Serco Group Plc · LSE:SRP
Serco — H1 2006 Earnings Presentation
20 slides from Serco's earnings presentation, Aug 31, 2006
Slide 1: 2006 Interim Results
2006 Interim Results Presented by Serco Group plc 31 August 2006 Agenda Overview Kevin Beeston Financial results Andrew Jenner Market and operating review Chris Hyman Summary and outlook Kevin Beeston Q&A 1
Slide 2: 2006 interim results - highlights
2006 interim results - highlights 2006 Increase Exc ITNET and RCI Revenue £1,236m 15.0% 10.0% Profit before tax** £52.5m 20.1% 16.8% Earnings per share** 8.06p 18.9% Dividend per share 1.05p 15.4% Group free cash flow £25.8m 33.0% *before amortisation of intangible assets Business highlights Stron
Slide 3: Financial results
Financial results Andrew Jenner – Finance Director Advise | Design | Integrate | Deliver Financial results Andrew Jenner – Finance Director Financial performance - income statement - cash flow - net debt Pensions PFI investment partnership update Advise | Design | Integrate | Deliver 3
Slide 4: Income statement
Income statement Revenue Profit before tax and intangible amortisation 2,260 92 1,637 71 1,555 67 1,326 1,236 57 53 1,075 £m £m 44 805 34 723 31 626 28 2002 2003 2004 2005 2006 2002 2003 2004 2005 2006 half year full year Income statement 2006 2005 Six months to 30 June £m £m increase Revenue 1,236.
Slide 5: Group free cash flow
Group free cash flow 73.8 55.8 47.0 £m 25.8 23.5 19.4 14.2 9.7 (11.5) 2002 2003 2004 2005 2006 half year full year Group free cash flow 2006 2005 Six months to 30 June £m £m Group EBITDA 56.5 52.3 Working capital movement (11.2) (15.5) Group operating cash flow 45.3 36.8 Interest (8.7) (7.7) Tax (2.
Slide 6: Net cash flow and Group recourse net debt
Net cash flow 2006 2005 Six months to 30 June £m £m Group free cash flow 25.8 19.4 Acquisitions - (282.5) Other financing (23.0) 254.4 Dividends paid (9.6) (8.3) Non recourse debt financed assets (3.0) (9.2) Net change in cash - group (9.8) (26.2) Group recourse net debt 30 June 31 Dec 2006 2005 As
Slide 7: Total net debt and Pensions
Total net debt 30 June 31 Dec 2006 2005 As at £m £m Group recourse net debt (237.0) (264.0) JV recourse net cash 26.9 18.0 Total recourse net debt (210.1) (246.0) Group non recourse debt (311.2) (326.8) JV non recourse debt - (22.4) Total non recourse debt (311.2) (349.2) Total net debt (521.3) (595
Slide 8: Group defined benefit pension scheme
Group defined benefit pension scheme As at 30 June 2006 £m Scheme assets 519.6 Scheme liabilities (639.0) Gross deficit (119.4) 9,800 members, closed to new members in 2001 Deficit volatile principally due to movements in AA bond rates - ranged from £119m to £160m in H1 2006 Group defined benefi
Slide 9: PFI investment partnership update and Summary
PFI investment partnership update In discussions to form a strategic investment partnership to - provide larger and lower cost pool of capital for future investment - allow us to sell some or all of our existing 100%-owned investments and recycle cash Serco would continue to - provide services u
Slide 10: Review of markets and business performance
Review of markets and business performance Chris Hyman – Chief Executive Advise | Design | Integrate | Deliver Review of markets and business performance Chris Hyman – Chief Executive Strong performance Growth Acquisitions bring new capabilities New markets emerging Systems and infrastruct
Slide 11: Civil Government - Home Affairs market
Civil Government Overall growth of 15% to £458m Sector accounted for 37% of revenue Sector consists of – Home Affairs – IT Services, BPO and Local Government – Health – Education Civil Government - Home Affairs market Clients responding to significant challenges UK market £3bn pa – terrorism
Slide 12: Civil Government - Home Affairs and IT Services and BPO
Civil Government - Home Affairs Wins UK market £3bn pa – new prison contracts and extensions valued at £79m Capabilities – non-emergency police number Offender management – chemical, biological, radiological and nuclear Law enforcement response Migration Leveraging UK experience in new Homeland
Slide 13: Civil Government - Health and Local Government
Civil Government - Health Expanded primary healthcare services UK market £10bn pa – Cornwall out of hours – Police/ Revenue and Customs contracts for Capabilities primary and forensic medical services Primary care Occupational health PFI Support services – £450m Forth Valley NHS Hospital – £60m
Slide 14: Defence and Defence – US
Defence Growth of 22 % to £ 307m UK Market £8bn pa Sector accounted for 25% of revenue Capabilities Integrated engineering UK Information systems – £58m Paradigm satellite contract extension Equipment operation – £1bn Marine Services contract Integrated training – £125m Agusta Westland teaming
Slide 15: Science and Transport
Science Overall growth of 26% to £204m Decommissioning market £2bn pa Sector accounted for 16% of revenue Capabilities Growth from £350m AWE extension Change management £12m, two year, Envirowise rebid Nuclear consultancy £20m, five year, North West technology centre Knowledge transfer Tec
Slide 16: Operational highlights – 2006 and High visibility of planned revenue
Operational highlights – 2006 Service builds business – revenue growth of 15% and PBTA growth of 20% – organic revenue growth of 10% – winning 90% of rebids and one in two new bids – new contracts valued at £1.3bn – appointed preferred bidder on contracts valued at £1.9bn – order book at record £1
Slide 17: Geographical analysis and Market sector analysis
Geographical analysis 2006 £1,236m 2005 £1,075m 9% 12% 6% 6% 8% 8% 74% 77% UK Asia Pacific Europe and North America Middle East Market sector analysis 2006 £1,236m 2005 £1,075m 16% 15% 25% 23% 37% 22% 37% 25% Defence Civil government Transport Science 17
Slide 18: Building for the future
Building for the future Refining internal systems – SAP system rolling out Capability and capacity – shared service centre in India Leadership – recruitment and development programmes Summary Kevin Beeston – Executive Chairman Advise | Design | Integrate | Deliver 18
Slide 19: Summary: Macro market development
Summary Kevin Beeston – Executive Chairman Macro market development Change to Board responsibilities Summary and outlook Advise | Design | Integrate | Deliver Macro market development UK is world leading public service contractor Globalisation driving competition and change Political acc
Slide 20: Change to Board responsibilities and Summary and Outlook
Change to Board responsibilities Kevin Beeston moving to Non-Executive Chairman Transition over twelve months Strong management at all levels Summary and Outlook Summary – strong double-digit growth – enhanced capabilities delivering new business – continued high win and rebid rate – order b