Slide 1: Serco 2024 Results
serco Serco 2024 Results 27 February 2025
Slide 2: Agenda
Agenda Overview & Strategy Mark Irwin Group Chief Executive Financial review Nigel Crossley Chief Financial Officer UK & Europe Anthony Kirby UK&E CEO & Group Chief Executive Designate Q&A
Slide 3: Overview & Strategy
Overview & Strategy Mark Irwin, Group Chief Executive serco
Slide 4: Full year results 2024
Full year results 2024 £4.8bn Revenue £274m Underlying operating profit 5.7% Underlying Margin -2% vs. 2023 +£25m vs. 2023 +60bp vs. 2023 £228m Free cash flow £4.9bn Wins in year £11.2bn Pipeline 109% Trading Cash Conversion 102% Book-to-bill Highest in a decade
Slide 5: Execution focus delivering progress across key priority areas
Execution focus delivering progress across key priority areas 22% 60 bp £4.9 bn 62% 5 Percentage Points 102% £11.2 bn
Slide 6: Deliberate investment in attractive, high-value markets: NA & Defence
Deliberate investment in attractive, high-value markets: NA & Defence 2025 revenue1 Defence North America
Slide 7: Organic defence growth: mission focused, tech-enabled, people-led
Organic defence growth: mission focused, tech-enabled, people-led Key capabilities
Slide 8: Acquisitive growth: strategic US defence acquisition of MT&S
Acquisitive growth: strategic US defence acquisition of MT&S Distributed Mission Operations Network (DMON) Customer: US Air Force Last awarded: Dec ‘24 Consideration Returns EPS accretion Leverage Mission Command $327m (£264m) ROIC expected FY26 mid- Adds ~0.9x to on a cash-free, to meet WACC single
Slide 9: MT&S further strengthens our offer in training & tech solutions
MT&S further strengthens our offer in training & tech solutions Acquisition support Vessel operations Naval design MRO Supporting the procurement of Crewing & operations of support Naval architecture & design of Maintenance, repair and overhaul of air, key defence & security platforms ships & ports
Slide 10: Long-term structural demand drivers position us well for future growth
Long-term structural demand drivers position us well for future growth Fierce pressure on governments to deliver more and better for less
Slide 11: 2019-24: significant growth across key performance measures
2019-24: significant growth across key performance measures 8.4% 18% CAGR CAGR 2.3x £1bn Generated
Slide 12: Financial review
Financial review Nigel Crossley, Group Chief Financial Officer serco
Slide 13: Financial overview
Financial overview FY 24 FY 23 Growth Revenue Revenue £4,787m £4,874m (2%) Organic growth (3%) 4% Strong H2 Acquisitions 3% 4% Revenue, Profit, Cash FX (2%) (1%) and Order intake Underlying operating Underlying operating profit £274m £249m 10% profit Organic growth 4% 1% Acquisitions 8% 4% +60bp FX
Slide 14: North Americas
North Americas Strong H2 performance and order intake build momentum into 2025 Year ended 31 December (£m)* FY24 FY23 Total growth CFX growth • Revenue -3% reported, +1% organic – Defence - Pituffik & ATFP delivered strong revenue growth Defence 933 932 3% – Transport – Colorado Springs contract exi
Slide 15: UK & Europe
UK & Europe Strong in-year margin improvement, large pipeline and important recent wins Year ended 31 December (£m)* FY24 FY23 Total growth CFX growth • Revenue 0% reported, -5% organic – Up: Immigration; EHC acquisition and ORS growth Defence 358 355 2% – Down: various contracts ended or exited inc
Slide 16: Asia Pacific
Asia Pacific Improvements in contract performance and organisational efficiency Year ended 31 December (£m)* FY24 FY23 Total growth CFX growth • Revenue -5% reported, -2% organic – Volume-variable work reduced in Immigration and Defence 181 157 19% Facilities Management Justice & Immigration 323 351
Slide 17: Middle East
Middle East Strong pipeline of new opportunities Year ended 31 December (£m)* FY24 FY23 Total growth CFX growth • Revenue -5% reported, -3% organic – Up: Transport - Abu Dhabi Airport and Al Fanar (Fire Defence 26 31 (12%) Rescue services), Citizen Services – Climatize acquisition and Advisory progr
Slide 18: Exceptional cash flow performance
Exceptional cash flow performance Strong cash discipline embedded, 6-year average trading cash conversion over 100% Year ended 31 December (£m)* FY24 FY23 Underlying operating profit 273.5 248.7 Enhancing working Capex and repayment of lease liabilities (170.5) (146.3) capital performance through fo
Slide 19: Capital allocation
