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Trading statements

Serco updates on FY guidance

30 June 2017 07:34

Serco said its FY guidance for revenue of about £3.1bn and underlying trading profit of £65m-£70m is unchanged, although the movement in currency since its 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," the company said.

This, it added, was due to the sensitivity of the company's 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," said Serco.

Net debt at the half year was seen to be towards the lower end of the range.

CEO Rupert Soames said the business had performed well in H1, which kept the company on track for the FY.

"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," said Soames.

"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."

In H1, Serco said it expected to report revenue of about £1.5bn and underlying trading profit of about £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," it said.

"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%."

Story provided by StockMarketWire.com

Related Company: SRP

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