £5.9m of joint venture turnover shown in
the 2001 Interim Report, representing the finance income element of the capital
repayment from PFIs, has been restated and shown as joint venture interest
receivable.
• To achieve consistency with the presentation adopted at 31 December 2001, and
in accordance with FRS 5, the PFI asset under construction on the Traffic
Control Centre contract has been reclassified from fixed assets to current
assets in the Summary Balance Sheet. The corresponding cash outflow is now
shown separately in the Summary Cash Flow Statement as a deduction from cash
flow from operating activities rather than within capital expenditure.
As in the past we have included a proforma profit and loss account to assist in
analysing the Group's results.
Auditors
We have asked Deloitte & Touche to perform a review of the financial statements
and notes included in this Interim Report. This is the first time we have asked
for such a review and there is no statutory requirement to do so. The review is
conducted in accordance with the guidance contained in Bulletin 1999/4 issued
by the Auditing Practices Board. The opinion given is not an audit opinion, but
assesses whether the accounting policies and presentation have been
consistently applied.
Independent review report to Serco Group plc
Introduction
We have been instructed by the company to review the financial information for
the six months ended 30 June 2002 which comprises the Summary Profit and Loss
Account, Summary Balance Sheet, Summary Cash Flow Statement and related notes 1
and 2. We have read the other information contained in the Interim Report and
considered whether it contains any apparent misstatements or material
inconsistencies with the financial information.
Directors' responsibilities
The Interim Report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors. The directors
are responsible for preparing the Interim Report in accordance with the Listing
Rules of the Financial Services Authority which require that the accounting
policies and presentation applied to the interim figures should be consistent
with those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with the guidance contained in Bulletin
1999/4 issued by the Auditing Practices Board for use in the UK. A review
consists principally of making enquiries of group management and applying
analytical procedures to the financial information and underlying financial
data and, based thereon, assessing whether the accounting policies and
presentation have been consistently applied unless otherwise disclosed. A
review excludes audit procedures such as tests of controls and verification of
assets, liabilities and transactions. It is substantially less in scope than an
audit performed in accordance with UK auditing standards and therefore provides
a lower level of assurance than an audit. Accordingly, we do not express an
audit opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 June 2002.
Deloitte & Touche
Chartered Accountants
London
5 September 2002
Notes
A review does not provide assurance on the maintenance and integrity of the
website, including controls used to achieve this, and in particular on whether
any changes may have occurred to the financial information since first
published. These matters are the responsibility of the directors but no control
procedures can provide absolute assurance in this area.
Legislation in the UK governing the preparation and dissemination of financial
information differs from legislation in other jurisdictions.
Proforma Summary Consolidated Profit and Loss Account
For the six months ended 30 June 2002
6 Months Restated 6 Restated Year
to 30.6.02 Months to to 31.12.01 £
£'000 30.6.01 £ '000
'000
Turnover: Group and share of joint 625,936 525,895 1,141,203
ventures -
continuing operations
Less: Share of joint ventures (103,895) (91,668) (227,510)
Group turnover 522,041 434,227 913,693
Cost of sales (450,903) (376,476) (789,686)
Gross profit 71,138 57,751 124,007
Administrative expenses (46,539) (40,203) (88,742)
Exceptional item: Cost of - (10,187) (10,187)
unsuccessful
NATS acquisition
Exceptional item: GSR refinancing - 15,356 15,356
Share of profits arising from 6,212 4,242 9,820
joint
ventures - including group joint
venture costs
and joint venture interest
Profit before group interest and 30,811 26,959 50,254
goodwill
Net group interest (2,416) (2,563) (5,092)
Profit on ordinary activities 28,395 24,396 45,162
before taxation -
pre amortisation of goodwill
Amortisation of goodwill (3,870) (1,970) (5,123)
Profit on ordinary activities 24,525 22,426 40,039
before taxation
Taxation on profit on ordinary (8,339) (7,288) (13,012)
activities
Profit on ordinary activities 16,186 15,138 27,027
after taxation
Dividends (3,257) (2,270) (7,265)
Retained profit 12,929 12,868 19,762
Basis of preparation
As in our 2001 Annual Review and Accounts we have included a Proforma Summary
Consolidated Profit and Loss Account as an alternative presentation to aid in
the understanding of the Group results. The Proforma is derived directly from
the Summary Consolidated Profit and Loss Account.
