Update on 2018 financial performance
28 September 2018
Serco Group plc
LEI: 549300PT2CIHYN5GWJ21
Serco Group plc ('Serco' or 'the Group'), the international service company, today provides an unscheduled update on expectations for the 2018 financial year. Strong operating performance, together with transformation savings and other cost efficiencies, have resulted in trading in the first few months of the second half being better than we anticipated; in addition, we now believe that a number of non-recurring trading items such as end-of-contract settlements and other commercial negotiations will contribute to a stronger outcome for 2018 than we expected, and one which will be meaningfully ahead of current market consensus.
Previous guidance was for Revenue of £2.7-2.8bn and Underlying Trading Profit of around £80m. Our latest view, which is at estimated reported currency rates, now indicates Revenue of approximately £2.8bn and Underlying Trading Profit of £90-95m; the latter would represent growth of between 30 and 40% on the result for 2017. Accounting net debt at the end of the year, which we previously thought would be at the mid-to-upper end of our £200-250m guidance range, is now expected to be towards the lower end of that range. This is in part because of stronger trading and in part because we anticipate that we will receive the early repayment of a vendor loan note issued on our disposal of Intelenet in 2015. As a consequence, we now expect leverage for covenant purposes of less than 1.5x EBITDA at the year end.
With regard to 2019, our detailed budget process for the 2019 financial year has only just begun, and we are mindful of the fact that 2019 will not benefit from the non-recurring trading items we expect to see in 2018. We will update markets on our thinking for 2019 at the time of our pre-close statement on 13 December.
Ends
For further information please contact Serco:
Stuart Ford, Head of Investor Relations T +44 (0) 7738 894 788
Marcus De Ville, Head of Media Relations T +44 (0) 7738 898 550
About Serco
Serco is a leading provider of public services. Our customers are governments or others operating in the public sector. We gain scale, expertise and diversification by operating internationally across five sectors and four geographies: Defence, Justice & Immigration, Transport, Health and Citizen Services, delivered in UK & Europe, North America, Asia Pacific and the Middle East.
More information can be found at www.serco.com
Forward looking statements
This announcement contains statements which are, or may be deemed to be, "forward looking statements" which are prospective in nature. All statements other than statements of historical fact are forward looking statements. Generally, words such as "expect", "anticipate", "may", "should", "will", "aspire", "aim", "plan", "target", "goal", "ambition" and similar expressions identify forward looking statements. By their nature, these forward looking statements are subject to a number of known and unknown risks, uncertainties and contingencies, and actual results and events could differ materially from those currently being anticipated as reflected in such statements. Factors which may cause future outcomes to differ from those foreseen or implied in forward looking statements include, but are not limited to: general economic conditions and business conditions in Serco's markets; contracts awarded to Serco; customers' acceptance of Serco's products and services; operational problems; the actions of competitors, trading partners, creditors, rating agencies and others; the success or otherwise of partnering; changes in laws and governmental regulations; regulatory or legal actions, including the types of enforcement action pursued and the nature of remedies sought or imposed; the receipt of relevant third party and/or regulatory approvals; exchange rate fluctuations; the development and use of new technology; changes in public expectations and other changes to business conditions; wars and acts of terrorism; and cyber-attacks. Many of these factors are beyond Serco's control or influence. These forward looking statements speak only as of the date of this announcement and have not been audited or otherwise independently verified. Past performance should not be taken as an indication or guarantee of future results and no representation or warranty, express or implied, is made regarding future performance. Except as required by any applicable law or regulation, Serco expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward looking statements contained in this announcement to reflect any change in Serco's expectations or any change in events, conditions or circumstances on which any such statement is based after the date of this announcement, or to keep current any other information contained in this announcement. Accordingly, undue reliance should not be placed on the forward looking statements.
