StockMarketWire.com
Serco Group said FY trading in 2015 is likely to be ahead of previous guidance, with underlying trading profit expected to be about GBP95m.

It added that reported trading profit will likely to be significantly higher than underlying trading profit.

It noted improved operational performance or renegotiation on some loss-making contracts will result in a substantial net release of OCPs and other Contract and Balance Sheet Review items.

Free cash outflow for 2015 will be better than previously anticipated; closing net debt, assuming completion of the offshore BPO disposal in the coming weeks, now expected to be around GBP100m.

Revenue and trading profit will decline further in 2016, reflecting the BPO disposal and net contract attrition. Underlying Trading Profit anticipated to be around £50m; however, the positive developments on onerous contacts contribute to an anticipated improvement in free cash outflow compared to 2015.

Targeted cost savings exceeded in 2015; over £50m of further central support and other overhead savings targeted for 2016.

4th Aug 2016

StockMarketWire.com
Serco has swung to an H1 pretax profit of £58.1m, from a year-earlier loss of £16.0m due mostly to exceptional finance costs of £32.8m. Revenue slipped to £1.5bn, from £1.6bn.

CEO Rupert Soames said the H1 performance was better than we expected.

"Although much of the improvement came from items that will not recur, it reflects the result of a lot of hard work and successful resolution of a number of commercial issues,2 he said in a statement.

"Since our last update in May, our trading performance and cost savings are tracking slightly ahead of plan, and recent foreign exchange movements have increased the value in sterling of our overseas earnings.

"Accordingly, we are increasing our profit guidance for 2016, although it is important to note that our view of the outlook for 2017 is not materially changed, other than adjusting for foreign currency movements.

"Whilst we expect to see potholes on the way, we are making good progress on the implementation of our strategy, underlined by our growing pipeline of new bids.

"We have removed some £550m from our operating costs, and at the same time we have been investing in our infrastructure, processes and capability and have recently rolled out significant improvements in our HR, finance and purchasing systems."