Capital allocation Continued progress against our framework supported by a strong balance sheet Highly Capital-light Target leverage range of Context: cash generative business model 1-2x net debt to EBITDA Capital priorities Progress in 2024 Invest to support organic New bid investment, increased pi
Slide 20: Guidance for 2025
Guidance for 2025 2024 2025 Actual Initial guidance New guidance Commentary Revenue £4.8bn ~£4.8bn ~£4.8bn Contract mobilisations & new business offsetting 7% headwind from UK and Australian Organic sales growth (3%) 0% 0% immigration Headwinds from UK / Australian immigration and Underlying operati
Slide 21: UK & Europe
UK & Europe Anthony Kirby, UK&E CEO & Group Chief Executive Designate serco
Slide 22: UK & Europe
UK & Europe Strong in-year margin improvement, large pipeline and important recent wins Year ended 31 December (£m)* FY24 FY23 Total growth CFX growth • Revenue 0% reported, -5% organic – Up: Immigration; EHC acquisition and ORS growth Defence 358 355 2% – Down: various contracts ended or exited inc
Slide 23: UK & Europe: a targeted, deliberate platform for growth
UK & Europe: a targeted, deliberate platform for growth Focus on most attractive sectors… FY24 revenues1
Slide 24: Operational excellence: continuous improvement for people & contract performance
Operational excellence: continuous improvement for people & contract performance Colleague 21% retention 6.0% FY24 technology Successful initiatives mobilisations
Slide 25: Competitiveness: focused on the fundamentals
Competitiveness: focused on the fundamentals
Slide 26: Growth: using all levers to drive growth in UK & Europe
Growth: using all levers to drive growth in UK & Europe 98% £6bn £266m
Slide 27: Growth: bolt-on acquisitions create a migration services platform
Growth: bolt-on acquisitions create a migration services platform Key capabilities
Slide 28: Key Messages
Key Messages serco
Slide 29: Momentum setting us up for a strong 2025
Momentum setting us up for a strong 2025 A resilient Execution focus Continued good Agreed to Largest pipeline Strong international on delivering colleague acquire major in more than a momentum at platform for Growth, engagement & new US defence decade at end of 2024 growth in the Operational safety
Slide 30: se rCO ae futiire
se rCO ae futiire
Slide 31: Appendix
Appendix serco
Slide 32: Notes and definitions
Appendix 1 Notes and definitions Revenue is as defined under IFRS, which excludes Serco’s share of revenue of its joint ventures and associates. In prior periods where relevant, revenue including that from any discontinued operations has been shown for consistency with previous guidance and disclosu
Slide 33: Revenue divisional analysis
Appendix 2 Revenue divisional analysis Revenue - growth composition FY24 vs FY23 FY23 FY24 Reported Acquisition/ Reported Constant £m Currency Organic Disposal FX TOTAL Currency Currency UK&E 2,440 (5)% 5% —% —% 2,446 2,455 North Americas 1,363 1% —% (4)% (3)% 1,326 1,370 Asia Pacific 845 (2)% —% (3
Slide 34: Underlying Operating Profit (UOP) divisional analysis
Appendix 3 Underlying Operating Profit (UOP) divisional analysis Underlying Operating Profit and Margin FY24 UOP FY23 UOP FY change HY24 UOP Reported Constant Reported Reported Reported Constant Constant Reported Reported £m Currency Currency Margin Currency Margin Currency Currency Currency Margin
Slide 35: Income statement – EPS and DPS
Appendix 4 Income statement – EPS and DPS £m FY24 FY23 HY24 Underlying Operating Profit (UOP) 273.5 248.7 142.4 Net finance costs (NFC) (33.1) (24.6) (15.5) Underlying PBT 240.4 224.1 126.9 Tax on UOP and NFC (60.4) (50.8) (33.0) Underlying PAT 180.0 173.3 93.9 Amortisation and impairment of intangi
Slide 36: Exceptional items
Appendix 5 Exceptional items £m FY24 FY23 HY24 Exceptional items: Compensation relating to early termination of UK contract - 9.9 - Goodwill Impairment (Asia Pacific) (114.5) - - Provision releases relating to indemnities provided on disposed businesses - 43.9 - Exceptional items (114.5) 53.8 - Tax
Slide 37: Free Cash Flow and Trading Cash Flow
Appendix 6 Free Cash Flow and Trading Cash Flow £m FY24 FY23 HY24 Underlying Operating Profit (UOP) 273.5 248.7 142.4 Share of profit of joint ventures and associates (22.8) (29.0) (11.2) Depreciation, amortisation and impairment of owned assets 25.1 25.7 11.7 Depreciation, amortisation and impairme
Slide 38: Net debt and leverage