Summary Consolidated Profit and Loss Account
For the six months ended 30 June 2002
6 Months Restated 6 Restated Year to
to 30.6.02 months to 31.12.01 £'000
£'000 30.6.01 £'000
Turnover: Group and share 625,936 525,895 1,141,203
of joint ventures -
continuing operations
Less: Share of joint (103,895) (91,668) (227,510)
ventures
Group Turnover 522,041 434,227 913,693
Cost of sales (450,903) (376,476) (789,686)
Gross profit 71,138 57,751 124,007
Administrative expenses (50,409) (42,173) (93,865)
Amortisation of goodwill (3,870) (1,970) (5,123)
Other administrative (46,539) (40,203) (88,742)
expenses
Exceptional item: Cost of - (10,187) (10,187)
unsuccessful
NATS acquisition
Other operating costs (3,887) (3,352) (8,888)
relating to joint ventures
Operating profit - 16,842 2,039 11,067
continuing operations
Exceptional item: GSR - 15,356 15,356
refinancing
Share of operating profit 9,589 7,508 17,374
in joint ventures
Net interest
Group (2,416) (2,563) (5,092)
Share of joint ventures 510 86 1,334
Proï¬t on ordinary 24,525 22,426 40,039
activities before taxation
Taxation on profit on (8,339) (7,288) (13,012)
ordinary activities
Proï¬t on ordinary 16,186 15,138 27,027
activities after taxation
Dividends (3,257) (2,270) (7,265)
Retained profit 12,929 12,868 19,762
Earnings per share (EPS) of
2p each:
Basic EPS, after 3.91p 3.86p 6.94p
amortisation of goodwill
Basic EPS, before 4.84p 4.36p 8.25p
amortisation of goodwill
Diluted EPS, after 3.90p 3.84p 6.91p
amortisation of goodwill
Diluted EPS, before 4.84p 4.33p 8.22p
amortisation of goodwill
Dividend per share 0.64p 0.57p 1.86p
Notes to the Summary Consolidated Profit and Loss Account are provided at the
back of this announcement.
Summary Consolidated Balance Sheet
As at 30 June 2002
As at Restated Restated
30.6.02 As at As at
£'000 30.6.01 31.12.01
£'000 £'000
Fixed Assets
Intangible assets 141,570 70,346 141,170
Tangible assets 51,379 46,411 48,724
Investments in joint ventures 30,650 31,707 30,510
Investment in own shares 18,487 9,350 18,983
Total fixed assets 242,086 157,814 239,387
Current assets/(liabilities)
Stocks 29,771 28,231 35,838
Debtors 295,054 217,790 275,810
Cash (net of overdraft) 60,039 43,467 (35,835)
Trade and other creditors (145,868) (147,310) (163,294)
Accruals and deferred income (119,004) (91,832) (128,629)
Net current assets/(liabilities) 119,992 50,346 (16,110)
Long-term creditors+ (72,847) (59,643) (68,570)
Provisions for liabilities and (27,276) (25,916) (25,636)
charges
Equity shareholders' funds 261,955 122,601 129,071
+ Includes £19.7m of PFI related non-recourse bank loans at 30 June 2002 (at 30
June 2001: £6.6m and at 31 December 2001: £14.1m).
Summary Consolidated Cash Flow Statement
For the six months ended 30 June 2002
6 Months to Restated 6 Restated Year
30.6.02 £ Months to to 31.12.03 £
'000 30.6.01 £'000 '000
Operating profit pre NATS cost 16,842 12,226 21,254
Exceptional item: Cost of - (10,187) (10,187)
unsuccessful
NATS acquisition
Operating profit 16,842 2,039 11,067
Depreciation and amortisation of 11,494 8,131 18,283
goodwill
Movement in working capital (16,652) (13,542) (13,866)
One-off pension fund contribution (15,500) - -
Net cash (outflow)/inflow from (3,816) (3,372) 15,484
operating
activities before PFI asset
expenditure
Expenditure on PFI asset in the (5,063) (6,501) (13,733)
course
of construction*
Net cash (outflow)/inflow from (8,879) (9,873) 1,751
operating activities after PFI asset
expenditure
Dividends received from joint 6,172 2,376 9,645
ventures
Returns on investments and servicing (2,952) (2,711) (5,604)
of finance
Taxation (2,468) (1,824) (6,417)
Capital expenditure and financial (8,907) 9,300 (14,623)
investment
Capital expenditure and financial (8,907) (8,559) (30,966)
investment
Exceptional item: GSR refinancing - 17,859 16,343
Acquisitions and disposals (3,187) (3,493) (73,586)
Equity dividends paid (5,536) (4,425) (6,664)
Net cash outflow before financing (25,757) (10,650) (95,498)
Financing 121,631 8,620 14,166
Financing 116,031 2,020 66
Non-recourse debt financing PFI 5,600 6,600 14,100
asset*
Increase/(decrease) in cash 95,874 (2,030) (81,332)
Opening balance (35,835) 45,497 45,497
Closing balance 60,039 43,467 (35,835)
*PFI asset under construction financed by non-recourse loan.
