Page 1

Stock Exchange Announcement Trading update 15 November 2021 serco Serco today provides an update to 2021 guidance , following stronger than expected recent trading . Recent trading Trading has been stronger than we expected in recent months , and we now expect revenue to be around £ 4.4bn , and Underlying Trading Profit to be not less than £ 225m . Several factors have driven this improved performance , most of which are unlikely to repeat . First , in the UK and Australia , volumes of work related to Covid - 19 support to governments have been higher , and have continued for longer , than we anticipated . Second , a number of contracts across the business have performed better than we expected , notably immigration - related contracts in the UK and Australia , and our healthcare insurance eligibility services contract ( CMS ) in the United States , where the decision of the Biden administration to extend the open enrolment period has resulted in additional volumes . Finally , a number of commercial discussions that we had expected to complete in 2022 are now anticipated to be finalised in the current financial year . Cash generation has also remained strong . Recognising the extraordinary efforts of our colleagues around the world and the difficulties experienced by many as a consequence of the pandemic , we will be making an ex - gratia payment to around 52,000 employees , as we did in 2020 , and in addition we will be making a significant one - off commitment to our recently established Serco People Fund . The fund provides cash and other support to colleagues who would benefit from a little extra help at this difficult time . Together , these initiatives will cost the company around £ 10m in the current year . Our revised guidance for 2021 is set out below : 2020 Actual £ 3.9bn 16 % £ 163m £ 26m 23 % 2021 Prior guidance ~ £ 4.3bn ~ 6 % ~ £ 200m ~ £ 28m ~ 25 % Revenue Organic sales growth Underlying Trading Profit Net Finance Costs Underlying effective tax rate Free Cash Flow £ 135m Adjusted Net Debt £ 58m Notes : The guidance uses an average GBP : USD exchange rate of 1.38 in 2021 and GBP : AUD of 1.83 . ~ £ 120m ~ £ 250m 2021 Latest guidance ~ £ 4.4bn ~ 10 % > £ 225m ~ £ 26m ~ 25 % ~ £ 150m ~ £ 220m Outlook for 2022 We are yet to complete our budget process for 2022 , and we will be working over the coming weeks to finalise individual budgets and gain Board approval . We expect to be ready to give our usual detailed guidance for the year ahead in conjunction with our Capital Markets Day on 2 December . At this point , we do not expect the guidance for revenue and trading profit for 2022 to be materially different to current analysts ' consensus * . We expect 2022 to see much lower demand for Covid - 19 related services , partially offset by the impact of new work secured in 2021 and growth in our core non - Covid - 19 related business . * Serco - compiled consensus is £ 4.2bn of revenue and £ 196m of Underlying Trading Profit . Bloomberg consensus is £ 4.2bn of revenue and £ 192m of Underlying Trading Profit as at 12 November 2021 . This announcement contains inside information . Ends For further information please contact : Paul Checketts , Head of Investor Relations , tel : +44 ( 0 ) 7718 195 074 or email : paul.checketts@serco.com Marcus De Ville , Head of Media Relations , tel : +44 ( 0 ) 7738 898 550 or email : marcus.deville@serco.com About Serco Serco is a leading provider of public services . Our customers are governments or others operating in the public sector . We gain scale , expertise and diversification by operating internationally across five sectors and four geographies : Defence , Justice & Immigration , Transport , Health and Citizen Services , delivered in UK & Europe , North America , Asia Pacific and the Middle East . More information can be found at www.serco.com 1