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Changes to accounting standards from 2013
Reporting from 2013 will reflect the changes to accounting standards IAS19 and IFRS11. Neither of these have a material impact on the Group's reported earnings. A restatement of the 2012 financial year and the first half of 2012 is found here.
Restated segmental information from 2012
Reporting from 2012 reflects the new corporate structure, comprising the Global Services division, alongside a single UK & Europe division, and our Americas and AMEAA divisions. Segmental income statement information for the comparable reporting periods is found here.
2013 Half Year Results
A presentation for investors and analysts will be held at the London Stock Exchange, 10 Paternoster Square, London EC4M 7LS at 09.30 on Thursday 29th August 2013. The presentation will be webcast live and subsequently available on demand.
Serco Group plc - 2013 Half Year results
6 months to 30 June
|Change at constant currency|
|Adjusted revenue - ongoing activities*|
|Adjusted operating profit- ongoing activities*|
|Adjusted profit before tax*|
|Profit before tax|
|Adjusted earnings per share (basic)*|
|Earnings per share (basic)|
|Dividend per share||3.10p|
|Free cash flow||29.0m||£0.9m||£28.1m||n/a|
* Adjusted measures include Serco's proportional share of joint ventures and are before exceptional items (in 2012 there was a £31.0m exceptional net profit on disposals) and reorganisation costs (in 2012 reorganisation costs totalled £15.7m). Ongoing activities exclude the financial results of disposals. Full definitions are provided on page 2, reconciliations are included in the Finance Review on pages 24 to 36 and the income statement is presented on page 39.
International portfolio provides resilience and growth
Group organic revenue growth of 8.8% reflects benefits of global portfolio breadth
- UK & Europe: growth of 7%, driven principally by the new contracts started in the second half of last year
- Americas: decline of 3%, reflecting challenging US federal contracting market though better than expected
- AMEAA: growth of 19%, with significant volume-related growth in immigration services
- Global Services: growth of 18%, supported by the particularly strong level of contract awards during 2012
Strong financial result for the period
- Organic revenue growth for the year weighted to the first half as expected, driven by last year's record level of contract wins together with volume-related and project-based work in the period
- Adjusted operating margin from ongoing activities reduced by 23 basis points to 5.7%, reflecting investment in contract bidding and new market development activity
- Adjusted earnings per share growth of 12.9% to 19.69p
- Interim dividend increase of 17.0%, reflecting policy of accelerated growth to move to higher payout ratio
Further good progress on contract awards and strategic positioning
- £2.1bn of contract awards; order book of £18.5bn as at 30 June 2013 (£19.1bn at 31 December 2012)
- New wins in the US highlight excellent progress to further diversify the Americas division
- Successfully developing a more balanced portfolio across geographies and markets
Continued progress on bid opportunities
- Serco's broad pipeline of opportunities remains strong at approximately £30bn
- Substantial new bid and extension/rebid opportunities in progress
- Revenue visibility currently 98% for 2013, 82% for 2014 and 72% for 2015
UK government review of contracts
- Full cooperation with central government customers in their reviews, supported by our external advisers
- Programme of actions agreed with the MoJ regarding the PECS contract
Overall outlook remains positive
- 2013 expected to deliver an improvement in organic revenue growth for the year as a whole; the strong growth achieved in the first half is forecast to be significantly lower in the second half
- 2013 Adjusted operating margin expected to be flat to slightly down on the level achieved in 2012
- Management expectations unchanged for Adjusted profit before tax and earnings per share
- Strength and breadth of portfolio continues to provide resilience and good growth potential
- The Group remains well positioned to take advantage of attractive market opportunities
Christopher Hyman, Group Chief Executive, said: "The strong financial performance over the first six months of 2013 has met expectations, our overall guidance for the full year is unchanged and the outlook remains positive. We have seen further excellent revenue growth in Australia and in our BPO business, the UK has seen good growth from the contracts won in 2012 and the Americas division has won significant new business despite the material challenges in the US federal contracting market.
"We are working closely with UK government customers on their ongoing reviews of our contracts, and have agreed to a series of actions with the MoJ regarding our PECS contract. Serco prides itself on being a values-led organisation, delivering essential services that matter to people around the world. We will act with integrity to deliver the standards expected of a service business such as ours and will put right any issues that arise from these reviews."
For further information please contact Serco:
Stuart Ford, Head of Investor Relations T +44 (0) 1256 386 227
Marcus De Ville, Head of Media Relations T +44 (0) 1256 386 226