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Serco and Pepper appointed preferred bidder to support portfolio of Irish mortgage loans National Asset Management Agency (NAMA) in Ireland have today confirmed that the consortium of Serco, the international services company, and Pepper Asset Servicing (Pepper), a leading asset manager and advisory company, has been selected as preferred bidder to provide primary1 and special servicing2 on a portfolio of approximately 28,000 residential mortgages. The contract will involve the management of the loans as well as day to day customer services and specialised case management
looking good.
Serco secures extra year of service at RAF Brize Norton Serco is one of UK's top business process services providers Serco signs Ontario Driver Examination Services contract http://www.serco.com/media/pressreleases/
Serco innovations provide welcome boost for local government Innovation and creativity, founded on shared risk and shared values, have proven a successful formula for Serco and their local government partners. The most recent example is with Hertfordshire County Council, where Serco have been appointed to deliver a pioneering new Telecare service for adults in receipt of social care. This is an extension to those services currently delivered by Serco on behalf of the Council and is expected to have an initial value of £12m over 5 years, with the potential for further growth as the service is extended to provide support to more citizens
Serco awarded new transport management contract in Hong Kong Serco Group plc (Serco), the international service company, today announces that it has been awarded by the Hong Kong Transport Department a new Management, Operation and Maintenance contract for the Tsing Sha Control Area. The contract, which is expected to commence in September, has a six-year base period with a total estimated value to Serco of HK$960m (approximately £80m).
holding strong
Serco Group: Citigroup shifts target price from 670p to 680p reiterating a buy recommendation.
Serco Group, the FTSE 100 international services company, said Wednesday that the required valuations for its recent purchase of DMS Maritime have been completed and are expected to result in a non-cash exceptional gain of 51m pounds. This gain will appear in the company's 2012 results. The overall balance sheet effect of the acquisition is now expected to result in recognition of 120m of net assets, although this is subject to final confirmation. Christopher Hyman, Chief Executive of Serco, said: "Our original shareholding in DMS Maritime was made 15 years ago when we first established the joint venture to provide a complex range of harbour and offshore services for the Royal Australian Navy. DMS Maritime is a high quality business that shares Serco's commitment to customer focus, has grown well and will be further enhanced under our full ownership. "We believe that it will benefit from the continuing development of our defence business in the region from a base support services provider to a complex services integrator, and from the significant opportunities that we see in the marine systems integration and services market - both for government and private sector customers."
Chief Executive Chris Hyman said he was pleased with the operational and financial performance delivered by the Group in 2012, particularly in the light of challenging conditions in some of the firm's markets. In a separate announcement, Serco set out its plans to establish an independent charitable foundation to mark its 25th year as a publicly traded company. The firm is making a one-off endowment of £5m to the Serco Foundation and will provide ongoing support for its stated mission to "help charities through the application of Serco's people, skills and capabilities".
Outsourcing giant Serco said it was on track to meet expectations for 2012 as it announced the sale of two operations at a loss. The firm said it expected to deliver a year of strong total revenue growth, including good organic growth. It also said it would post an increase in adjusted operating margin similar to that achieved in 2011 when it releases its full year results in March 2013. Exceptional items are expected to have a broadly neutral impact on the company's income statement for the 2012 financial year. Serco has agreed to sell its education software and UK data hosting operations for a loss. It said those businesses had become non-core to the ongoing development of the group and had both experienced significant changes in market conditions. The £6m deal will mean a provisional non-cash exceptional accounting loss on disposal of approximately £25m, the company said. For the year to the end of December 2011, the financial result of these operations was approximately £14m of revenue and £2m of adjusted operating profit.
Positive Points: Group trading remains on track to meet current full year forecasts. The board expects to deliver another year of strong total revenue growth, including further good organic growth, together with an increase in adjusted operating margin similar to that achieved in 2011. The group’s Africa, Middle East, Asia and Australia (AMEAA) region previously delivered a solid performance. In February Serco said it had identified £30 billion of opportunities across the group, with over a quarter coming from its AMEAA region where the firm is targeting expansion. Serco’s geographical footprint continues to swell. The group previously reported that over 45% of total group revenue is now generated outside the UK, an increase from over 40% in 2011. The board previously highlighted that its recently created global Business Processing Outsource (BPO) business had delivered an “excellent” performance. A progressive dividend policy continues to be pursued by management. A half year dividend of 2.65p per share was previously declared, representing an increase of 6% on the 2011 payment.
