glad i did so now 83p today not good from highs of nearly £8 couple of years ago. I am no expert by any means but think this could have further to fall so i'll keep old of my cash a little longer got to turn at some point
I see that the shadow of Mr Lyons, former chairman, (on the losing side when Santander bailed out Abbey National and chairman of the highly indebited Towergate) continues to cast its spell. Good to know that his CBE was well deserved and, despite the loss incurred by shareholders, is comforted by his substantial pensions.
<b><u>Jefferies Full Note This Morning.BUY TARGET 157p</b></u>
<b><i>We upgraded to Buy in September as we felt risk/reward had become favourable. According to The Financial Times this contrarian call was “very brave” but two months on, and ahead of a year end trading update, our conviction is increasing. Headwinds have not fully abated, but the IMS will highlight the significant progress made by new management in 2015. FY16E attrition guidance could increase to £400m. Earlier this year, Serco guided to £350m revenue attrition in FY16E. In our view, this could be revised to c£400m as the original figure included £50m from Intelenet (which drops out as it will be sold before year end) and the following contracts have been lost or lapse: US National Benefits Centre (£35-40m annual revenue); Virginia Department of Transport (c£35m annual revenue, winding down towards a May 2016 exit); complex cases child maintenance (£30m annual revenue which runs off over three years as existing cases are resolved). Disposal update. Judging by Blackstone’s recent financing activities the Intelenet acquisition is on track to complete before year end. This leaves UK leisure/waste as Serco’s sole remaining non-core asset, but novating its contracts to individual legal entities could take until mid-2016. Serco’s balance sheet will have been de-risked by then, and we think its turnaround will have a firmer footing so there may be a case for retaining this public sector facing unit. Positive cashflow developments. Serco recently reached a favourable agreement with the Australian government to amend its contract to provide in-service support to Armidale Boats. This is the largest component of the £447m onerous contract provision and resolving loss makers would lead to material FCF upgrades. On recovered earnings, Serco has an 8% FCF yield. Trimming LFL revenue assumptions; unchanged EPS. We now anticipate -8% and +2% organic revenue growth in FY16E and FY17E, respectively (previously -5% and +3%) due to higher attrition, but our EPS estimates remain unchanged for two reasons: 1) as we highlighted in our September note, management feel more in control of cost efficiencies; 2) we assumed that UK leisure/waste would be sold in late 2015 but have reconsolidated until any transaction is clearer.</b></i>
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