Appendix 7 Net debt and leverage £m FY24 FY23 HY24 Free cash flow 227.5 209.2 75.3 Exceptional cash items (see Appendix 5) - 9.2 - Net (acquisition) / disposal of subsidiaries and operations (20.8) (7.5) (19.3) Dividends paid to shareholders (38.4) (33.7) (24.5) Dividends paid to non-controlling int
Slide 39: Focus on five sectors across four regions
Appendix 8 Focus on five sectors across four regions FY24 revenue mix, including share of JV&As* UK & North Asia Middle Serco £m Sector Europe Americas Pacific East Total Defence 753 933 181 26 £1,893m 35% Justice & 1,409 - 323 - £1,732m 33% Immigration Transport 240 85 17 83 £425m 8% Health 217 - 1
Slide 40: Cash flow breakdown 1 and breakdown 2
Appendix 9 Cash flow breakdown 1 and breakdown 2 £m FY24 FY23 HY24 Breakdown 1 – depreciation, amortisation and impairment Depreciation (excluding lease assets) 17.2 17.3 8.0 Amortisation (non-acquisition) 8.3 7.7 4.0 Depreciation and amortisation 25.5 25.0 12.0 Impairment of PPE (excluding lease as
Slide 41: Cash flow breakdown 3
Appendix 10 Cash flow breakdown 3 £m FY24 FY23 HY24 Breakdown 3 – cash flow and net debt exceptional items Restructuring and costs related to Strategy Review - (0.7) - Compensation relating to early termination of contract - 9.9 - Costs associated with successful acquisitions - - - Exceptional items
Slide 42: Leverage covenant calculation
Appendix 11 Leverage covenant calculation £m FY24 FY23 HY24 LTM Underlying operating profit (UOP) 273.5 248.7 243.2 Exclude: share of joint venture and associate post-tax profits (22.8) (29.0) (22.2) Exclude: foreign exchange credit on investing and financing arrangements (2.1) (0.9) (1.9) Include:
Slide 43: Interest cover covenant calculation
Appendix 12 Interest cover covenant calculation £m FY24 FY23 HY24 LTM Net finance costs (33.1) (24.6) (29.1) Other covenant adjustments to net finance costs 19.6 12.7 16.3 Exclude: foreign exchange credit on investing and financing arrangements 2.1 0.9 1.9 Exclude: net interest receivable on retirem
Slide 44: Balance sheet summary
Appendix 13 Balance sheet summary £m FY24 FY23 HY24 Goodwill 826.2 906.7 938.5 Other intangible assets (excluding leased assets) 101.4 115.6 117.2 Property, plant and equipment (excluding leased assets) 56.8 44.3 55.7 Contract assets, trade and other receivables 657.8 640.4 678.8 Inventories 24.1 24
Slide 45: Return on Invested Capital (ROIC)
Appendix 14 Return on Invested Capital (ROIC) £m FY24 FY23 HY24 Invested capital assets 1,691.4 1,773.2 1,853.2 Invested capital liabilities (714.7) (662.3) (702.9) Invested Capital (IC) 976.7 1,110.9 1,150.3 Average IC (two-point) 1,043.8 1,163.7 1,152.9 Operating profit for rolling 12 months 273.5
Slide 46: Pension assets mix and IAS 19 valuation
Appendix 15 Pension assets mix and IAS 19 valuation £m FY24 FY23 Fair value of scheme assets - SPLAS Buy and maintain credit 17.8 55.8 Short-dated credit 31.9 30.5 Asset backed securities 38.0 12.0 LDIs 181.7 235.8 Private debt 143.5 145.0 Amounts held by insurance companies 385.8 430.3 Cash and oth
Slide 47: Currency rates
Appendix 16 Currency rates Spot rate for FY25e Average rates Closing rates 17 Feb 31 Dec 30 Jun 31 Dec 30 Jun 31 Dec 30 Jun FY24 HY24 FY23 HY23 FY22 2025 2024 2024 2023 2023 2022 2022 £:US$ 1.26 1.28 1.27 1.24 1.23 1.24 1.25 1.28 1.27 1.26 1.20 1.21 £:Aus$ 1.98 1.93 1.92 1.87 1.83 1.78 2.02 1.90 1.8
Slide 48: Tax
Appendix 17 Tax • FY24 underlying tax of £60.4m, on an Underlying profit before tax of £240.4m is an Underlying effective tax rate (ETR) of 25.1% • Corporate tax rate in the UK increased to 25% - increased tax rate was effective from 1 April 2023 and therefore in full effect in 2024 following a hybr
Slide 49: Net debt trend analysis
Appendix 18 Net debt trend analysis 31/12/16 30/06/17 31/12/17 31/12/12 30/06/13 31/12/13 31/12/13 30/06/14 31/12/14 31/12/14 30/06/15 31/12/15 31/12/15 30/06/16 31/12/16 31/12/17 30/06/18 31/12/18 31/12/18 30/06/19 31/12/19 31/12/19 30/06/20 31/12/20 31/12/20 30/06/21 31/12/21 31/12/21 30/06/22 31/
Slide 50: American Depository Receipt (ADR) program
Appendix 19 American Depository Receipt (ADR) program Serco Group has a sponsored Level 1 ADR program, for which Deutsche Bank act as the depositary bank and custodian Ticker: SCGPY Exchange: OTC For assistance with converting Ordinary Shares into ADRs (or vice CUSIP: 81748L209 versa), please contac
Slide 51: serco.com
serco.com