Negative Points: Challenging conditions in certain markets was highlighted. Management previously noted that trading conditions in the US federal market remained very challenging, impacting its Americas division. Political deadlock in the US regarding budget negotiations continues to provide uncertainty. While the group was recently short listed to potentially manage a number of UK prisons, the government appeared to back track, with three prisons expected to be outsourced now to remain under public sector control. With a major proportion of Serco's revenues exposed to the public sector, the company carries a degree of political risk. Serco operates in a highly competitive market. Any future acquisition carries a degree of over payment or integration risk.
Full year trading update: In a short statement, management highlighted that it remains on track to meet expectations for 2012. The company’s share price was little changed in early trading. The board noted that it expects to deliver another year of strong total revenue growth, including further good organic growth, together with an increase in adjusted operating margin similar to that achieved in 2011. In addition, the necessary consents and approvals had been received with regards to the previously highlighted acquisition of DMS Maritime, whilst agreement on the disposal of two small operations had also been reached – this was all in line with the group’s strategy to proactively manage its business portfolio. Chris Hyman, Chief Executive noted that "I am pleased with the operational and financial performance delivered by the group in 2012, particularly in the light of challenging conditions in some of our markets.” On balance, despite some challenging market conditions, hopes persist that governments and corporations globally will continue to outsource operations in a drive to cut costs,
Seymour Pierce has reiterated its 'buy' recommendation and 700p target price for outsourcing giant Serco following the firm's pre-close trading statement on Thursday. "We remain buyers of the shares on account of the company's geographical and operational diversity which we believe puts the company in a strong position to deliver growth," said analyst Caroline de La Soujeole.
Serco Group: Westhouse Securities upgrades to add, while keeping the target price at 630p.
Serco Group: Oriel Securities upgrades to hold with a target price of 500p
Serco Group: JP Morgan Cazenove reduces target price from 662p to 646p, overweight rating unchanged. Credit Suisse cut target price from 650p to 610p and downgrades from outperform to neutral.
Serco has delivered the anticipated pick-up in performance in the second half and is on track to meet full year expectations. The outsourcing specialist expects conditions to remain challenging in the US but further improvement is expected in its UK markets, while strong performances from its Africa, Middle East, Asia and Australia (AMEAA) and Global Services Business Process Outsourcing (BPO) operations are anticipated to continue. The organic revenue decline of 2% in the first half of the year is tipped to improve to strong growth in the second half, reflecting new contract awards flowing through to revenues. Full-year operating margin should be similar to that achieved in 2011, as revenue growth picks up and underlying efficiency improvements kick in. As previously communicated, free cash generation is also expected to be weighted to the second half. A higher level of working capital investment related to the growth in our BPO-related contracts is still anticipated.
Serco Group: Panmure Gordon upgrades from hold to buy, target price of 630p kept.
Outlook and guidance The outlook and our guidance reflect a balance of risks and opportunities and remain unchanged from those set out with the half-year results announced on 29 August 2012. Whilst we expect challenging conditions to remain in the US, we anticipate further improvement in UK markets and strong performances from our AMEAA and Global Services BPO operations. The outcome for the 2012 financial year is anticipated to be in line with expectations. As previously indicated, our financial performance (including revenue growth, margin progression and free cash generation) is weighted to the second half of the year when we expect a strong financial result. We expect to deliver another year of strong total revenue growth, including further good organic growth. The organic revenue decline of 2% in the first half of the year is anticipated to improve to strong growth in the second half, reflecting the excellent performance in securing new contract awards flowing through to revenues. We expect an increase in full-year operating margin similar to that achieved in 2011, reflecting the pick-up in second half revenue growth and the delivery of underlying efficiencies. As previously communicated, free cash generation is also expected to be weighted to the second half. A higher level of working capital investment related to the growth in our BPO-related contracts is still anticipated. We remain confident in the overall outlook for Serco, the continued delivery of our strategic plan and further improving our financial performance.