Interim Report
As required by Section 240 of the Companies Act 1985, notification is hereby
given that the accounting information contained in the Interim Report for 2002
does not comprise a full set of accounts and that no full accounts have been
delivered to the Registrar of Companies. The interim results for both 2001 and
2002 are unaudited whilst the results for the 2001 full year were audited, and
an unqualified audit report was made. The 2001 full year accounts have been
delivered to the Registrar of Companies.
Distribution of Report
Copies of this Report are being sent to all shareholders of Serco Group plc.
Copies can be obtained from our website www.serco.com or on request from the
Registered Office:
Serco Group plc
Dolphin House
Windmill Road
Sunbury-on-Thames
Middlesex TW16 7HT
United Kingdom
Notes
For the six months ended 30 June 2002
1. Earnings per share
The calculation of basic earnings per Ordinary Share after goodwill is based
on profits of £16,186,000 for the six months ended 30 June 2002 (2001: £
15,138,000) and the weighted average number of 414,132,355 (2001: 392,139,870)
Ordinary Shares of 2p each in issue during the period.
The calculation of basic earnings per Ordinary Share before goodwill is based
on profits of £20,056,000 for the six months ended 30 June 2002 (2001: £
17,108,000) and the weighted average number of 414,132,355 (2001: 392,139,870)
Ordinary Shares of 2p each in issue during the period.
The calculation of diluted earnings per Ordinary Share after goodwill is based
on profits of £16,186,000 for the six months ended 30 June 2002 (2001: £
15,138,000) and the weighted average number of 414,798,700 (2001: 394,727,800)
Ordinary Shares of 2p each in issue during the period.
The calculation of diluted earnings per Ordinary Share before goodwill is
based on profits of £20,056,000 for the six months ended 30 June 2002 (2001: £
17,108,000) and the weighted average number of 414,798,700 (2001: 394,727,800)
Ordinary Shares of 2p each in issue during the period.
2. Analysis of profit before tax - pre goodwill
6 Months 6 Months
to 30.6.02 to 30.6.01
£'000 £'000
Profit on ordinary activities before taxation 24,525 22,426
reported
Amortisation of goodwill 3,870 1,970
Profit on ordinary activities before taxation - 28,395 24,396
pre amortisation of goodwill
Exceptional item: Cost of unsuccessful NATS - 10,187
acquisition
Investment: People and Technology project - 3,440
Exceptional item: GSR refinancing - (15,356)
Less: Serco Assurance contribution after phase-in (1,091) -
costs and
associated financing costs
Underlying profit on ordinary activities before 27,304 22,667
taxation -
pre amortisation of goodwill
Serco Group, Inc.
20 E Clementon Road, Suite 102 South
Gibbsboro, New Jersey 08026
United States
T +1 856 346 8800
F +1 856 346 8463
Serco Group Pty Limited
Level 10, 90 Arthur Street
North Sydney, NSW 2060
Australia
T +61 (0)2 9964 9733
F +61 (0)2 9964 9924
Serco Group plc
Dolphin House, Windmill Road
Sunbury-on-Thames, Middlesex TW18 7HT
United Kingdom
T +44 (0)1932 755900
F +44 (0)1932 755 854
Serco Group, Inc.
20 E Clementon Road, Suite 102 South
Gibbsboro, New Jersey 08026
United States
T +1 856 346 8800
F +1 856 346 8463
Serco Group Pty Limited
Level 10, 90 Arthur Street
North Sydney, NSW 2060
Australia
T +61 (0)2 9964 9733
F +61 (0)2 9964 9924
Serco Group plc
Dolphin House, Windmill Road
Sunbury-on-Thames, Middlesex TW18 7HT
United Kingdom
T +44 (0)1932 755900
F +44 (0)1932 755 854
Wednesday, 15th January 2025
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