Record awards and strong performance

Transcription

1 Record awards and strong performance 2009 Half Year Results Serco Group plc 26 August 2009 Advise Design Integrate Deliver

2 Chris Hyman Overview 2009 Half Year Results Advise Design Integrate Deliver

3 Strong financial performance 2009 H H1 Change Revenue 1,950m 1,491m 30.8% Adjusted operating profit 110.0m 76.8m 43.2% Profit before tax 83.4m 62.8m 32.8% Adjusted earnings per share 14.02p 10.18p 37.7% Dividend per share 1.85p 1.48p 25.0% Group free cash flow 50.7m 33.0m 53.6% 2

4 Strong operational performance Strong growth across markets Successful entry into new markets and sectors Winning business at higher margins Rollout of integrated systems continues Investing in preparing our people for the future Excellent progress on integration of SI 3

5 Strong operational performance Maintain our rebid win rates at 90% Win one in two of new bids Grow our order book to 16.7bn Opportunity pipeline valued at 27bn 3.5bn awards in first half Further 0.5bn awards in second half to date 4

6 Excellent revenue visibility At 30 June 2009 Order book of 16.7bn % 4% 1% 99% % 66% 12% 4% 86% % 13% 3% 72% Order book Extensions and rebids Preferred bidder 5

7 New pressures on governments drive opportunities Growing citizen demand for essential service improvements Increasing socio-economic challenges - terrorism, congestion, migration, climate change Pressure on public finances driving need for transformational change - governments seeking significant productivity improvements in the medium-term - seeking trusted partners to deliver change - competition increasingly proven to deliver significant benefits Serco s track record and broad capabilities highly relevant - strong public service ethos and best practice from around the world 6

8 Andrew Jenner Financial Review 2009 Half Year Results

9 Financial review Income statement Cash flow Net debt Pensions Guidance 8

10 Strong revenue and profit growth Revenue Adjusted operating profit 2,548 2,260 2,811 3, ,807* 165 m m 1,075 1,236 1,349 1, * * Excludes currency effects. half year full year Note: Adjusted operating profit is profit before interest and tax and amortisation of acquired intangibles. For the full year 2006, this also excludes the 11.4m gain on sale of PFI investments. 9

11 Income statement months ended 30 June m m Increase Revenue 1, , % Adjusted operating profit % Investment revenue and finance costs (17.7) (9.5) Adjusted profit before tax % Amortisation of acquired intangibles (8.9) (4.5) Profit before tax % Effective tax rate 26.4% 26.9% Average shares in issue 486.6m 487.1m Adjusted earnings per share 14.02p 10.18p 37.7% Earnings per share 12.62p 9.35p 35.0% 10

12 Revenue +9.6% 1,950m +10.4% 142m +10.8% 156m 1,491m 161m 2008 Excluding SI and currency SI Currency 2009 Note: In calculating the growth rates excluding currency shown above, non-sterling revenue, including that of SI, has been translated into Sterling at the average foreign exchange rates for the first half of

13 Income statement months ended 30 June m m Increase Revenue 1, , % Adjusted operating profit % Investment revenue and finance costs (17.7) (9.5) Adjusted profit before tax % Amortisation of acquired intangibles (8.9) (4.5) Profit before tax % Effective tax rate 26.4% 26.9% Average shares in issue 486.6m 487.1m Adjusted earnings per share 14.02p 10.18p 37.7% Earnings per share 12.62p 9.35p 35.0% 12

14 Adjusted operating profit +11bps 110.0m +18bps +20bps 76.8m 5.64% 5.15% 2008 Excluding SI and currency SI Currency 2009 Note: In calculating the growth rates excluding currency shown above, non-sterling revenue and earnings, including those of SI, have been translated into Sterling at the average foreign exchange rates for the first half of

15 Currency Average rates 1H H 2008 :US$ :Aus$ :Eur Closing rates 30 Jun 31 Dec :US$ :Aus$ :Eur FY 2009 FY 2008 assumption * :US$ :Aus$ :Eur * Assuming no further changes to exchange rates 14

16 SI revenue and Adjusted operating profit 6 months ended 30 June US$m US$m Increase Revenue % Adjusted operating profit % Adjusted operating profit margin 7.5% 6.4% Guidance remains Continuation of organic revenue growth rate of c7% for full year 2009 Medium-term revenue growth in line with Serco Group growth Cost synergies principal driver of future margin improvement: annual cost synergies in excess of US$10m realised by end of second full year 15