In the AMEAA region, Serco has been selected as preferred bidder for its first frontline services contract in India, to operate and maintain a new bus service in the city of Indore. In Australia, whilst it is still not clear at this stage how the government's new off-shore processing legislation will impact our immigration services, the number of people in our care has further increased. Continued strong growth is also being supported by the annualisation of contracts started in the last year and other expansions in service scope in the region. As announced on 7 November 2012, Serco has agreed to purchase the remaining 50% stake in DMS Maritime Pty Ltd from our joint venture partner P&O Maritime Services. The transaction strengthens Serco's position as a leading defence services provider in Australia and in the growing marine services market. Global Services, Serco's global BPO business, recently signed and commenced operations for a £170m outsourcing partnership with AEGON UK, the leading life and pensions company. Other major new contract awards have also been won in the second half in the travel, utility, media, retail, IT and telecom sectors, as well as several BPO services for public sector customers. In July, operations also began for the major new £430m contract with Shop Direct Group. As a result, Global Services is expected to see particularly strong organic growth in the second half of the financial year. No other material events, transactions or impacts on the Group's strong financial position have taken place since the 30 June 2012 balance sheet date
Contract awards and operational update At the half year, Serco had a £19.4bn order book and an estimated £31bn pipeline of identified opportunities around the world. Since then, we have been awarded a further £1.4bn of contracts, bringing the total for the year to date to £5.6bn, comprising signed contracts valued at £5.4bn and preferred bidder appointments valued at £0.2bn. Winning or expanding smaller contracts also plays an important role in our growth and a selection of these is included in today's Contract News Update on www.serco.com. Notable contract developments and approximate total contract award values are highlighted below. In UK frontline services, a number of significant new contracts have successfully transitioned and mobilised. In Transport, the £350m contract to operate the lifeline ferry services to the Northern Isles of Scotland began in July. In Health, the £140m Suffolk Community Health contract commenced operations in October whilst in the Home Affairs market the £175m COMPASS asylum seeker support services contract has also started full operations. Serco has recently been awarded preferred bidder status for two environmental services contracts for Canterbury City Council and Wycombe and Chiltern District Councils with a combined value of £90m. Other significant awards in the second half include the contract for delivery of the new National Citizen Service in six regions valued at approximately £70m, the London Community Payback contract worth £38m and expansions and extensions to Defence Multi-Activity Contracts (MACs) valued at £30m. In the Americas division, while challenging market conditions clearly remain, task orders and contracts have continued to be awarded. A new $70m contract to upgrade military vehicles was won, and our US Army career transition services contract and patent office classification contract have seen important expansions worth approximately $100m combined. There has also been progress on extensions and rebids for some of the significant contracts that were due before the end of 2013 such as the $100m extension for systems engineering support for a US intelligence agency and the successful rebid of the $40m contract to provide parking services in San Francisco. However, as previously described, the market overall remains very difficult due to the continued uncertainty around budgets and the threat of sequestration.
Christopher Hyman, Chief Executive of Serco Group plc, said: "I am pleased with the business developments being made across the group, and particularly our operational achievements including the significant new contracts that have started in recent months. This supports the delivery of an improved financial performance in this second half and meeting expectations for the 2012 financial year. We continue to manage our portfolio proactively and it is showing its overall resilience and strength, with the challenging US market conditions being offset by our new BPO division and the AMEAA region both delivering excellent performances."
Interim Management Statement Improved performance in second half in line with expectations; £5.6bn of contract awards for year to date; challenging US conditions offset by overall portfolio strength 16 November 2012 Serco Group plc (Serco), the international service company, today issues its Interim Management Statement covering the Group's performance since 30 June 2012. With strong operations and a high level of new contracts having recently begun, the second half of the year is seeing the forecasted improvement in financial performance. It is therefore anticipated that 2012 will be in line with expectations and our outlook is unchanged from that set out in the results announced in August 2012.