An in-line update from Serco shows it is on track to hit £5b revenue in FY11, a 16% increase on FY10 (see Serco shows resilience in 2010), and to achieve its operating margin target of 6.3% by 2012. Since the beginning of the financial year, Serco said it had won £1.6bn of contracts (vs. £1b by the same point in 2010), made up of £1.4b in signed contracts and £0.2b at preferred bidder status. Although its order book was £16.6b at 31 December, down from a record the previous year of £17.1b, the pipeline of opportunities keeps going up. They were at £29b vs. £28b in FY10.
Despite the UK government’s austerity measures, Serco’s software and IT services (SITS) operations seem to have performed well in the UK year to date, with almost £30m in new signings that we know of. Deals include an extension of its IT and BPO contract with Glasgow City Council, known as Access, to include ICT support for 29 of Glasgow’s secondary schools, worth £19m over seven-years; a renewal of the East London Traffic Control System (ELTRACS) traffic management contract for Transport for London worth £1m over two years; a £5.4m, four-year deal at West Sussex County Council to provide contact centre services following its £56m acquisition of The Learning Company (see Serco acquires UK contact centre provider); and £2.7m of work to upgrade Enfield and Derby council’s technology and communications systems.
In the broader UK support services sector, Serco has made even bigger strides. It won a £420m 10-year deal with the Ministry of Justice to provide prisoner escort and custody services within the new National Offender Management Service region of London and the East of England, with £15m worth of additional business to support ex-offenders back into work through the ‘Job Deal’. Of course Serco also emerged as the only SITS-related provider to win business in the Government’s multi-billion pounds Work Programme scheme in April (see SITS providers lose out in DWP Work Programme) with two deals in West Midlands and South Yorkshire. Most interestingly, Serco moved into the hospital management space with the acquisition of Braintree Clinical Services Limited and the contract with Mid-Essex Primary Care Trust to manage and operate Braintree Community Hospital in the UK. The contract is valued at around £60m over four years.
Outside of the UK there are also a wealth of broad-ranging contracts being won, such as satellite engineering, prisons support, logistics, recruitment, facilities management and ICT services. This shows the real depth and breadth of Serco’s business, and goes a long way to showing how it is such a resilient player in an increasingly tough market.