Carillion's Serco deal aimed at reducing debt

Carillion's Serco deal aimed at reducing debt

Serco said order intake in 2017 had been strong at over £3bn which represents a book-to-bill ratio of over 100%, the first time this has been achieved since 2012.

It added that orders for the year would hit more than £3 billion, thanks in part to the group's largest contract win in history at Grafton prison in Australia.

Troubled British construction firm Carillion said on Wednesday it had reached a deal to sell a large part of its United Kingdom healthcare facilities management business to outsourcing group Serco for about 47.7 million pounds. The definitive Business Purchase Agreement will stand, assuming Carillion receives shareholders' approval and the requisite third-party consents over the course of 2018, each individual contract will be acquired on a cash-free, debt-free basis, with the consideration to be paid in instalments and to be satisfied using Serco's existing debt facilities.

Rupert Soames, Serco's chief executive, said the new contracts should add £90m of revenue and £8m of profits to the business in the coming years, and added significant potential for future income.

Underlying trading profit for 2017 will be at the high end of earlier guidance of £65m to £70m with second half profit up about 10% from a year earlier, Serco said in a trading update.

Serco said it remains "broadly on track" on costs and onerous contracts, but in some markets - particularly the UK- growth has slowed.

The group said annual underlying trading profits are expected to come in at the peak of a £65 million to £70 million range, causing stock to climb 12% in morning trading on the London Stock Exchange.

The move will bolster Serco's existing United Kingdom healthcare business, which has revenues of £240m after securing contracts at Barts NHS Trust and University Hospital Southampton this year.

"In the meantime, we continue to deliver against our plans and make good progress against our strategy".

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