Thursday 24 February 2022

*UKHotViewsExtra* - Covid cliff edge looms for Serco

SercoBusiness Process Operations specialist Serco has experienced several years of strong growth. Its latest 2021 full year results, out this morning, outline top line growth for the Group of 14% (10% of which is organic) which takes total revenue for the year to £4,424m (FY 2020 £3,884m). Underlying Trading Profit (UTP) increased by 40% to £229m (FY 2020 £163m) with associated margin increasing from 4.2% to 5.2%.  Interestingly, some two-thirds of Serco profits are now coming from outside of the UK.

However, Serco has benefited significantly from providing Covid-related services to various governments which will eventually ‘wash through’ this year as things (hopefully!) return to normal. This will have a big impact on 2022 revenue and profit which Serco is now forecasting to decline to between £4.1bn-£4.2bn (-8% organic) and c.£195m respectively. Indeed, Serco has had to become careful not to get addicted to Covid related work which continued longer than expected (see Serco bags £322m COVID test centre extension) and contributed something like £700m to revenue and £60m to UTP in 2021.

Serco’s 2021 order intake was strong with £5.5bn of work won and a book-to-bill ratio of 125%. Serco won 56 contracts worth more than £10m and 5 with a total contract value of more than £200m. Around 60% of this came from the UK and Europe, 25% from the Americas, 10% from Asia Pacific and 5% from the Middle East. Of the order intake, 60% was new business and 40% were rebids and extensions. This is the opposite of the position to the previous FY. 

TechMarketView clients, including subscribers to UKHotViewsPremium, can read more by downloading the full review of Serco’s FY results here UKHotViews Extra - Covid cliff edge looms for Serco.

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Posted by Marc Hardwick at '08:54' - Tagged: results