17 Income statement months ended 30 June m m Increase Revenue 1, , % Adjusted operating profit % Investment revenue and finance costs (17.7) (9.5) Adjusted profit before tax % Amortisation of acquired intangibles (8.9) (4.5) Profit before tax % Effective tax rate 26.4% 26.9% Average shares in issue 486.6m 487.1m Adjusted earnings per share 14.02p 10.18p 37.7% Earnings per share 12.62p 9.35p 35.0% 16

18 Group free cash flow m half year full year 17

19 Group free cash flow months ended 30 June m m Group EBITDA Working capital movement (31.3) (24.2) Group operating cash flow Interest (18.0) (12.4) Tax (8.4) (3.1) Expenditure on tangible and intangible assets (22.5) (19.1) Dividends from joint ventures Group free cash flow

20 Net debt 30 June 31 Dec As at m m Group cash and cash equivalents Group loans (611.7) (708.8) Group obligations under finance leases (20.4) (15.5) Group recourse net debt (459.8) (524.5) JV recourse net cash Total recourse net debt (404.1) (480.0) Group non recourse debt (28.9) (34.1) Total net debt (433.0) (514.1) 19

21 Defined benefit pension schemes Total net balance sheet liabilities of 73.8m (December 2008: 20.5m) Asset base of 1.2bn Contract specific schemes Limited commercial risk Non contract specific schemes Deficit on main Group scheme of 12.4m (December 2008: surplus of 62.4m) Movement in net liability due to asset returns and changes in inflation assumptions 20

22 Guidance In 2009, expect double digit revenue growth and 30 basis points of Adjusted PBT margin improvement, excluding SI Expect SI to enhance 2009 revenue growth by approximately 10% Including SI, expect Adjusted operating profit margin to increase by around 40 basis points in 2009 By the end of 2012, expect revenue to be approximately 5bn, and Adjusted operating profit margin to increase to approximately 6.3% Note: Guidance excludes material currency effects 21

23 Summary Continued strong revenue growth Further margin improvement Good SI contribution Good group free cash flow performance Continued strong financing position Re-iterated guidance for 2009 and medium-term 22

24 Chris Hyman Business Review 2009 Half Year Results

25 Market sector and geographical analysis Revenue by market Revenue by geography 26% 18% 41% 1H ,950m 23% 5% 8% 64% 15% 25% 21% 36% 1H ,491m 6% 12% 7% 75% 18% Civil Government Science UK Asia Pacific & India Defence Transport Europe & Middle East North America 24

26 Civil Government New markets entered; growth in existing markets Civil Government segment includes home affairs, IT and BPO, healthcare, environmental services and consulting; now includes Welfare to Work Operates in UK, US, Canada, Australia, India and Europe 49.1% revenue increase to 809m representing 41% of the group (2008: 36%) 25

27 Civil Government Home Affairs, Australia Immigration management Signed contract to transform Australia s immigration removal centres (DIAC) Valued at AUS$370m over five years; four year extension potential Seven adult immigration detention centres across the continent National and international transport and escort services Transformation includes quality improvement, performance management and increased value for money Christmas Island Darwin Perth Sydney Melbourne 26

28 Civil Government Home Affairs, Australia Offender management World first - competition extended to state run prisons Sydney 27

29 Civil Government Home Affairs, UK Offender management Competition in UK and prison market extending to existing, state-run prisons England and Wales electronic monitoring contract extended for two years, 70m 28

30 Civil Government Home Affairs, UK Offender management Preferred bidder for two PFI prisons in UK Valued at 600m over 26½ years Belmarsh West, London 900 offenders, category B Maghull, Liverpool 600 offenders, category B Innovative services developed with charity partners to discourage reoffending Liverpool London 29

31 Civil Government Welfare to Work, UK Successful entry into new UK Welfare to Work market Selected as prime contractor for five year contracts in three UK regions - Valued at up to 500m - Network of specialist providers, funded by service fee and performance payments Number of similar sized opportunities expected to follow in the UK Greater Manchester North, Mid & South-East Wales West Midlands 30

32 Civil Government Healthcare, UK Successful entry into new UK pathology market Joint venture with leading NHS Trust Guy s and St Thomas - Valued at 250m over ten years - Improving and delivering Trust s pathology services London 31

33 Civil Government Environmental services, UK Significant expansion in UK environmental services market Providing services to 13 local authorities including 3 London boroughs Charnwood Borough Council, Leicestershire - 35m over seven years H2 appointed preferred bidder for London Borough of Bexley - 170m over 15 years Charnwood Breckland Mid Suffolk Milton Keynes Welwyn Hatfield London Woking Canterbury Winchester Mid Sussex Cornwall 32

