Serco Group has provided an update on its trading amid the current coronavirus outbreak.
The group says early indications are that it has had a strong first quarter for the 2020 financial year. Organic revenue growth is likely to have been around 10 per cent, and underlying trading profit for Q1 is anticipated to be at, or slightly ahead of its phased budget.
Its adjusted net debt was £215 million, and the group had £508 million of committed credit facilities and committed headroom of £286 million. At the start of the year Serco had an order book of over £14billion and around 75 per cent of its anticipated 2020 revenues were in the order book.
The group states that at this early stage of the coronavirus crisis it is “impossible to foresee with any reliability what overall impact the virus will have on its business”. Some contracts would deliver more profit, some less, but the net result of these “puts and takes” is currently unknown.
It adds: “We therefore no longer regard the guidance we gave at the time of our results in late February as being reliable within the normally accepted conventions of ranges of outcomes, and we are formally withdrawing it.
“If the crisis lasts a long time, we will have to take decisive action, and we will not shrink from that. However, for as long as we can sustain investment and maintain our hard-won capability, we shall do so.”
Across its other sectors, it is likely that short-term capital projects and similar ad hoc works that Serco supports will be deferred as customers focus on managing the immediate crisis. In some cases this will be offset by other unplanned work, it adds.
Rupert Soames, group CEO, said: “Our priority in this crisis is to support the delivery of essential public services and, within that context, do all we can to protect our employees from harm and our shareholders from loss. We will devote ourselves to doing whatever is required to support public services so that, when the crisis passes, our reputation amongst our customers will be enhanced and our operational capacity and capability will remain intact.
“Sustaining vital public services puts many tens of thousands of Serco people on the front line in hospitals, prisons, trains, metros, refuse lorries, asylum-seeker accommodation, tugs, ships, contact centres and sites of national strategic importance. They are addressing customer requirements and available resources which change by the hour and often mismatch, and all the while protecting their families and communities. Our mettle is being tested as never before, and we are determined to rise to the level of events.”