As stated in our First Half Trading Update, the first half has been a little better than was anticipated at the time of our rights issue.
Trading Profit is in line with our guidance at the First Half Trading Update, with the addition of £5.5m net benefit of Contract and Balance Sheet Review adjustments and £10.3m from exclusion of depreciation and amortisation of assets held for sale; without the benefit of these items, Trading Profit was £46.9m.
Trading Profit for the comparable period in 2014, excluding an £18.2m financial instruments restatement, was £45.1m.
We maintain our guidance given at the time of our rights issue of Trading Profit for 2015 of around £90m, with risks now weighted on the upside. This guidance excludes any Contract and Balance Sheet Review adjustments and the treatment of assets held for sale.
Net exceptional charge of £117.4m in the period, which includes a £70.1m impairment to assets held for sale and £32.8m refinancing costs.
Rights issue and debt refinancing completed successfully in the period, with closing net debt of £290m, a reduction of £392m since the start of the year.
£1bn total value of contracts signed in the period, representing 400 individual customer orders of which 15 are contracts greater than £10m; pipeline of larger new bid opportunities remains approximately £5bn.
Operating costs reduced by over £200m, in proportion with revenue reduction; on track with overhead and other specific cost saving initiatives.
Good progress being made in other areas of Strategy Review implementation, including reshaping the portfolio on core markets, exiting some of the Group's loss making contracts and improving management information and decision-making processes.
Rupert Soames, Serco Group Chief Executive, said: "This is a respectable start to what will be a long, and no doubt occasionally bumpy, road to recovery. In the period we completed some essential first steps, most notably raising the equity and refinancing our debt which has given us much a stronger balance sheet.
"Trading in the period was a little better than we anticipated at the time of the rights issue, and we are maintaining our previous guidance for 2015, albeit that we now believe that the risks associated with this guidance are weighted to the upside. As previously stated, we expect that revenues and profits will continue to be under pressure in 2016.
"We are making progress executing our strategy; total costs in the period were some £200m lower; we are reshaping the portfolio to become a focused provider of public services, and making good headway exiting loss-making contracts. Good progress is being made on developing and rolling out better reporting and control procedures.
"Many challenges remain, but we are now heading in the right direction. With the rights issue and refinancing behind us, we can now focus on the service we provide our customers and delivering our strategy".