34 Civil Government IT & BPO, US US Records processing support to National Benefits Center for the US Department of Homeland Security - US$190m over the full five years Training and technical support contracts renewed with Pension Benefit Guaranty Corporation and the Department of Transportation - Approximately US$10m 33

35 Civil Government IT & BPO, UK & India UK & India H2 appointed preferred bidder for Business Link services with UK s South East England Development Agency - 80m, three years with potential for two year extension - Builds on expertise developed with services provided to South West Regional Development Agency and for UK DBIS Good progress in India South East 34

36 Defence Good performance and expanded capabilities Support to armed forces in the UK, US, Canada, Germany and Australia 33.2% revenue increase to 499m, representing 26% of the group (2008: 25%) 35

37 Defence UK Good growth from broad contract base Over 60m of new business won in first half - Organic growth to helicopter maintenance support and pilot training contracts - Renewed MoD Air Surveillance and Control Systems contract for a further five years Shortlisted for the Armed Forces Recruiting and major Royal Navy training contracts 36

38 Defence US Enhanced opportunities from expanded capabilities Capabilities expanded through SI acquisition Significant IDIQ awards - Alliant integrated IT solutions - STOC II simulation and training for the US Army 37

39 Transport Continued growth and expansion of services Transport segment includes light and heavy rail, traffic management, civil aviation, civil marine and cycle schemes Principal services in UK, US, Canada, Australia and Middle East 13.2% revenue increase to 346m, representing 18% of the group (2008: 21%) 38

40 Transport Air Traffic Control Continued growth and expansion of services Renewed and expanded contract with Dubai Airports - 245m over 10 years Renewal of contracts at Abu Dhabi and Al Ain airports - 24m over two years Dubai Abu Dhabi 39

41 Transport Heavy Rail Strong operational performance Good revenue growth Punctuality levels of 90% and 97% in the last year respectively for Northern Rail and Merseyrail Northern Rail Merseyrail 40

42 Transport Urban Transport New services and increased capacity Dubai Metro - inauguration in September DLR - work on extensions to network, stations and three carriage trains Further light rail opportunities H2 London Cycle Hire contract signed 140m over six years Operate and maintain 6,000 cycles for hire, 400 docking stations, over 10,000 docking points Dubai London 41

43 Science Nuclear skills driving growth Science segment manages science based organisations and applies science to economic development Principal services in UK 10.5% revenue increase to 295m, representing 15% of the group (2008: 18%) 42

44 Science Nuclear skills driving growth Strong nuclear credentials H2 signed AWE five year pricing review Serco-led consortium appointed to transform UK nuclear research - Three year contract to manage and develop the UK National Nuclear Laboratory Examining nuclear decommissioning opportunities West Cumbria 43

45 SI International Excellent progress on integration Good contribution in first half Integration well advanced and good progress on cost synergies - re-brand complete - management and business re-organisation complete - bid pipeline processes reviewed and integrated Patent & Trademark Office (PTO) and EPMII contracts operating well 44

46 Chris Hyman Outlook and Summary 2009 Half Year Results

47 Governments structural deficits United Kingdom - July 2009 UK public sector borrowing of 8bn vs 5.2bn surplus in July Total predicted deficit of up to c 175bn this year United States - US deficit largest since World War 2 (predicted to be over US$1.5 trillion) - Improvement projected to be slower than in previous recoveries 46

48 Radical steps to achieve fundamental changes United Kingdom - Reforming welfare - Transforming healthcare services - Market testing in home affairs - Moving to a low carbon economy United States - Reforming healthcare - Strengthening IT infrastructure and cyber security - Improving educational outcomes - Investing in renewable technologies Australia - Defence Strategic Reform Program 47

49 Adopting innovative contracting models Further development of fixed price, outcome based contracting Public-private joint ventures and flexible partnership models Joined-up government through shared support services Performance based contracting Increasing use of third sector 48

50 Serco is well placed to contribute Experience across all public service contracting models Strong public service ethos and commercial acumen Reputation for transforming and delivering essential services Broad capabilities Flexibility and agility 49

51 Summary Record 3.5bn of contract awards Continuing to win 90% of rebids and one in two of new bids Strong order book of 16.7bn Increasing demand for our skills and capabilities Confident in future growth and in achieving guidance 50

52 Questions & Answers Advise Design Integrate Deliver